Financial inclusion, which means individuals, communities and businesses having access to useful and affordable financial products and services that meet their needs, is being promoted by the World Bank ad a key enabler to reduce extreme poverty and boost shared prosperity. It has also been adopted by countries – both developed and developing – as an enabler for achieving seven of the 17 Sustainable Development Goals.
In its published Global Financial Inclusion Index 2023, the Economist Intelligence Unit, measured the extent to which individuals have access to and use financial services, with an overall score that ranges from 0 to 100. In developed countries, the index shiwed an average score of 78.6, while in developing countries the average score was 58.1.
Just two days ago, the second International Financial Inclusion Conference 2024 (IFIC’24), with the theme “Inclusive Growth—Harnessing Financial Inclusion for Economic Development”, held in Lagos from Tuesday, November 12 – November 13 2024. The platform gave the Central Bank of Nigeria (CBN) Governor Olayemi Cardoso the opportunity to telling the world how the leading African economy is faring when it comes to financial inclusion.
Indeed since becoming the CBN governor in September 2023, Cardoso has made financial inclusion a priority because of its potential to unlock significant economic growth, particularly through the empowerment of small and medium-sized enterprises (SMEs), women and other vulnerable segments of the Nigerian population.
He noted that though SMEs contribute over 80% of employment in Nigeria, they face challenges accessing credit for expansion, stressing the government’s unwavering commitment to supporting these businesses in order to unlock the sector’s full potential. “Similarly, women play a critical role in driving inclusive growth. Research shows that when women are financially empowered, they reinvest in their families and communities, creating broader socio-economic benefits,” he noted.
The CBN governor also said that in line with the apex bank’s efforts to deepen financial inclusion, new minimum capital requirements for banks were introduced, ensuring they are well-capitalized to take on greater risks in underserved markets and provide more loans and financial products to MSMEs, rural communities, and other vulnerable segments. He further explained that the CBN was committed to empowering young Nigerians to attain financial independence, encouraging entrepreneurship, and stimulating economic growth across the country through focused financial literacy initiatives.
Cardoso also explained how the adoption of digital payment channels using mobile technology had been a transformative tool for financial inclusion, with Nigeria’s growing mobile phone penetration offering a unique opportunity to expand access to financial services, noting that interoperable payment platforms had enabled millions of Nigerians to send payments, save, and access credit even without traditional bank accounts.
He commended the participants, the Financial Inclusion Steering Committee and Nigerians for their unwavering commitment to Nigeria’s financial inclusion goals to build a financial ecosystem that ensures shared prosperity for all Nigerians.
Earlier in his opening remarks, the CBN Deputy Governor, Financial System Stability, Mr. Phillip Ikeazor, emphasized that “the Central Bank of Nigeria will continue to drive the initiatives and policies necessary to ensure that financial inclusion remains a priority, fostering innovation and providing access to financial services for all Nigerians.”
He noted that CBN’s recent efforts to include the 28 million Nigerians still without access to financial products and services. These efforts, he added, began with the launch of the National Financial Inclusion Strategy in 2012 at the 3rd Global Policy Forum, aimed at reducing financial exclusion. As a result of this move, he said the exclusion rate had dropped from 46.3% in 2010 to 26% in 2023.
Mr. Ikeazor also spotlighted the Bank’s targeted initiatives, such as the Women Entrepreneurs Finance Initiative (We-Fi), stressing that Nigeria’s financial inclusion efforts would be incomplete without acknowledging the crucial role of Digital Financial Services (DFS) in enhancing access to financial services in remote areas, reinforcing the commitment to “No Nigerian left behind”.
The conference featured engaging plenary sessions, with Deputy Governor Economic Policy, Mr. Muhammad Sani Abdullahi, chairing the session titled “Towards a More Inclusive Economy: Insights from Emerging and Developed Economies.” The CBN has also partnered with other organizations, such as the Alliance for Financial Inclusion, to promote financial inclusion in Nigeria.
Cardoso’s trajectory may seem overly ambitious, but the Indian financial inclusion story means he should be encouraged. India successfully accelerated progress on financial inclusion to such an extent that it achieved in less than a decade what would otherwise have taken half a century. According to the World Bank’s Global Findex Database (GFD), back in 2011, only 35 percent of those above fifteen years of age in India had accounts with a bank, other financial institution, or mobile money service provider. By 2014, this had increased to 53 percent and to 81 percent in 2017. In 2021, this was 78 percent. Based on this, some have argued that India’s approach to financial inclusion is worth emulating.
No doubt there are several benefits of financial inclusion for the governments at federal, state and local levels. For instance, financial inclusion will not only help people escape the shackles of poverty, it will also help governments increase tax revenue by providing access to financial services that can help individuals and businesses pay taxes more easily. And this will mean more money for the government to spend on infrastructure and other critical national projects which, in turn, will help improve economic stability by reducing the risk of financial crises and improving the overall resilience of the financial system.
For many participants of the conference, there were several takeaways and other new thoughts to ponder. It showed that with Cardoso in charge, the CBN aim of achieving full adult financial inclusion is well on course.
- Nasir writes from Abuja
