SEATTLE — Financial inclusion in Nigeria has become a priority for the nation in recent years. In spite of the fact that Nigeria has the largest economy in Africa, financial inclusion is low, with a mere 30 percent of Nigerian adults having a formal bank account. Several organizations have formed partnerships with each other in an effort to increase financial inclusion across Nigeria.
The State of Financial Inclusion
Financial inclusion includes access to a variety of financial products in the formal sector, including savings accounts, credit, pensions and insurance. The impoverished are the least likely to have these access to these services thus contributing to a continuing cycle of poverty.
In the absence of formal financial products, many Nigerians must rely solely on cash for savings and transactions, which has an overall negative impact on Nigeria’s economy. Increasing financial inclusion has been shown to improve economic growth, as well as the ability of individuals to accumulate wealth, making it better for the nation as a whole.
Without financial inclusion, many Nigerians are also prevented from pursuing business opportunities, as access to the formal financial sector is generally necessary in order to obtain the loans needed to create or expand a business. Low financial inclusion rates, therefore, harm overall business growth in Nigeria.
The biggest barrier to accessing financial services is not having a bank branch within range of one’s home. A 2011 poll revealed that 61 percent of the unbanked in Nigeria would like to have accounts, but are prevented from doing so because they do not have a bank close enough to where they live.
Gender and location also have an effect on financial inclusion in Nigeria. Women are less likely than men to have a bank account, as 73 percent of women are unbanked. Additionally, financial inclusion is worse in northern Nigeria, with more than twice as many people being unbanked compared to the southern part of the country.
Mobile money is becoming a popular alternative for many in Africa who live too far from bank branches, but only 6 percent of Nigerians have a mobile money account.
Efforts by Companies in Nigeria
One company striving to improve financial inclusion in Nigeria is the Youth for Technology Foundation (YTF), which broadly seeks to improve the lives of younger generations. The organization’s financial inclusion efforts have also centered around bringing more women into the formal financial sector.
YTF was able to create a mobile financial service for Nigerian women through a partnership with the Cherie Blair Foundation for Women, the First Bank and VISA. The project trains 2,500 Nigerian women to be mobile banking agents, helping Nigerians obtain and learn to use mobile financial services. This allows Nigerians who do not live near a bank branch to access the financial sector and the benefits that it can bring.
In 2017, Paga, a mobile money service in Nigeria and the Nigerian Postal Service (NIPOST) launched a partnership aimed at increasing financial inclusion in the nation. Paga will expand their network of mobile money agents, placing them at post offices across Nigeria.
According to B.M. Mukhtar, the General Manager of NIPOST’s financial service, “There is a post office location within reasonable distance of almost every community in the country today, so we see an opportunity for NIPOST to play a leading role in enhancing financial inclusion for the betterment of Nigeria.”
Paga currently has more than 11,000 mobile money agents across the nation. At post offices, these agents will help customers make deposits and withdrawals, as well as pay bills and pay for services. Paga plans to work with banking partners to offer savings and loans products in the near future.
Most recently, in early 2019, First Bank of Nigeria and Azuri Technologies announced a partnership to improve financial inclusion in Nigeria. Azuri is a solar company that provides everything from solar home lighting to solar satellite TV. The company uses the “pay-as-you-go,” business model and is working to provide much-needed energy to households across Nigeria.
Through the partnership with First Bank, Azuri customers can pay for Azuri solar power with First Bank’s Firstmonie network. The bank has Firstmonie agents in rural and semi-urban areas throughout Nigeria, and the organizations hope that as this payment method will be easier for Azuri customers, it will encourage them to participant in more formal banking options.
Firstmonie offers basic financial services, including opening an account, making cash deposits and withdrawals and paying bills. This partnership could also help enable people with First Bank accounts to more easily purchase Azuri’s products, bringing solar power to more Nigerians.
Efforts by these companies are an important step in increasing financial inclusion in Nigeria. Growing mobile money and making access to bank accounts easier and more convenient for Nigerians to access is essential to this process.
– Sara Olk