set of wheels, radically different from the drivers of success in previous eras.
All through the evolution of the human race, different trends have emerged, each one bringing drastic changes along and re-defining the status quo. Two hundred years ago, no one cared about how many financial institutions existed, for instance, or how many people they successfully served; but today, governments and private sector players all over the world are making moves in quick succession to boost what has now come to be widely accepted as “Financial Inclusion.”
Financial Inclusion is simply about making more financial services available to the financially under-served and excluded.
This has become a priority for governments and international agencies such as the International Monetary Fund and the International Finance Corporation of the World Bank because of the significant upside that comes with higher levels of financial inclusion.
Development finance experts estimate that, on a global scale, some 2.5 billion people are financially excluded and totally unbanked. In Nigeria, 53 percent of adults were financially excluded in 2008, this figure reduced to 46.3 percent in 2010 according to findings from the “Enhancing Financial Innovation and Access (EFInA)” development group. Currently, this statistic stands at 39.7 percent, indicating that efforts to bridge the financial inclusion gaps in the country have been yielding some fruit.
There is definitely a business case for driving financial inclusion in Nigeria, and this is hinged on the significant economic upside that a more “included” Nigeria can generate. As it stands, only about 28.6 million adults in Nigeria have bank accounts and this represents 32.5 percent of the adult population. Another EFInA survey reveals that up to 23 million adults keep their monies at home, a big percentage of such people definitely reside in the north of Nigeria where some 60 percent of inhabitants are totally unbanked. If only 30 percent of the people in this category saved N500 every month with an existing or new bank, the financial services industry in Nigeria could increase by a whopping N41.4 billion ($250 million) every year.
The most recent Financial Access Survey results from the IMF show a strong link between financial inclusion and economic growth. Specifically, the results show a vivid correlation between the number and use of commercial bank services (a measure of financial inclusion) and an increase in GDP per capita (a measure of economic growth). In Africa, depositor data from commercial banks reveal that depositors per one thousand adults grew five-folds between 2004 and 2013 and translated into a 40 percent growth in real GDP per capita. This is a strong reason to drive further financial inclusion in Nigeria.
A totally “included” Nigeria will see more people leverage available opportunities for business growth because all citizens will be connected with formal institutions. Also, monetary resources will be saved in the appropriate places where they can be used to further drive the economic development of the nation; this is in stark contrast to the present day scenario in many rural areas where money is saved by burying it underneath the earth. A totally “included” Nigeria will provide sufficient motive power to facilitate the country’s Vision 2020.
By Emmanuel Iruobe
