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Financial Inclusion in Nigeria

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What is Financial Inclusion?

Financial inclusion is the availability and accessibility of financial services and products to all individuals and businesses, regardless of their income level, social status, or geographical location. 

The aim of financial inclusion is to ensure that everyone has access to basic financial services, such as savings accounts, credit, insurance, and payment systems.

Brief history of financial inclusion initiatives

Financial inclusion is not a new concept. The concept of providing financial services to underserved populations dates back to the 19th century with the establishment of credit unions and cooperative banks. 

However, it was not until the early 2000s that financial inclusion became a key focus for policymakers, financial institutions, and development organizations around the world. Financial inclusion has since gained global attention due to its potential to reduce poverty, promote economic growth, and enhance social welfare. 

Today, financial inclusion is recognized as a critical tool for achieving the United Nations Sustainable Development Goals (SDGs), particularly SDG 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth). 

In this article, we will explore the importance and barriers to financial inclusion, the role of financial institutions in promoting financial inclusion, government and policy interventions, technological innovations and the future of financial inclusion initiatives.

Examples of financial inclusion in Nigeria and around the world

These examples demonstrate how financial inclusion has been achieved through approaches such as mobile technology, government schemes, microfinance institutions, etc.

1. Paga in Nigeria

Paga is a Nigerian fintech company that provides a platform for mobile payments and financial services. They have over 19 million users and provide services such as bill payments, airtime top-ups, and money transfers. Paga’s platform has helped to promote financial inclusion in Nigeria by providing access to financial services for people who are unbanked or underbanked.

2. M-Pesa in Kenya

M-Pesa is a mobile money service launched by Safaricom, a mobile network operator in Kenya. The service allows users to transfer money, pay bills, and purchase goods and services using their mobile phones. Today, M-Pesa has more than 52 million users and has expanded to other countries in Africa.

3. Jan Dhan Yojana in India

Jan Dhan Yojana is a financial inclusion scheme launched by the Indian government in 2014. The scheme aimed to provide every household in India with a bank account, as well as access to credit, insurance, and pension services. Within a year of its launch, the scheme had opened more than 190 million bank accounts and has since expanded to provide additional services.

4. FINCA in Uganda

FINCA is a microfinance institution that operates in several countries, including Uganda. They provide financial services to low-income individuals who do not have access to traditional banking services. The institution provides small loans, savings accounts, and other financial services to help individuals and families improve their quality of life.

5. The Grameen Bank in Bangladesh

The Grameen Bank is a microfinance institution founded by Muhammad Yunus in Bangladesh in 1983. The bank provides small loans to low-income individuals, particularly women, to help them start or grow a business. The Grameen Bank has since become a model for microfinance institutions around the world.

Types of financial inclusion

  1. Geographic inclusion: This ensures that financial services are available in all parts of a country, including rural and remote areas.
  2. Demographic inclusion: This ensures that all segments of society have access to financial services, regardless of factors such as age, gender, income, or education.
  3. Product inclusion: This ensures that a range of financial products and services are available to meet the diverse needs of individuals and businesses.
  4. Digital inclusion: This ensures that digital technologies, such as mobile phones and the internet, are accessible and affordable to all so that people can access digital financial services.
  5. Behavioural inclusion: This ensures that people have the knowledge and skills to use financial products and services effectively and make informed financial decisions.
  6. Social inclusion: This ensures that financial services are accessible to marginalized and disadvantaged groups, such as refugees, and people with disabilities.

By promoting all of these types of financial inclusion, individuals and communities can gain access to the financial services they need to manage their finances, build assets, and invest in their future.

Importance of financial inclusion

  1. Economic growth
  2. Poverty reduction
  3. Increased financial stability
  4. Improved financial literacy
  5. Social inclusion
  6. Empowerment

Barriers to financial inclusion

Lack of access to financial services: Many people, particularly those living in rural areas or low-income households, do not have access to formal financial institutions such as banks. This lack of access can limit their ability to save, invest, and manage their finances.

Insufficient financial literacy: Many people do not understand basic financial concepts such as interest rates, and inflation. This can make it difficult for them to make informed financial decisions or take advantage of financial products and services.

Discrimination based on income, gender, and social status: In many cases, financial institutions may discriminate against individuals based on their income, gender, or social status. For example, minority groups may face additional barriers to accessing financial services due to cultural biases or discriminatory practices.

Impact of these barriers

Economic consequences: Financial exclusion can limit economic growth and development by preventing individuals and households from accessing loans, savings, and investment opportunities. This can result in lower levels of entrepreneurship, reduced job creation, and a lack of access to capital for small businesses.

Social consequences: Financial exclusion can also have social consequences by perpetuating poverty and inequality. Without access to financial services, individuals and households may struggle to pay for basic necessities such as food, housing, and healthcare. This can lead to social exclusion, marginalization, and a lack of opportunities for personal and professional development.

people from different backgrounds

How to achieve financial inclusion

The Role of Financial Institutions

A. Financial products and services

Financial institutions can offer financial products and services that are tailored to the needs of underserved populations such as:

  • Savings accounts: These can help individuals build up their savings and access credit in the future.
  • Microcredit: Microfinance institutions can offer small loans to individuals and small businesses that do not have access to traditional banking services. These loans can help individuals start businesses, purchase assets, and improve their livelihoods.
  • Remittance services: Remittance services allow individuals to send and receive money across borders, which can be especially important for migrants and their families.

B. Financial inclusion strategies

Financial institutions can also adopt a range of strategies to promote financial inclusion.

