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WITH over 47 million underbanked people, it is commendable that financial institutions in the country have been urged to provide services to deepen financial inclusion and ensure greater participation of more Nigerians in the nation’s financial sector. The latest call by the Consumer Awareness and Financial Enlightenment Initiative (CAFEi) for financial inclusion is in line with the new strategy by the Central Bank of Nigeria (CBN) to reduce the number of Nigerians without access to banking services by 20 per cent by the end of this year.
We support the move to expand financial inclusion because, for people to make meaningful contributions to the economy, they must be financially included through access to basic payment system as well as financial products that will enable them improve their quality of life and grow their wealth. In fact, research has shown that customer intelligence solutions help to find the most profitable growth opportunities. They also help to drive the best marketing actions to achieve optimal cross-business impacts. The banks should not lose sight of these benefits.
Currently, financial inclusion in Nigeria remains below 10 per cent in terms of access to insurance and credit. This makes economic participation difficult. Undoubtedly, the main barrier to financial inclusion includes inadequate knowledge of available opportunities and inability of existing financial products to cater for people’s needs. We believe that in order to reduce the financial inclusion gaps, the financial institutions should redirect some of their resources to financial education and enlightenment and tailor their products to meet the needs of customers, especially those in rural areas. The influence of technology has made it easier to reach out to millions of prospective bank customers across the country.
The financial inclusion strategy became necessary a few years ago following the agreement between the CBN, Deposit Money Banks, licensed mobile money operators and ‘super agents’ to fund the inclusion initiative in the country. The plan includes the rolling out of about 500,000 agent networks, which will offer a wide range of basic financial services such as cash-in, cash-out, fund transfer, bill payments, airtime purchase, government disbursements as well as remote enrolment of Bank Verification Number (BVN) to an estimated 50 million Nigerians that are currently either “underbanked or unbanked.” Under the initiative, the North with huge gap of financial inclusion, will get more of these financial services. According to the approval by the Bankers Committee, the roll-out ratio gives the North East 30 per cent, North West, 30 per cent, North Central, 20 per cent, South South, 7.5 per cent, South East, 7.5 per cent, and South West, five per cent. The high figure of “financially excluded” Nigerians does not augur well for the economic development of the country. Therefore, banks and private financial institutions should take advantage of the unbanked and underbanked market by changing their present operating models and product services to effectively serve this fast growing, lucrative market.
It is good that under the scheme, the CBN and commercial banks will, from time to time, roll out new products and services expected to accelerate and deepen financial inclusion across the country. While these offerings are already in urban centres, they are yet to reach many rural communities. About 21 per cent of adults in the country have access to bank services, while about 74 per cent of them are yet to open bank accounts. The remaining five per cent had previously banked and closed their accounts for reasons ranging from poor bank services and multiple charges.
To expand financial inclusion in the country, the banking industry should restrategise and focus on bringing more customers to their net by driving low cost digital access to customers, broadening financial literacy campaigns and creating micro investment products for the benefit of the excluded, underserved and low-income Nigerians many of who are living in the rural and semi-urban areas. There is no doubt that if this process of financial inclusion is properly driven, it will scale up greater participation of Nigerians in the nation’s financial sector and reduce the number of unbanked population.
A survey conducted a few years ago by one of the leading financial providers in the world, Accenture, showed that bringing unbanked adults and businesses into the formal banking in Nigeria could generate about $380 billion in revenue for the banks. The majority of this population, the survey also found, are living within the low and middle-income emerging markets like Nigeria, even as many income earners are found not to be patronising banks. For adequate financial inclusion, the banks must make sure that these banking services are available in all parts of the country.
