75% Northern adults lack access to financial services –Investigation

.Nigeria’ll attain 95% financial inclusion by 2024, says CBN
Over 75 per cent of bank customers in the North East and in some other areas in the North West have, so far, not been able to access financial services in an appropriate form, owing to raging insurgency and the ravaging COVID-19 pandemic.
The figure inched up from the 70 per cent exclusion, which was recorded in 2016, according to a document obtained by our correspondent.
The financially excluded adults in the North East region in 2012 rose from 60 per cent to 62 per cent in 2014; 68 per cent in 2016; and 70 per cent in 2018. This year, experts say the percentage has soared above 70 to 75 per cent.
Head, Financial inclusion Secretariat, Central Bank of Nigeria, Mrs. Temitope Akin-Fadeyi, at a recent workshop for financial journalists in Abuja, said that the financial exclusion rate across crisis-prone areas in the North West and North Central increased from 30 per cent in 2012 to about 70 per cent as at the end of 2016.
Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs like transactions, payments, savings, credit, and insurance; delivered in a responsible and sustainable way.
Access to a transaction account is a first step towards broader financial inclusion since it allows people to store money, send and receive payments. A transaction account can also serve as a gateway to other financial services, which is why ensuring that people worldwide can have access to a transaction account is the focus of the World Bank Group’s Universal Financial Access 2020 initiative.
The Assistant Director, Research, Policy and International Relations Department, Nigerian Deposit Insurance Commission, Mr. Rotimi Ogunleye, said agent banking was to provide financial services to the widely dispersed population at an affordable price because agent banking is up to three times cheaper to operate than branches.
In some countries, he said it was promoted to decongest existing customers from crowded branches, “while it is also meant to improve the access to financial services among the most vulnerable sections of the society.”
Ogunleye listed those could be agents to include limited liability companies, sole proprietorships, partnerships and societies, among others.
“Agent banks engage in Cash-in, Cash-out, processing bill payments, sending and disbursing money transfers, conducting know your customer prior to opening bank account. Other functions include processing account applications, opening bank accounts, disbursing credit and accepting loan repayments,” he said.
For the Nigerian Stock Exchange, Nigeria’s high level financial exclusion, put at 14 million of youthful population, is worrisome.
NSE’s Head, Corporate Services Division, Mr. Bola Adeeko, said 14 million youths in Nigeria lacked access to financial services, stating that, regardless of their socio-economic, demographic or geographical situations, they faced some degree of difficulty or uncertainty as they moved on to adulthood.
He explained that having the right information could make a significant difference in the type of decisions youths make at that stage of their lives, adding that access to financial and social assets was a key contributing factor to help youth make their own economic decisions and escape poverty.
He said, “Personal financial planning is no longer a concept that applies solely to members of the labour force, adults in our society, or the upper social class.
“Contemporary society requires everyone to understand the principles of money and develop personal financial management skills that will enable them manage their finances effectively and achieve financial freedom.”
Managing Director, NDIC, Alhaji Umaru Ibrahim, said financial inclusion entailed access to a broad range of financial services, including payments, savings, credit, insurance and pension products.
Access to finance by the poor and vulnerable groups, he said, was a prerequisite for employment, economic growth and poverty reduction.
While highlighting the financial inclusion initiative of the Federal Government, Umaru recalled that the launching of the National Financial Inclusion Strategy and the establishment of the N220billion Micro, Small and Medium Enterprises Development Fund, which had mainly been accessed by women, were signs that government was serious about financial inclusion.
He added that the cashless policy designed to bring low-cost, secure and convenient financial services to urban, semi-urban and rural people, coupled with Agent Banking initiative that had the ability to grow access to banking facilities, would no doubt deepen financial inclusion.
“A banking agent is a retail outlet contracted by a financial institution to a mobile network operator to process clients’ transactions and these agents could be pharmacies, supermarkets, and many more,” he said.
The NDIC boss pointed out that the promotion of all-women microfinance institution was also a positive development to the aforementioned initiative.
A lecturer in the Department of Banking and Finance, Nasarawa State University, Prof Uche Uwaleka, said prioritising intervention, creating awareness to ensure patronage, incorporating non-interest financial services into CBN intervention programmes and mobilising banks that offer such products for greater outreach and impact were some of the areas that must be covered.
“Other areas include massively rolling out agents’ network and creating awareness to increase the adoption of digital financial services as simple, flexible and easy alternative channels for reaching remote areas and rural hinterlands,” he added.
Enumerating some of the existing challenges likely to confront the strategy, a financial analyst and fund manager, Mr. Francis Ekundayo, explained that the existence of multiple literacy campaign programmes, which resulted in duplication of efforts and the risk of conflicting messages, indicated the absence of secure and sustainable funding structure for harmonised financial literacy programme in the country.
“While we know there is serious problem, there is a major gap in our understanding of the root causes of financial exclusion and under-provision, and what interventions are actually at work, to overcome the underlying causes. Moreover, there are major gaps in our understanding of how exclusion affects specific groups of consumers or regions in the country,” he said.
Former Director-General, West African Institute for Financial and Economic Management, Prof. Ekpo Akpan, explained that a combination of low disposable incomes and the economics of access in retail financial services meant that these groups of people were not commercially viable for mainstream retail financial providers.
“Alternatively, consumers may face actual exclusion because of disability. In this case, there may be limits to what the market can provide and innovative business models may be needed to change the economics of access or remove the barriers to access and develop affordable, accessible products and services,” he said.
The apex bank has been at the forefront of driving financial inclusion in Nigeria, launching multiple initiatives, such as the financial inclusion strategy, the cashless policy, and the Micro, Small and Medium Enterprises Development Fund.
Other initiatives are the new Electronic Identification Cards, championed by the National Identity Management Commission, which might grant more Nigerians access to financial services.
Director, Banking Supervision, CBN, Mrs. Tokunbo Martins, admitted that the apex bank considered the rate unacceptable for a country that wants to attain the status of a financial hub for West Africa by 2020.
She explained that Nigeria would attain 95 per cent financial inclusion by 2024, adding that about six million people would be captured in the banking system every year.
To achieve this, she said that banks had been mandated by the CBN to increase customer base, customer savings and block operations leakages in the system. Other strategies include creating awareness on electronic banking, agent banking and expanding rural banking in the country.
The CBN Governor, Mr. Godwin Emefiele, had said that the National Financial Inclusion Strategy was being reviewed for greater effectiveness and impact, and that stakeholders would be sufficiently mobilised to participate.