Achieving Financial Inclusion in Nigeria

The financial sector is constantly coming up with useful and innovative ways of providing its services to the population. The advent of fintech (the use of technology in the financial industry) has provided a way for all entities to have access to financial products and services at a reasonable rate. Although these services have included more people in the money sector, thereby disrupting the financial world, there is still a huge portion of the world population which is largely unbanked.

Financial inclusion means that 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 a survey by Enhancing Financial Innovation and Access (EFInA), about 40.1 million or 41.6 percent of Nigerian adults are financially excluded, and 48.6 percent are financially included, while 58.4 percent are said to be financially served. This shows the sheer amount of people without access to financial services. In Nigeria people have found ways to have access to financial services and become financially inclusive; either by getting a job (their salary is paid through a bank account) or starting a business (open an account to obtain payments or credit). They then become increasingly financially inclusive by growing to having insurance, a credit account, a brokerage account, and mortgage etc.

The way financial services are delivered has changed tremendously in the past century. These changes are underscored by transaction costs, which have evolved based on changes in communication and computing technology. The developments in communication and computing technology have contributed significantly in bringing down the transaction costs involved in the delivery of banking services, and overtime, influenced the scale and depth of such services.


Apart from the transaction costs which is largely influenced by the developments in communication and computing technology, there is the indirect costs to exchange of financial services influenced by infrastructure or the lack of it- lack of infrastructure hampers the physical connection between the provider and beneficiary of financial services.

Many Nigerians live in the rural areas, have low incomes, are involved in subsistence farming or petty trading, and are barely educated. This means that transaction costs will continue to hinder the process of financial inclusion. A lot of tactics have been employed to tackle this, but the progress has been rather low.

The Central Bank of Nigeria, in 2011 granted license to 14 mobile payment providers to combat the issue of transactional costs involved in traditional banking, but this did little to help. We are far off the mark from attaining financial inclusion in Nigeria.

The way forward may lie in the collaboration between the Telecommunications providers and the banks. The Telco’s have the existing infrastructure and capacity to reach the millions of Nigerians that banking services cannot reach. The M pesa model in Kenya has often been cited as the right model to foster financial inclusion in Africa. With this platform, an individual with no bank account can transfer cash, buy airtime and pay for good and services with the transfer of credits from one phone to another.

It remains to be seen if this model will be the answer in Nigeria, but what is certain is that the mobile financial services platform is the most viable option to reach the unbanked, rural communities in Nigeria.