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19 Facts you Must Know about Digital Financial Services in Nigeria

Financialtechnology brings you a total of 19 salient facts from The Lagos Business School (LBS) digital financial report tagged Digital Financial Services in Nigeria: State of The Market Report 2017.http://sustainabledfs.lbs.edu.ng/FI-Resources/SoMR-Full_Report-2017.pdf

Author of the report, Olayinka David-West benefitted from her colleagues including Olubanjo Adetunji, Olawale Ajai, Timothy Aluko, Olalekan David and Nkemdilim Iheanachor.

Other contributors are Ikechukwu Kelikume, Omotayo Muritala, Ijeoma Nwagwu, Victor Okhuese, Adedoyin Salami, Ibukun Taiwo and Immanuel Umukoro.

The report addresses the DFS’s 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. The report does not contain legislative bills but forms a premise for the drafting of new laws, policies and regulations. Below are the 19 facts:

  1. FINANCIAL INCLUSION: GLOBAL PERSPECTIVE

According to the World Bank, more than 2 billion people remain financially excluded.

  1. FINANCIAL INCLUSION: THE NIGERIAN REALITY

In 2012, Nigeria signed the Maya Declaration, committing to reducing financial exclusion to 20 percent by 2020.

  1. FINANCIAL INCLUSION

Financial inclusion measures provide useful insights into consumer perceptions and adoption of financial services.

  1. FINANCIAL SERVICES PENETRATION

Insurance penetration among the banked, under-banked and unbanked is below 1 percent.

  1. MOBILE MONEY PENETRATION

Lack of mobile money awareness amongst under-banked and unbanked consumers inhibits adoption.

  1. HOUSEHOLD PERSPECTIVE

Households of the financially excluded are more substantial (4 or more persons) and have a combined income below the World Bank poverty threshold of $1.90.

  1. DEMOGRAPHIC CHARACTERISTICS

In the quest for financial inclusion, the youth (single or married) and widowed, are most vulnerable.

  1. SOCIO-ECONOMIC CHARACTERISTICS

The vulnerability gap of the financially excluded widens as a result of education, employment status and income levels.

  1. DIGITAL ASSETS

Mobile phone penetration (device ownership or access) remains an inhibitor of digital financial services adoption.

  • IDENTIFICATION DOCUMENTS

The ubiquity of the voter’s identification warrants efforts for increasing access to identification documents acceptable and verifiable for financial transactions.

  • COMPETENCIES

The literacy and numeracy levels do not inhibit financial inclusion; however, non-English language access to financial services will be advantageous.

  • COMMUNITY PERSPECTIVE

Female urban migration is on the rise in the North West, North Central and South West regions.

  • HOUSEHOLD PERSPECTIVE

Income does not marginalise female-occupied households.

  • SOCIO-ECONOMIC CHARACTERISTICS

Despite lower levels of education and earning power, under-banked females are economically engaged.

  • ASSETS AND CAPABILITIES

Women still lack access to and ownership of mobile devices.

  • COMPETENCIES

Women are just as literate and numerate as men, but unbanked females are more comfortable communicating in English and Hausa.

  • POLICY INSIGHT 1

The DFS policy is still not well spelt out. The CBN needs to go the extra mile to articulate this.

  • POLICY INSIGHT 2

Policy statements are confusing. There is no penalty for poor service delivery neither is there any compensation for the end user. Both the CBN and NCC seem not to be on the same page.

  • POLICY INSIGHT 3

The early involvement of regulators short-circuited innovation and did not allow for right fit service discovery that suits the market. All operators were constrained by policy guidelines. The policy has not been effective so far.