By 
The International Monetary Fund (IMF) has outlined five crucial policy options for advancing financial inclusion in Nigeria, the largest economy in Africa.
These strategies encompass the expansion of financial access points, promotion of digital financial services, enhancement of financial literacy, refinement of the fintech operational framework, and augmentation of the features and applications of the Central Bank Digital Currency (CBDC).
The IMF stated in a recent report that while progress has been made in terms of financial inclusion, the achievement falls short of the goals set in Nigeria’s 2012 financial inclusion strategy.
It observed that the percentage of the adult population holding a bank account has consistently grown and now constitutes over two-thirds of financially included individuals.
“However, this increase has largely involved individuals who have used the non-bank and informal financial sector,” the report highlighted.
Financial inclusion is defined by the World Bank as the provision of affordable and useful financial services to individuals and businesses, addressing their specific needs such as transactions, payments, savings, credit, and insurance, all delivered responsibly and sustainably.
Due to its role in reducing extreme poverty and fostering shared prosperity, financial inclusion has been identified as a catalyst for seven out of the 17 Sustainable Development Goals 2030.
According to Enhancing Financial Innovation & Access, Nigeria’s financial inclusion rate rose to 64.1% in 2020 from 63.2% in 2018.
However, this 2020 figure remained below the Central Bank of Nigeria’s target of 80% for that year. The apex bank later revised the target to 95% by 2024.
The authors of the IMF report indicated that while more people have been integrated into the banking sector, significant gaps in overall financial exclusion, particularly related to specific financial products, continue to exceed official targets by a significant margin.
Reasons for these inclusion gaps, including gender, education, income, and geographical disparities, have been attributed to factors like distant access to financial services, limited financial literacy, and relatively low usage of mobile money and payments.
The IMF experts suggested that policies should continue to focus on improving networks and access points, while also prioritizing identity onboarding and reshaping financial education strategies.
Regarding the Central Bank of Nigeria’s efforts to promote digital currency awareness, the IMF disclosed that the adoption of the e-Naira has been slower than expected.
“After an initial strong uptake, wallet downloads have decelerated, reaching only 0.8% of bank accounts, and merchant wallet downloads represent about 10% of merchants with point-of-sale terminals,” the report stated.
Wallet activity has also been noted to be low, with many wallets appearing inactive. Since its launch, the average weekly eNaira transactions have only accounted for eight percent of wallets, with an average transaction value of around N53,000 (approximately $120).
In the wake of Nigeria’s introduction of the e-Naira in October 2021, several other Sub-Saharan African central banks have been exploring digital currencies to enhance their payment systems.
These countries include South Africa, Ghana, Uganda, Kenya, Rwanda, Mauritius, Madagascar, Zimbabwe, Eswatini, Namibia, and Zambia.
Central banks worldwide are evaluating the potential issuance of their own Central Bank Digital Currencies (CBDCs), with a keen focus on the risks and opportunities they present, as highlighted by Queen Máxima of the Netherlands, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development.
Queen Máxima emphasized the potential of CBDCs to expand access for the underbanked and vulnerable, while also acknowledging the new challenges and risks they could introduce. She advised proceeding with careful consideration and thorough analysis.
Comments