Africa’s biggest economy can take lessons from other countries like Kenya and India which have been successful in including more of their citizens into the financial net, thereby increasing their financial inclusion rate.
This is important for Nigeria as its financial inclusion rate of 64 percent as of 2020 was 16 percentage points lower than its set target of 80 percent. And the Federal government has updated its target to 95 percent by 2024.
Speaking at a recent international financial inclusion conference, Evelyn Kilonzo, Senior Manager & Portfolio Lead, Financial Inclusion & Innovation, BSD, Central Bank of Kenya said, their achievement of 83.7 percent financial inclusion rate was thanks to mobile phones.
“Our population like Nigeria and other African countries have a lot of people who live in the rural areas but work in the cities. So, the principle of getting money home is what really drove mobile financial services in 2017 with the introduction of M-PESA,” she said.
She further said infrastructure helped the penetration of mobile financial services which uses basic feature phones using the USSD technology. “Currently, we have 132 percent penetration of mobile phones, meaning that within the adult population, people have one more than one phone.”
Kilonzo added that having the right regulatory framework also provided the success to mobile financial services.
“When we began rolling our financial services, there was no regulatory environment suitable for the service, which is money transfers.
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“But we were able to see some spaces within the law that could allow for a test and learn approach, where we were learning how to roll out this kind of service and then generate regulations as we go along,” she said.
For India which has a bank penetration rate of 77.5 percent, Saurbah Garg, chief executive officer of Unique Identification Authority of India said technology has been a big enabler for them.
“We continue to use it to ensure that the basic financial needs of people who live in villages, remote areas and who are not so literate are met,” Garg said.
He said nearly 400 million bank accounts were opened due to a digital identity. “Once they are onboarded into the banking system, the second major challenge is to ensure access for the different services that the banking system has to offer.”
Financial inclusion is when individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit, and insurance – delivered in a responsible and sustainable way, according to the World Bank.
The important role played by financial inclusion in reducing extreme poverty and boosting shared prosperity, has led to its inclusion among the enablers for seven of the 17 Sustainable Development Goals 2030.
Financial inclusion is a core priority for the Central Bank of Egypt, said Rasha Negm, Head of Fintech & Innovation of Central Bank of Egypt.
“As a Central Bank, we are proactively including more financial and banking services for all segments of the economy as our financial inclusion rate for adults having financial transaction accounts from 17. 1 million in 2016 to 36.8 million, this is like 115 percent growth rate in five years,” she said.