Financial Inclusion

 

financial inclusion is the access to essential financial products and services that individuals and businesses require to meet their needs.

Financial inclusion is considered one of the key elements to enabling people from low socio-economic backgrounds to participate in the formal economy and access to financial opportunities and solutions. 

Bottlenecks to financial inclusion can include:

  • income level/affordability of products and services

  • eligibility (lack of formal identification or available collateral)

  • technology/internet access

  • gender

  • financial literacy

  • physical barriers (distance/transportation to existing bank branches)

The livelihoods of women and girls (and in turn their families and surrounding communities) can be improved by empowering women to achieve financial independence that is both sustainable and inclusive.  In order to achieve positive economic outcomes, a gendered approach to the investment in human capital, specifically education, health and nutrition is pertinent.

The total percentage of the population in Nigeria who have accounts open with formal financial institutions has increased for both sexes, however the gender gap in this figure has nearly doubled (FINDeX, 2019). Females went from 26% in 2011 to 33.6% in 2014, while males increased from 33.3% in 2011 to 54.3% in 2014. 

Experts report that empirical data from a slew of microfinance firms in Nigeria denote a positive correlation between loan repayment rates and female clients, affirming that increasing access to needed financial solutions and products and promoting female financial inclusion is integral to reducing extreme poverty (Ogunley, 2017).

Bottlenecks to financial inclusion can include: income level, physical barriers (particularly related to distance and transportation in rural areas, financial literacy, affordability of products and services, and eligibility (related to national ID, available collateral, or other formal requirements).  Another roadblock to be considered is inclusive banking policy. In many developing countries the government can act as a negligible bystander to the disempowerment of women in the economic system (Suresh & Dutta, 2018). Alliance for Financial Inclusion (AFI) covers barriers, opportunities and progress made in Nigeria with regard to women’s financial inclusion. The report upholds that consideration of gender differences in this realm of economic policy is imperative to reducing poverty and income inequality in Nigeria. 

While the challenges to financial inclusion are great, particularly for women, opportunities for inclusion shine through as the number of mobile and digital financial services grow and products are being tailored to the “unbanked”. Nigeria, like much of Africa and the rest of the Global South, is in a unique place to leapfrog development.