Financial inclusion is increasingly recognised as a critical driver of economic growth and poverty reduction. The Central Bank of Nigeria (CBN) has been at the forefront of promoting financial inclusion in Nigeria, implementing a range of strategies to ensure that every Nigerian has access to financial services. This piece explores the CBN’s strategies for financial inclusion, highlighting their significance, impact, and future direction.
The Importance of Financial Inclusion in Nigeria
Nigeria, with a population exceeding 200 million, is Africa’s largest economy. However, a significant portion of its population remains unbanked or underbanked. According to the 2020 Access to Financial Services Survey, approximately 36% of Nigerian adults, representing about 38 million people, still lack access to formal financial services. This exclusion disproportionately affects women, rural dwellers, and the economically disadvantaged, limiting their ability to participate in the economy.
Financial inclusion is vital for fostering inclusive economic growth, reducing poverty, and achieving broader socio-economic development. It enables individuals and businesses to access credit, save securely, and invest in opportunities that can improve their livelihoods.
CBN’s Financial Inclusion Strategy
The CBN’s financial inclusion strategy, launched in 2012, is a comprehensive plan aimed at reducing the percentage of financially excluded adults in Nigeria to 20% by 2020. Although the target was not fully met—financial exclusion stood at 36% in 2020—significant progress has been made, and the CBN continues to implement and refine its strategies.
1. Agent Banking and Digital Financial Services
Agent banking is a cornerstone of the CBN’s strategy, bringing banking services to the doorsteps of Nigerians in remote and underserved areas. As of 2022, there were over 1.4 million agents across the country, compared to just 20,000 in 2017. This expansion has made financial services more accessible, particularly in rural areas, contributing to a reduction in financial exclusion.
In parallel, the CBN has promoted digital financial services as a critical enabler of financial inclusion. Mobile money, for instance, has seen rapid growth, with 15% of Nigerian adults using mobile money services in 2020, up from 3% in 2015. The introduction of the eNaira, Nigeria’s digital currency, in 2021 is another significant step, aimed at broadening access to financial services, particularly among the unbanked.
2. Financial Literacy and Consumer Protection
Financial literacy is a vital component of the CBN’s financial inclusion strategy. The CBN, in collaboration with various stakeholders, has launched several financial literacy campaigns, targeting different segments of the population, including women, youth, and micro, small, and medium enterprises (MSMEs). The goal is to empower Nigerians with the knowledge and skills needed to make informed financial decisions.
In tandem with literacy efforts, the CBN has implemented robust consumer protection frameworks. These frameworks ensure that financial products are fair, transparent, and accessible, which is essential for building trust in the financial system and encouraging more people to use formal financial services.
3. Microfinance and SME Support
Microfinance is another critical element of the CBN’s approach. The CBN has licensed over 900 microfinance banks across the country, providing financial services to those traditionally excluded from the formal banking sector. These banks play a crucial role in supporting MSMEs, which are the backbone of Nigeria’s economy, contributing over 50% to the nation’s GDP and employing over 80% of the workforce.
The CBN has also launched specific initiatives to support MSMEs, such as the N220 billion MSME Development Fund, which provides affordable credit to small businesses. This initiative is particularly important in a country where access to finance remains a significant barrier to business growth.
Challenges and Future Directions
Despite the significant progress made, challenges remain in achieving full financial inclusion in Nigeria. Infrastructure deficits, particularly in rural areas, and a lack of digital literacy among the population are major barriers. Additionally, the COVID-19 pandemic has disrupted economic activities and exacerbated existing inequalities, making the need for inclusive financial systems more urgent than ever.
To address these challenges, the CBN is focusing on deepening digital financial inclusion through the expansion of mobile money services, enhancing the regulatory environment to foster innovation, and continuing to promote financial literacy and consumer protection. The CBN is also exploring partnerships with the private sector, fintech companies, and international organisations to leverage technology and innovative solutions for financial inclusion.
The CBN’s strategies for financial inclusion are pivotal for Nigeria’s economic future. By expanding access to financial services, the CBN is not only empowering individuals and businesses but also laying the groundwork for a more inclusive economy.
