Nigeria failed to meet its National Financial Inclusion Strategy target for 2020 to include 80 percent of its adult population into the financial system. EFInA data show that only 64.1 percent were financially included by the end of last year. This means that 36 percent of Nigerian adults, or 38.1 million of the country’s 106 million (18 years and above) adults, remain completely financially excluded. This is a shortfall by 16 percent points from the desired target of a 20 percent exclusion rate.
The 2012 strategy by the Central Bank of Nigeria (CBN) had also aimed to reach 70 percent of Nigerians with formal financial services by 2020; the actual figure reported by EFInA’s Access to Financial Services in Nigeria 2020 Survey released on Thursday showed it was 51 percent, a shortfall by 19 percent points.
“At our current rate of progress, we will not reach the 2020 financial inclusion targets until around 2030,” Ashley Immanuel, CEO of EFInA, said. Financial inclusion means that people have access to basic financial services like a savings account, credit and insurance. A higher exclusion rate in Nigeria could lead to a poorer population as lack of access to credit and insurance puts them at an economic disadvantage.
A breakdown of the EFinA report showed that Nigeria did not only miss its overall financial inclusion target, it was unable to also achieve other sub-targets outlined by the Central Bank of Nigeria. Africa’s largest economy planned to ensure that its adult population that has a transaction account with a regulated financial institution and/or has made an electronic payment through a regulated financial institution in the last 12 months will be 70 percent at the end of 2020 but only 45 percent was achieved, leaving a gap of 25 percent points.
It was the same for savings, as only 32 percent was achieved, 28 percent short of its 60 percent target. The 40 percent target for credit was also not achieved as a 37 percent gap was reported in 2020, meaning only 3 percent of the target was achieved. Out of the 40 percent target set for insurance inclusion, only 2 percent was achieved, meaning 38 percent of the target was unreached. “We can reach these targets much faster if we follow paths taken by other African countries that have seen rapid financial inclusion growth due to mobile money,” Immanuel said.
Analysis of the EFInA report revealed that Nigeria’s financial inclusion gender gap persisted in 2020 as the difference between men with access compared to women remained in the review period.
Fifty-one percent of Nigerian adults are using formal financial services, such as banks, microfinance banks, mobile money, insurance, or pension accounts, up from 49 percent in 2018. This is largely driven by growth in banking, with 45 percent of Nigerians banked in 2020, up from 40 percent in 2018. Hastening the licensing of the much-anticipated payment service bank (PSB) to help deepen access, especially in the rural communities where the majority of Nigeria’s excluded population live, is one of the ways analysts believe Nigeria can grow its financial inclusion rate.
More than two years after the CBN gave an official nod to non-financial companies to apply for mobile banking licences to assist in deepening access to financial services, not much has changed. Only two telcos have been given the mobile money permits. The country’s largest mobile operators, MTN and Airtel, are yet to receive the licence.