Banking the Unbanked: bridging the financial inclusion gap in Nigeria

“I don’t have an account, and I can never have one till I die. My pocket and my car are secure enough for me, no matter how much I have,” an Abuja resident, Ibrahim Gombe, told Premium Times. Mr. Gombe is one of over 30 million adult Nigerians who do not trust the nation’s banking system and for this and other reasons explored below, remain financially excluded.

Financial inclusion is defined as the availability and equality of opportunities to access financial services and refers to efforts aimed at removing the barriers that exclude individuals and businesses from participating in the financial sector and using its products and services to improve their lives.

Africa lags the rest of the world in the race to achieve Universal Financial Access and currently, Nigeria contributes a disproportionate amount to the number of financially excluded persons in Africa despite her position as the largest economy on the continent. Although financial literacy plays a role, majority of the figures can be traced to a small number of factors most common of which are: lack of money, distance from a financial service provider, lack of necessary documentation and lack of trust in financial service providers.

According to a 2018 Access to Financial Services (A2F) survey conducted by Enhancing Financial Innovation and Access (EFInA), 36.6 million adult Nigerians out of the 99.6 million (36.8 per cent) total adult population are financially excluded, with 44.1 per cent being male and 55.9 per cent female. A closer look at the financial inclusion gap in Nigeria also suggests a higher concentration of financially excluded persons in the north relative to the south.

Today, the principle of financial inclusion experiences a greater level of significance due to new realizations around its role as a driver of economic growth. Financial inclusion has therefore become an explicit strategy for accelerated economic growth and is seen as critical to achieving inclusive growth in Nigeria and other parts of the developing world.

Recent attempts at bridging the financial inclusion gap

Over the years, financial services industry stakeholders have responded to these financial inclusion impediments by driving and implementing various initiatives and policies. In 2005, the government launched the National Microfinance Policy which provided the supervisory and regulatory framework to facilitate the growth of privately-owned microfinance institutions and to encourage the participation of third sector institutions (such as cooperative societies). Another initiative in this direction was the 2013 insertion of financial inclusion as one of the cardinal objectives of the Nigerian Financial System 2020 (FSS 2020).

As part of plans to become one of the world’s largest economies, Nigeria introduced the National Financial Inclusion Strategy (NFIS) in 2012 with a goal to increase the number of Nigerians with access to financial services from ~30 per cent to ~80 per cent by 2020. Against this backdrop, the Central Bank of Nigeria (CBN) also granted approvals-in-principle to three new Payment Service Banks (PSBs) in 2019 to make banking services available to over 60 million financially excluded Nigerians by 2020. To further broaden the reach of financial services in remote communities, regulations guiding the operations of Payment Solution Service Providers (PSSPs) allowed companies other than banks to offer banking services to customers.

In collaboration with deposit money banks, mobile money operators, and banking agents, the CBN launched the Shared Agent Network Expansion Facilities (SANEF) project in March 2018 with the primary objective of accelerating financial inclusion in Nigeria. In addition to policy thrusts introduced by the CBN to reduce the economy’s reliance on cash transactions, commercial banks also rolled out various E-banking products and supported multiple electronic payment modes based on the implicit assumption that reduced banking costs and a more efficient payment system will encourage more individuals and business to embrace the formal financial service ad products.

Other steps that have been taken towards financial inclusion include the efforts by commercial banks to improve the ease with which new accounts can be opened, with a particular focus on artisans and other low-income earners. Savings accounts at many banks have been categorized into three tiers. Opening a Tier 1 savings accounts – the category with the least number of requirements, mostly for low-income earners, artisans, and small business owners requires only a passport photograph.

Efforts of fintech startups such as Opay, Paga, etc and telcos such as MTN in improving financial inclusion in Nigeria cannot be overemphasized either. With a combined strength of over 120,000 active agent networks, these startups are leading the charge to include the bulk of Nigeria’s unbanked and under-banked population in rural locations by offering relatively cheap mobile money services.

Nigeria – picking up pace in the race to financial inclusion

The CBN had set a target to provide 80 per cent of Nigeria’s total adult population with financial services and products by 2020. Presently, Nigeria is not on track to meet this target set out in the National Financial Inclusion Strategy (NFIS) of 2012. What are some of the quick wins that can ramp up the pace of financial inclusion in Nigeria?

Improved literacy (financial and otherwise) among consumers and a strong consumer protection framework are expected to result in healthy competition, increased transparency, and improved retail adoption of tailored financial products and services. Growth in indices such as the number of active POS machines in remote communities, internet penetration rate, the number of USSD-enabled mobile phones, user-base for non-cash payment modes etc will also signal a deeper penetration of financial products and services.

Priority must be given to the North-West and North-East regions, that retained the spots with the highest number of financially excluded people in Nigeria – 73 percent and 66 per cent respectively when compared to 36 percent in the South-West.

The financial institutions’ stakeholders must also leverage the media in addressing some of the misgivings of individuals who are financially excluded by choice and driving increased awareness about the benefits of participating in an organised financial system.

Government must provide incentives to encourage financial institutions to invest in creating more branches, recruiting and upskilling human capital, introducing custom financial products etc in rural areas, otherwise considered low priority by these institutions, to deepen penetration. Other more nuanced factors contributing to financial exclusion, such as religious beliefs on conventional banking and finance may also be addressed through the creation of tailored retail and wholesale financial solutions to address the needs of such groups

The Government’s primary role is hinged on creating an enabling environment for financial services operators and the consumers to interact in a symbiotic manner.


Financial Inclusion is a critical development policy priority in Nigeria and all stakeholders have an important role to play in narrowing the inclusion gap. Analysts have linked the staggering levels of financial exclusion in Nigeria to its equally high poverty levels, however, this implies that financial products and services are not yet affordable or designed to fit low income users. The inclusive growth that drives unity and sense of belonging may remain a mirage until majority of the population can access timely, transparent, and reliable financial services.

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