Financial inclusion [FI] goes beyond banking and payments. It addresses economic development and gender inclusion goals that are also critical to national development, Lagos Business School (LBS) has declared in its Digital Financial Services in Nigeria: State of the Market Report 2017. The report was unveiled today at its Financial Inclusion Conference.http://sustainabledfs.lbs.edu.ng/FI-Resources/SoMR-Full_Report-2017.pdf
Author of the report Mrs. Olayinka David-West with contributions from Olubanjo Adetunji, Olawale Ajai, Timothy Aluko, Olalekan David, Nkemdilim Iheanachor, Ikechukwu Kelikume, Omotayo Muritala, Ijeoma Nwagwu, Victor Okhuese, Adedoyin Salami, Ibukun Taiwo and Immanuel Umukoro
LBS noted that the levers of FI fall across three pivotal nodes. This includes the consumer (demand), provider (supply) and government (institutions). Fl is a prerequisite for eradicating poverty and achieving the sustainable development goals (SDGs).
A legislative bill establishing the National Poverty Eradication Commission (NAPEC) was passed in 2016 but it has become a substantive legislation. Financial empowerment and independence can be employed to address gender inequality and the rights of women.
17 States of the Market Report Addressing financial inclusion can be likened to killing multiple birds with one stone and as such, it calls for an inclusive approach that will have far-reaching impacts on development. However, the range of market-enabling policy recommendations required to stimulate FI and DFS further highlight implementation and enforcement gaps attributed to capacity, institutional frameworks, political will and other factors that question the efficacy of current interventions.
There is no magic pill to solve the challenge of slow progress in the attainment of Nigeria’s goal of reducing financial exclusion to 20 percent by 2020. However, better evidence-based research on the precise nature of the problem and ameliorative policy reform measures that this research report presents, if promptly adopted and systematically implemented, should greatly aid the race to achieve the goal of 80 percent financial inclusion by 2020.
According to Mrs. David-West, Nigeria has the highest number of licensed mobile money operators (MMOs), but the low adoption rates, primarily by the under-banked and unbanked has been worrisome to industry players-regulators and licensees.
She lamented that that notion supporting digital financial services (DFS), mainly through ubiquitous mobile devices as a magic bullet for enhancing access and utility of financial services is still in its nascent stages.
“Through research engagements, the various dimensions of Nigeria’s financial inclusion conundrum are the primary focus of the Sustainable and Inclusive Digital Financial Services (SIDFS) initiative hosted at the LBS. By generating an evidence base, we aim to provide thought leadership and insights to address the financial inclusion phenomenon across all dimensions of the ecosystem.
“In 2016, the initiative published the first DFS State of the Market Report, which focused on two pivotal pillars of financial inclusion development and growth – the demand and supply perspectives. By profiling under-banked and unbanked consumers, we identified characteristics of the underserved from the community, through household and individual lenses. The customer segments were profiled using demographic parameters as well as assets (identity, phone ownership/access) and capabilities (language, digital). These profiles are intended to enhance supplier know-how and aid product development capabilities.
“The in-depth analysis of the supply-side identified 3 business models for delivering sustainable DFS, namely focused, specialist or hybrid. The study went further to describe the portfolio of organizational assets, resources and capabilities to efficiently deliver DFS to under-banked and unbanked consumers. The themes presented in this edition expand the discussion beyond the core ecosystem and provides insights into the institutional frameworks necessary for financial inclusion”, she explained.
She added that the report addresses the third ecosystem pillar – the institutional/regulatory component, with specific focus on the legislation, policies and regulations. The policy analysis unearthed critical policy constraints and guided by the doctrinal interpretations of existing laws, market-enabling policy solutions evolved. The presentation focuses on material financial inclusion issues, the guiding laws and solution proposals.
She informed that the report does not contain legislative bills but forms a premise for the drafting of new laws, policies and regulations. Finally, these market-enabling policies or solutions for creating an ecosystem for delivering DFS to the unbanked require the cooperation and collaboration of public institutions, the private sector and civil society.
“Financial inclusion for all”, she emphasized, “is a reality when it is a national priority. We hope this report enlightens you and enjoins your collaboration in addressing financial inclusion in Nigeria”.