The principle of financial inclusion has assumed greater level of importance in recent times due to its perceived importance as a driver of economic growth. Though there may not have been a universal agreement over an exclusive list, it is widely agreed that financial inclusion is multidimensional and encompassing. In simple terms, it describes a process where all members of the economy do not have difficulty in opening bank account, can afford to access credit, and can conveniently, easily and consistently use financial system products and facilities without difficulty.
The need for financial inclusion of a significant number of people within a financial system cannot be overemphasised. Giving access to millions of Nigerians who are presently excluded from financial services would provide the possibility for the creation of a large depository of savings, investable funds, investment and wealth generation. In other words, access to financial services that are well suited for low-income earners promote enormous capital accumulation, credit creation and investment boom. Usually the low-income earners constitute the largest proportion of the population and so control enormous chunk of the economy’s idle fund albeit held in small amounts in the hands of each of the several million members of this group. Harnessing and accumulating these resources provides a huge source of cheap long-term investable capital.
In recent times, the Nigerian financial services sector has witnessed increasing activities, by both the government and the regulatory authorities, aimed at deliberately promoting policies that are intended to grow financial inclusion. The Central Bank Of Nigeria (CBN) has been at the forefront of encouraging and supporting products that are specifically targeted at the low income and financially excluded. Some of these policies include Financial System Strategy 2020 (FSS2020), Microfinance Policy, Non-interest Banking, E-banking Products, Electronic Payment System and Cashless Policy. In spite of these interventions, there is still a wide gap between the population of the country and the number of people who have access and make use of financial services in the country
The CBN, in its October 2019 Annual report on Financial Inclusion, said the country’s financial inclusion rate for 2018 stood at 63.2%.The biannual report showed that this was an improvement on the 2016 rate which stood at 58.4%. However, this was a far cry from what obtains in African countries such as South Africa, Egypt and even emerging economies in South America. In the same period (2019) under review, South Africa financial inclusion rate stood at 87.3%.
Financial experts began the year 2020 with high hopes of measuring increased financial inclusion by the end of the year. However, the global pandemic caught most people and businesses unawares and the effect has been devastating. The effect of the pandemic has hit hard on the federal government as the country is now facing U.S dollar shortages due to the crash in oil prices. It has also impacted low-income households and businesses due to government measures to curb the spread of the virus.
Most states have banned all public gatherings and partially closed major markets and schools, while the federal government continues to implement lockdowns in most commercial hubs and major cities. These measures are having sweeping implications on the low income and financially excluded population with high reliance on their informal day-to-day business transactions for survival.
According to the EFInA Access to Financial Services in Nigeria 2018 survey, 44.3 million adults own businesses and about 23 million adults earn their income daily or weekly. The resultant effect has been the increased demand by customers of financial institutions for personalized online and offline transactions as opposed to the old way of long queues at the bank. Welcome to the new normal in the financial services sector.
Many financial institutions in Nigeria have invested hugely in cutting-edge technology to ease financial transaction for their teeming customers. This is also in line with widening financial inclusion in the country as most low income earners and rural dwellers still find it difficult to assess financial services. Point Of Sales (POS) terminals, mobile banking, agent banking (which started in 2013) are some of the products developed by banks to ease transaction for its customers and businesses. Some telecommunication companies such as MTN and 9mobile have also veered into the area of financial technology (fintech) to expand the frontiers of financial inclusion. Recently, Opay, a leading ride-hailing platform, suspended its popular O-ride platforms to focus primarily on fintech. It explained that the restructuring of its business model was as a result of an increase in demand for its offline mobile money agency and online digital payment platform in the early period of the pandemic.
Banks and other smaller financial institutions, including co-operative societies and insurance companies are remodeling their business in line with providing services for their customers through innovation driven by the present Covid-19 reality. The ripple effect of this innovation can only get more and more people involved in financial transaction in a country where the technology needed for penetration and inclusion is largely inadequate.