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Nigeria’s formal financial inclusion grows to 64% in 2023, says EFinA report

The Access to Finance (A2F) survey report presented by Enhancing Financial Innovation and Access (EFInA) on December 13, 2023, at Eko Hotel, Lagos, revealed that despite challenging macroeconomic headwinds, Nigeria’s formal financial inclusion improved to 64% in 2023 from 56% recorded in 2020. The growth in financial inclusion in 2023 was majorly fueled by marginal growth in the banking population and growth in the use of non-bank financial institutions (such as Fintechs), which rose to 12% in 2023 from 5% in 2020 while financial exclusion persisted due to high level of poverty and difficulty in accessing financial service providers in remote areas.

The General Manager, EFInA, Oluwatobi Eromosele, made the presentation of the survey results, noting that the 2023 A2F survey report was the eighth in its series of financial inclusion reports for Nigeria and had adopted a new methodology in 2023 to capture the changing population dynamics in Nigeria.

The new methodology was used to update previous years’ financial inclusion rate, with findings revealing that 2020 formal financial inclusion in Nigeria, which had been reported to stand at 64.1%, was adjusted to 56%. The report covers four broad spectrums: Access, Usage, Quality, and Impact.

Summary of Findings from the 2023 A2F Report

  • Nigeria’s total (formal and informal) financially included population rose to 74%, while 26% remained financially excluded in 2023 from 67% in 2020.
  • Nigeria’s formal financial inclusion rose to 64% in 2023 from 54% in 2020 while informal financial inclusion stood at 10% in 2023, a 1% point fall from 11% in 2020.
  • Financial exclusion improved from 32% in 2020 to 26% in 2023.
  • In 2023, 1 in 4 Nigerian adults remained financially excluded in Nigeria.
  • Rural communities are less likely to be formally included than urban communities. 37% of rural Nigerians are financially excluded compared to 17% of urban Nigerians.
  • Financial exclusion is most severe in Northern Nigeria, with the Northeast (47%) and Northwest (47%) remaining the most excluded regions in Nigeria.
  • The banked population increased from 51% in 2020 to 52% in 2023, while the population adopting non-bank financial services rose from 5% to 10%.
  • Adults who rely on informal financial service providers declined to 10% in 2023 from 11% in 2020.
  • Mobile phone adoption rose to 93% in 2023 from 90% in 2020 with use of smart phone dropping to 27% from 28% in 2020.
  • The gender gap is widening, from 8% in 2020 to 9% in 2023, demonstrating the need to focus on interventions that support female inclusion intentionally.
  • Challenges related to fraud incidence, poor service, high banking costs, and a lack of clarity in financial information reduce the quality of financial services in Nigeria.
  • one-third of adults report low financial capability, and relatively low access to formal efficient mechanisms to meet financial needs.
  • High liquidity distress and challenging economic conditions ultimately impact financial well-being with 12% point drop in the proportion of financially healthy adults.

In her remarksDr Agnes Martins, the Board Chair of EFInAnoted that the 2023 survey would shed light on financial accessibility and serve as a stepping stone that will democratize access to finance for all. According to the Chairman, access to finance should be considered a fundamental human right, and the survey should serve as “a tool that will break the back of financial exclusion in Nigeria.” She called for “…intentional, deliberate strategies…” as “all stakeholders… further analyse the data and work collaboratively to develop solutions.”

In his keynote address at the launch event, the Governor of the Central Bank of Nigeria, Mr. Yemi Cardoso, represented by Mr. Chibuike Nwagerue, Director of Other Financial Institutions, CBN, said: “Nigeria’s drive for financial inclusion has been a long, sometimes arduous journey. We have monitored the trend over the years and have sometimes worried about the slow pace of progress in achieving an inclusive economy. The results shared today indicate that with sustained dedication and commitment, we can achieve our collective goal of financial inclusion for all. As an ecosystem, we must redouble our efforts to develop innovative solutions to enable inclusion and be intentional about how we do it.”

In his speech, the special guest of honour and Director General of the Securities and Exchange Commission, Mr. Lamido Yaguda, represented by Mr. Temidayo Obisan, Executive Commissioner, Operations, noted that increased inclusion was fundamental in fighting multidimensional poverty in Nigeria. The SEC DG pointed out the role of a 10-year capital market master plan, which contains initiatives for promoting inclusion and financial deepening in Nigeria, such as the onboarding engagement of more Fintechs brokerage firms.

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