A recent forum in Lagos held by CRC Credit Bureau highlighted the distance Nigeria still has to travel to reach financial inclusion. It emerged that just 2% of the population has access to credit facilities, of which less than 10% are consumers or MSMEs. In Indonesia it is said that such borrowers enjoy 18% of total bank credits, and in South Africa as many as 45%. The contrasting Nigerian model of loan books dominated by public agencies and corporates is a hindrance to the development of the economy.
- The FGN’s national financial inclusion strategy of October 2012 set a target to reduce the exclusion rate from 46.3% in 2010 to 20.0% in 2020. Ghana was still lagging Nigeria in 2012, with a rate of 44% vs 40%.
- Nigeria’s progress towards the target has since slowed. A report by the International Finance Corporation entitled the Future of Financial Inclusion in Africa estimated that the number of excluded Nigerians increased by 2.1% in 2017 to 40.1 million (Good Morning Nigeria, 04 June 2018). The underlying exclusion rate probably improved by a small margin since annual population growth is running at 2.5% or more according to consensus.
- The IFC report, launched in May, told a similar narrative to the recent forum in Lagos. It estimated that 60 million Nigerians are savers, half of them through a financial institution, and that one third borrow, almost all informally. .
- The 2017 report of the Nigeria Inter-Bank Settlement System noted that just 3.8 million Nigerians (out of 59 million active bank account holders) made mobile money transfers in 2017. It added that the mobile money operators licensed by the CBN handled transactions totaling N1.10trn (US$3.6bn) in 2017. The comparable figures for the far smaller economies of Ghana and Kenya last year were roughly US$36bn and US$45bn respectively.
- High transactions costs are a barrier to inclusion clearly but Nigeria has fallen far behind its continental peers such as Ghana and Kenya because of its regulation of mobile money. Its system is bank-led, rather than telco-led.
- Research by a former CBN deputy governor has found that the system in Ghana was previously bank-led but that the authorities changed the model in July 2015 in the face of strong opposition from the commercial banks: the telcos were allowed to create new legal entities independent of, but largely owned by themselves. These digital providers were the initial game-changers.
- Financial inclusion also requires much enhanced access to the internet. Broadband penetration stood at 22% in March, and is inching towards the target of 30% at end-2018.