Challenges to financial inclusion in Nigeria

Financial inclusion is a key aspect of economic development, ensuring that all individuals have access to essential financial services such as banking, credit, and insurance. In Nigeria, efforts have been made to reduce the percentage of financially excluded adults from 52.5 percent in 2008 to 39.5 percent in 2014, only to see a slight increase to 41.5 percent in 2016. There are several hurdles to expanding financial inclusion in the country, but initiatives are underway to address these challenges and bring more individuals into the financial ecosystem. One of the key initiatives aimed at promoting financial inclusion in Nigeria is the social safety net intervention program of the federal government. This program offers various payments and transfers as well as account initiatives to include financially excluded individuals in the financial inclusion segment, in line with the vision of achieving 2020 financial inclusion targets. Eligibility and identification are crucial aspects that need to be addressed to bring more individuals into the financial fold. Cashless systems play a vital role in enabling financial inclusion, and efforts to reintroduce cashless transactions can help drive inclusion initiatives forward. Affordability is another barrier to financial inclusion in Nigeria, as income levels impact an individual's ability to access financial services. The recession experienced in the country has also affected financial inclusion, with a drop observed from 2014 to 2016. Identifying customers remains a challenge, especially for individuals in rural areas who may lack proper identification documents. The introduction of tools like Tier 1 KYC and leveraging digital financial services can help bridge this gap and onboard more customers into the financial system. The recent directive mandating the full feature bank accounts to be linked to the Bank Verification Number (BVN) poses a challenge to financial inclusion, particularly for customers who do not have BVNs. BVN is a biometric verification number introduced by the central bank to uniquely identify customers for transactions. However, the requirement for customers to visit bank branches for BVN registration presents accessibility challenges, especially for individuals in remote areas. Discussions are ongoing with regulators to address this issue and ensure that financial inclusion efforts are not hampered by the BVN directive. It is essential to find solutions that balance security requirements with the need to expand financial access to all segments of the population. In conclusion, overcoming the challenges to financial inclusion in Nigeria requires a multi-faceted approach that addresses eligibility, affordability, identification, and accessibility barriers. By implementing innovative solutions and leveraging digital technologies, the country can work towards bringing more individuals into the financial ecosystem, promoting economic growth and financial stability for all.