  • Partnering with other institutions: Financial institutions can partner with other organizations, such as NGOs or government agencies, to reach underserved populations.
  • Developing digital financial services: Digital financial services, such as mobile banking and digital wallets, can help individuals access financial services regardless of their location.
  • Offering financial education: Financial institutions can offer financial education programs to help individuals build their financial literacy and make informed financial decisions.

The Role of Government and Policy Interventions

A. Policies for promoting financial inclusion

Governments can adopt a range of policies to promote financial inclusion.

  • Regulation and supervision: Governments can regulate and supervise financial institutions to ensure that they are providing safe and affordable financial services to underserved populations. This can help prevent financial fraud and abuse and increase consumer confidence in financial services.
  • Financial inclusion targets: Governments can set financial inclusion targets to encourage financial institutions to provide financial services to underserved populations. For example, governments may require banks to open branches in rural areas or require them to offer a certain percentage of loans to women or low-income borrowers.
  • Subsidies and incentives: For example, governments may provide tax breaks or reduce regulatory requirements for institutions that offer microcredit or savings accounts to low-income individuals.

B. Government-led initiatives

  • Financial literacy programs: Governments can offer financial literacy programs to help individuals build their financial skills and knowledge. These programs can be delivered through schools, community centres, or online platforms.
  • National payment systems: Governments can develop national payment systems that are accessible to all individuals and businesses. These payment systems can reduce the costs of financial transactions and increase access to financial services.

The Role of Technological Innovations in Financial Inclusion

A. Mobile banking and digital wallets

Mobile banking and digital wallets are technologies that are particularly well-suited to promoting financial inclusion. They allow individuals to access financial services through their mobile phones, which can be especially important for individuals living in rural or remote areas.

Digital wallets allow individuals to save and transfer money using their mobile phones. These wallets can be used for a range of transactions, from saving and investing, paying for goods and services to sending money to friends and family.

B. Blockchain technology

Blockchain technology is another technology that has the potential to revolutionize financial inclusion. It is a decentralized ledger that records transactions in a secure and transparent way. This technology can be used to provide secure and transparent financial services to individuals and businesses.

One application of blockchain technology for financial inclusion is in remittance services. By using blockchain technology, remittance services can reduce costs and increase the speed of cross-border transactions. This can be particularly important for individuals who rely on remittances from family members living abroad.

C. Biometric technology

Biometric technology, such as fingerprint and facial recognition, can also be used to promote financial inclusion. This can be used to verify the identity of individuals who may not have traditional forms of identification, such as a government-issued ID.

By using biometric technology, financial institutions can reduce the risk of fraud and provide financial services to individuals who may have previously been excluded from the formal financial system.

Challenges to achieving Financial Inclusion

A. Lack of access to technology

While mobile phones have become increasingly common, there are still many individuals who do not have access to a mobile phone or internet connection.

B. Limited financial literacy

Another challenge to achieving financial inclusion is limited financial literacy. Many individuals, particularly those living in poverty or in rural areas, may not have a basic understanding of financial concepts such as saving, budgeting, and investing.

C. Limited trust in formal financial institutions

Many individuals, particularly those living in poverty or in remote areas, may not trust formal financial institutions. This can be due to a lack of understanding of the services provided by these institutions, past negative experiences or a preference for informal financial services such as saving through a Thrift or community-based savings group.

D. Regulatory barriers

In some countries, regulations may limit the ability of financial institutions to offer certain services or may make it difficult for new players to enter the market. This can limit competition and reduce the incentives for financial institutions to innovate and provide affordable financial services.

E. Gender gap

According to Aishah Ahmad, deputy governor at the Central Bank of Nigeria (CBN), there is an 8% gender gap in financial inclusion in Nigeria. Women often have less access to formal financial services than men. This can be due to a range of factors such as limited access to education and employment opportunities, as well as cultural and social barriers that limit women’s ability to participate in the formal financial system.

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How Cowrywise is contributing to financial inclusion in Nigeria

One universal truth about personal finance is that it is worthwhile to save and invest no matter who or where you are. 

Over the years, Cowrywise has positioned itself as the dominant, digital-first wealth management platform for the young generation of Nigerians and Africans, built to simplify and democratize access to savings and investment products.

From having a trusted custodian where all of our users’ financial assets are held and approaching customer service with excellence to building solutions that embed finance into the daily lives of our users, we have created an inclusive and accessible platform to make personal financial management a lifestyle for anyone.

>> Find out more: Embedded Finance: The next revolution may rest with the most innovative fintech companies


Financial inclusion is an essential component of economic development and poverty reduction. Access to formal financial services can help individuals and communities manage their finances, build assets, and invest in their future. While progress has been made in promoting financial inclusion, there are still several challenges that need to be addressed.

Financial institutions play a crucial role in promoting financial inclusion, but they cannot do it alone. Governments and policymakers have a critical role to play in creating an enabling environment for financial inclusion, including implementing policies that support financial education, consumer protection, and financial sector development.

Moreover, technological innovations have opened up new opportunities for financial inclusion. Mobile banking, digital wallets, and other digital financial services have the potential to bring formal financial services to millions of unbanked individuals in Nigeria and around the world.

However, achieving financial inclusion is not without its challenges. Addressing the challenges of limited access to technology, limited financial literacy, lack of trust in formal financial institutions, regulatory barriers, and the gender gap will require a concerted effort from all stakeholders. 

By working together, we can build a financial system that is inclusive, accessible, and affordable, and ensure that no one is left behind.


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