Addressing the Challenge of Financial Inclusion in Nigeria


The huge volume of physical cash in circulation, despite efforts by the Central Bank of Nigeria to build a cashless economy through financial inclusion, has become a source of worry to Nigerians, writes Emma Okonji

In Nigeria, the majority of citizens still rely heavily on physical cash transactions, as against digital cash transactions, where money is transmitted electronically via the Internet, mobile phones, Point of Sale (PoS) machines, and other mobile devices, for the payment of goods and services. In order to change the narrative in line with the global standard in today’s digital era, the Central Bank of Nigeria, the financial services regulator, introduced a cashless policy. The policy seeks to bring the larger chunk of Nigerians that are outside the financial system into the county’s financial space, where their money can be linked to bank accounts. It also seeks to encourage Nigerians to do more of electronic transactions for payments of goods and services.

To achieve its aim, CBN set a target to reduce the number of financially excluded Nigerians from 46 per cent in 2010 to 20 per cent in 2020. But it has only succeeded in reducing the number to 41 per cent as at the last count in 2018, which is a five per cent reduction in eight years. The situation is already giving the CBN serious concern.

Just as CBN is worried about the slow pace in achieving financial inclusion, financial industry stakeholders are also worried that Nigeria is still heavily dependent on physical cash transactions, in spite of the efforts of the apex bank.

Trying to find a lasting solution to the problem, which is becoming worrisome to all, Intermarc Consulting, in its 2018 Digital PayExpo, which held at Eko Hotel, Lagos, last week, brought together financial experts from within and outside Nigeria to discuss the challenge of financial inclusion in Nigeria and the rest of Africa, in order to proffer solutions. It had the theme “Innovative Financial Services for the Vast Unserved Segments”.

 Financial Inclusion

Financial inclusion is the process of bringing everyone to a digital platform where financial transactions for the payment for goods and services are done electronically through various electronic channels that are safe and secure. 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.

In Nigeria, majority of the people, especially traders, business owners, artisans and low salary earners, are outside of the country’s financial system and this set of people largely depend on physical cash for their daily transactions. The situation has led to huge volumea of cash circulating outside Nigeria’s financial system, which the CBN is trying to address in collaboration with stakeholders like Intermarc Consulting that organises annual Digital PayExpo.


Financial inclusion in Nigeria is challenged by many factors. Aside the issue of poor infrastructure that could have accelerated the process and its acceptability, industry stakeholders have identified lack of trust, poor training, poor awareness, inadequate consumer protection, high cost of transaction, distance, and complexities in payment system as some of the challenges hindering the speedy development of financial inclusion in Nigeria and across African countries.

Having identified some of the challenges, Managing Director of Intermarc Consulting and convener of Digital PayExpo, Mr. Adeyinka Adeyemi, said Intermarc Consulting had over the years continued to listen closely to Nigeria and Africa’s payment needs through its engagement channels. Adeyemi believed Intermarc had crafted an exceptional programme that reflects the intensity of the current climate and responded to the demands of the moment. According to him, “Digital PayExpo is designed as an inclusive series addressing different segments of digital financial services with focus on how much services can leverage on technology to bring access to the grassroots.”


Stakeholders who gathered at the 2018 Digital PayExpo discussed some of the measures to address the challenges of financial inclusion in Nigeria and across African countries. A Director at CBN, Musa Jimoh, who represented CBN’s Director of Banking and Payment Systems, Dipo Fatokun, said CBN introduced supper agent banking and planned to raise additional 500,000 supper agent networks by 2020 that will be closer to the grassroots, to drive financial inclusion in rural communities.

Executive Director, Business Development at Diamond Bank, one of the major sponsors of the 2018 Digital PayExpo, Mrs. Chizoma Okoli, in her presentation, explained what Diamond Bank was doing to take banking to the rural communities and to boost financial inclusion among those that are financially excluded. According to her, Diamond bank partnered MTN Nigeria to introduce the Diamond Y’ello Account, designed to bring more Nigerians into the financial circle. She said in less than two years of the introduction of Diamond Y’ello Account, the bank registered over 10 million accounts.

Other products introduced by Diamond Bank according to Okoli, are the Diamond Beta account and ADA, which allows customers to interact with robotics and could open bank accounts, initiate bill payments, and buy airtime for customers.

Using Kenya as a benchmark for financial inclusion, Managing Director, Microsave in Kenya, Mr. Isaac Ondieki, tasked regulators to come up with policy and implementation measures that would address trust among the people, in order to achieve financial inclusion. Ondieki, who presented a paper on “The Risk and Fraud Perspective to Financial Inclusion”, addressed the areas of real and perceived risks in financial inclusion. He listed factors like trust, poor training, poor awareness, inadequate consumer protection, and complexities in payment system as some of the risks that could mar financial inclusion and support financial fraud.

Indian perspective

Founder, Geosansar and Co-founder, Finboot, Mr. Nish Kotecha, who gave the Indian perspective of how to overcome the challenge of financial inclusion, said India was able to bring the over 600 million unbanked Indians into the country’s financial system through technology that was built on values that dovetailed with the political, social and now business mood of India. Kotecha said he created the concept of “Financial Inclusion in the Supply Chain”, which has received awards and accolades globally for its unique work in promoting financial literacy.

“In my judgment, and in my experience as an Advisory Board Member of Accion, which is a global non-profit committed to creating a financially inclusive world and is now active in 40 countries, digitisation can address each of Nigeria’s challenges and so presents significant opportunities for growth, development and job creation in the country,” Kotecha said.

He added, “Today, some four billion people globally are still offline, the opportunities offered by technology are still out of reach for many and its benefits remain unevenly distributed. While some countries have made significant headway, others are struggling to keep up. If we want technology to be an engine for inclusive growth and development, we must understand its challenges and address them in a way that ensures better access and better opportunities, particularly for those who are behind.”

According to him, traditional banking and payment methods are often ill-suited to the digital environment and digitisation will not deliver its full potential if many are still financially excluded.

Kotecha said, “The World Bank has estimated that more than 200 million formal and informal micro, small and medium-sized enterprises in emerging economies lack access to basic financial services to thrive and grow. No wonder, therefore, that financial inclusion is becoming a priority for policymakers, regulators and development agencies globally. In fact, it is identified as an enabler for seven of the 17 Sustainable Development Goals.

Digital payments are actually an entry point for financial inclusion. Integrating digital payments into the economies of developing nations is crucial for broad economic growth and individual financial empowerment.”

Citing the case of M-PESA, the mobile payment system in Kenya, East Afruca, Kotecha said, “ We have all heard of M-PESA, which from its early experiment by Vodafone and DFID (UK Government) has become world renowned by showing the potential of these solutions and the potential of developing countries to leapfrog forward in their use of technology all driven by customer need.

Infrastructure innovation is being led by emerging economies who are finding smart ways to leapfrog the current infrastructure and in many cases bureaucracies to meet the demand for inclusion. Developed countries are playing catch up.”

Kotecha further explained that the spread of mobile telephony and mobile-internet services had brought hundreds of millions of people into the formal financial system, and encouraged the Nigerian government to invest in technology that will support financial inclusion.

Many believe events like the annual Digital PayExpo should be encouraged because they present a veritable platform for experts to exchange information, learn from national experiences, interact with different stakeholders, and look at how to better engage in discussions, with the ultimate aim of promoting financial inclusion.