The 2016 Brookings Financial and Digital Inclusion Project Report has scored Nigeria high in commitment made to drive financial inclusion across the country.
Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society.
Technology Times review of the report shows that although Nigeria is yet to reach the scale in mobile money, the report rated Nigeria 94% in commitment to financial inclusion service considering the effort by government to advance digital payment services in the country.
[quote font=”georgia” font_size=”22″ font_style=”italic” align=”left” arrow=”yes”]On mobile capacity of financial inclusion, the report rated Nigeria 78%, noting that the mobile capacity dimension indicates the existence of opportunities for enhanced adoption of mobile money and other digital financial services that leverage mobile infrastructure in the country.[/quote]On mobile capacity of financial inclusion, the report rated Nigeria 78%, noting that the mobile capacity dimension indicates the existence of opportunities for enhanced adoption of mobile money and other digital financial services that leverage mobile infrastructure in the country.
Authors of the report say that “while mobile money has not yet reached scale in Nigeria, several recent initiatives led by the government of Nigeria to advance digital payment services, agent banking, and consumer protection initiatives should promote increased adoption of formal financial services by expanding distribution points, increasing consumer confidence, and reducing crowding within the mobile money market.”
The report also noted that Nigeria has demonstrated clear national-level commitment to advancing financial inclusion, rating the regulatory environment at 83%. It says the targets of the National Financial Inclusion Strategy (NFIS) initiated by the Central Bank of Nigeria (CBN), which is a signatory of the Maya Declaration, is an indication of its commitment towards promoting financial inclusion.
“The NFIS outlined the roles and responsibilities of key stakeholders, acknowledged the challenges of broadening financial inclusion in Nigeria, and established specific targets for payments, savings, credit, insurance, pensions, branches of deposit banks and micro finance banks. Initial targets within the NFIS included more than halving the number of financially excluded Nigerians and expanding the penetration of payment products for the adult population to 70 percent by 2020,” it says.
While noting the Nigeria’s effort to include women in financial inclusion, the report says the financial access challenges faced by women and other marginalised groups merit particular consideration.
According to the report, “in Nigeria, MasterCard and UN Women have partnered on an initiative that aims to provide women with information on the benefits of a formal identification program and to enroll half a million Nigerian women in the program.
“Full financial inclusion cannot be achieved without addressing the financial inclusion gender gap and accounting for diverse cultural contexts with respect to financial services,” it adds.
According to the report, developing economies should promote the development and implementation of digital identity programs, in order to address the gender gap in financial inclusion, which it says would yield benefits not only for women, but also for their families, communities, and beyond.
While making recommendations on advancing an inclusive regulatory environment, the report suggests that regulators should engage in sustained dialogue with private sector representatives and other financial inclusion stakeholders to develop and refine regulations that promote a level playing field for providers and ensure adequate consumer protection for customers.
“Central banks, ministries of finance, ministries of communications, banks, non-bank financial service providers, and mobile network operators have major roles in achieving greater financial inclusion and should coordinate closely with respect to policy, regulatory, and technological advances.”
The document also recommended that both digital and traditional providers should be permitted to adapt know-your-customer requirements and other combating the financing of terrorism and antimoney laundering mechanisms to reflect the level of risk posed by underserved customers engaging in low-value transactions in order to scale adoption of these services among the target market.
The Brookings Financial and Digital Inclusion Project (FDIP), launched in summer 2014, examines access to and usage of secure, affordable formal financial services among underserved populations. The objective of FDIP is to provide policymakers, the private sector, representatives of non-governmental organizations, and the general public with information that can help improve financial inclusion in their respective countries and beyond.