While this might come as a shocker to a number of individuals and corporations in the nation, true financial inclusion in Nigeria might still be a thing of the far future.
This of course is in stark contrast to CBN’s confidence in its target to reach an 85% financial inclusion rate in the country.
Enhancing Financial Innovation and Access (EFInA), the organization which has been on the frontline of monitoring and assessing financial inclusion in Nigeria, recorded growth in Nigeria’s financial inclusion rate in 2020 at 64.1 percent, a 0.9 percent increase up from 63.2 percent in 2018.
This was still noticeably below CBN’s 80% target for the year 2020.
The World Bank defines Financial Inclusion as the phenomenon where individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.
Enhancing Financial Innovation and Access (EFInA), carried out a survey in 2008 that showed 52.5% of adults, or 45.4 million people, were not able to access financial services. And at the time there were just 18.3 million banked Nigerians, roughly 21.1% of the adult population.
While the general demographic of Nigerians financially excluded still largely consists of women in northern Nigeria and children in other parts of the country.
Over the years, the EFInA has made considerable efforts to reduce the nation’s financial exclusion rate, a mission in which they experienced immense success as the percentage decreased from 46.3% to 39.5% (according to the EFInA) between 2010 and 2014, but recorded a setback in 2014 as the nation’s financial exclusion rate experienced a spike, increasing to 41.9% between 2014 and 2016.
This phenomenon is thought to have been triggered by the implementation of the Bank Verification Number (BVN) in 2014 as a regulatory requirement for Nigerians to access financial services provided by financial institutions.
Although this was set in place to function as a database to regulate the banking information of Nigerians and for other Know Your Customer (KYC) purposes, this poses a problem because a number of Nigeria’s unbanked population do not have BVNs, which is another reason why these individuals will not have access to financial services.
Hence, this is yet another factor contributing to the increase in Nigeria’s financial exclusion rate
It appears that Nigeria as a nation has set herself a few steps back in the pursuit of true financial inclusion.
But there is a solution:
Mr. Tomilayo Akano, the CEO of Tom X Holdings, a major player in the financial inclusion space, creating credit, bill payment and saving facilities to Nigeria’s unbanked population through a number of their products namely; Tom X credits, RAPAID, and others, provided his perspective on resolving the challenge on both ends, saying:
“Taking into account the need for a KYC database while still catering to the financially excluded, there is a need to consider the use of the National Identification Number (NIN) on registered phone numbers for bank verification instead of BVN, Seeing as all functional Nigerian numbers are linked to a NIN number, we can guarantee that every Nigerian with a phone number can get access to financial services.
But ultimately, if the value of being banked is properly communicated to the unbanked in a language that they understand, Nigeria would hit its 80% financial inclusion target in no time.”
As of Friday, September 16th, 2022, the NIMC had registered 90 million Nigerians with national identification numbers, which is a stark contrast to the number of Nigerians with a bank verification number (BVN), which is just under 55 million people.
The NIN (National Identity Number), a standard regulatory requirement for financial institutions in the nation, might just be a gateway to true financial inclusion in Nigeria.
