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News

November 20, 2023

4 mins read

Unlocking Prosperity: Creating Meaningful Financial Inclusion in Nigeria

by Tosin Eniolorunda

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There is one undeniable truth, that even the most ardent of skeptics might actually hold to be true – Nigeria, as Africa's most populous nation, has the potential to become the greatest country on the continent. From its vast arable land to an enormous population which has a high propensity to be an asset if adequately managed and deployed, it’s really ours for the taking.

The role of financial inclusion as a catalyst for economic development, poverty reduction, and social inclusion has been widely recognized. Some industry analysts aver that if we are going to be able to deepen shared prosperity, accelerate poverty reduction and reduce inequality, then we have to roll up our sleeves and invest in critical physical, financial, digital, technological and innovation infrastructure that support the building of our most valuable asset – Nigeria’s human capital. Because at the end of the day, financial inclusion, financial literacy is about the transformative power that people have whether they live in bustling cities or remote villages. The question to be asked is how do we create a meaningful experience for all stakeholders.

Identified barriers that prevent meaningful outcomes include low income, low financial literacy, lack of trust in financial institutions, high cost of financial services, inadequate infrastructure, and restrictive regulations. Sadly, these challenges disproportionately affect women, rural dwellers, youth, and micro, small and medium enterprises.

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However, as both empirical and anecdotal evidences have shown in many emerging markets, the effective deployment of technology in leapfrogging over previously identified barriers holds the biggest attraction. It’s usually a game-changer. India and China, with similar heterogeneous societies and large populations, are fine examples to learn from. Imagine the immense satisfaction that will come from POS terminals being able to cater to the tactile or auditory needs of the physically challenged – this is inclusiveness in all its trappings. Can we use technology to deliver financial literacy modules or microsite where people can access and understand using pidgin and local languages? Can we have contactless payment solutions become the default mode of payment in a way that means that the bus conductor isn’t asking a passenger for cash, all that needs to happen will be done via a mobile phone from Damaturu in Yobe to Agenebode, Edo state. Surely, an aggressive adoption of innovative technologies will make a huge difference in our lives irrespective of gender, creed, station in life and other societal markets.

Another tool for unlocking prosperity will be how we leverage digital financial services (DFS), which are enabled by information and communication technologies (ICTs), such as mobile phones, internet platforms, and electronic payment systems. DFS have demonstrated that costs can be lowered while increasing the convenience, and expanding the reach of financial services to the underserved segments of the population. As we have seen with players like Moniepoint, they are fostering innovation and competition in the financial sector, creating new opportunities for value creation and economic diversification. Imagine a scenario where we can reverse engineer our financial landscape such that DFS become the dominant go-to service provider for accessing credit, savings, insurance, pensions, and other financial products and services that could improve their livelihoods and resilience.

Lastly, the role of transformational leadership at all levels of government of and the private sector should be of the highest national significance in curating a meaningful experience for all stakeholders across our financial services system. As we all know, creating a supportive regulatory and policy environment is necessary to foster financial inclusion. Clear and inclusive regulations that promote competition, innovation, consumer protection, and data privacy will be instrumental. Collaboration and partnerships among various stakeholders is closely aligned to the point. This is because even by our communal Ubuntu ethos as Africans, we recognize that no single tree can beautify a forest, it will take the coming together of many trees to provide shade and succor for many people.

Creating a meaningful experience for all stakeholders in financial inclusion in Nigeria is not just about increasing the number of bank accounts. It's about empowering the unbanked, supporting financial institutions, and fostering a collaborative effort among government agencies and fintech companies. Only through a holistic approach that takes into account the unique challenges and aspirations of each stakeholder can Nigeria truly achieve the goal of financial inclusion, ensuring a brighter and more financially secure future for all its citizens.

In unlocking prosperity for all Nigerians, it is imperative to harness the power of technology and digital financial services. This would require concerted efforts from various stakeholders, including the government, regulators, financial institutions, fintech firms, civil society organizations, and consumers. By creating a conducive environment for innovation and inclusion in the digital financial space, Nigeria can realize its vision of becoming a leading African economy in the 21st century.

*First published in the 2023 Q3 SANEF TALKS Quarterly Financial Inclusion Newsletter

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