Bridging Financial Literacy Gap in Nigeria


‘Debola Osibogun

Over the past decade, the Nigerian Financial Services landscape has seen the largest representation of women at the helm of affairs: three successive female Finance Ministers in government, a female Director of Currency Operations and two female Deputy Governors at the Central Bank of Nigeria (CBN), and an increasing representation of women on the boards of financial services institutions including female chairpersons of three of the country’s largest banks. These alongside other developments send a clear message across the industry that financial services are no longer the forte of the male gender. It is with this knowledge that we celebrate the 2020 International Women’s Day. Given this year’s theme, I am Generation Equality: Realising Women’s Rights, there is the need to examine subthemes such as female financial empowerment to make progress towards achieving equality for women in today’s Nigeria.

Financial Literacy
The Organisation for Economic Cooperation and Development (OECD) summarises financial literacy as, “the process by which consumers improve their knowledge of financial products…develop skills to become more aware of financial risks to make more informed choices…and improve their financial well-being”. Financial literacy is therefore key to developing individual financial stability. However, a financial literacy gender gap exists worldwide, where women lag men in the knowledge and management of finances.

In understanding the importance and impact of financial literacy to achieve gender equality, there are two distinct levels of female financial literacy in Nigeria to consider – firstly, the case where there is no awareness of the financial system and it benefits; and secondly, a scenario where a female is financially included but has a poor knowledge of financial management tools that could improve the quality of life for her and her family.

Despite the increasing representation of females in financial services leadership, recent studies suggest that female financial inclusion is rising slower than males, with 36% of women still financially excluded compared to 24% of men – putting the current financial inclusion gender gap at around 12%. To put this into context, the Central Bank of Nigeria (CBN) formulated the National Financial Inclusion Strategy (NFIS) in 2012 with the mandate to reduce the level of financial exclusion from around 46% in 2010 to 20% by 2020. Evidently, more progress has been made in achieving this for males than for females and there is little doubt that lack of financial literacy has hampered the CBN’s efforts to achieve its 2020 inclusion goal. A 2015 survey by the apex bank in conjunction with the International Finance Corporation (IFC) found that Individuals in rural areas with little or no formal education and low incomes tend to develop a low level of trust in dealing with financial institutions and as such are unlikely to be financially literate. The report also found that there is a bias for women, particularly female farmers and females in rural areas of the North-West and North-East regions of Nigeria compared to Southern regions. A large proportion of these women also remain unbanked as a result.

The other consideration is for women who are financially included but not ‘financially savvy’, meaning that beyond the basic bank account, they lack financial capabilities or competencies that allow them to plan for a better quality of life. It might appear that these women have been ignored in Nigeria given the more targeted focus on improving financial literacy to drive financial inclusion. However, the commercial viability of these women presents a stronger proposition for private financial institutions and there have been efforts by these institutions to capture, nurture and evolve with this demographic segment.
With the female population of Nigeria at around 49%, and 36% of them currently financially excluded, the impact of improving the financial literacy of women could significantly impact their contribution to economic growth and socio-economic development of the country.

Reducing Financial Literacy Gender Gap
Efforts to achieve a higher rate of financial literacy for unbanked females in Nigeria have mainly been driven by partnerships between regulators and developmental finance institutions. The CBN in partnership with organisations like Enhancing Financial Innovation and Access (EFInA) and the Nigeria Deposit Insurance Corporation (NDIC), has launched various initiatives aimed at accelerating financial literacy and inclusion such as face-to-face training in numeracy skills and basic financial management. The apex bank also launched its inaugural National Financial Literacy Conference in 2019 bringing together key stakeholders in the industry to develop strategies for improving financial literacy across the country. More recently, the Ministry of Agriculture and Rural Development also launched a training programme aimed at improving financial knowledge in agriculture for females.

Concurrently, for the females already captured in the financial services system, financial institutions have championed efforts individually and in partnerships with women empowerment platforms such as ‘Women in Business (WIMBIZ)’ and ‘Women in Successful Careers (WISCAR)’ focused on improving their knowledge of finance and entrepreneurship skills. Examples include ‘FirstGem’ by FirstBank, ‘Womenpreneur’ by Access Bank, ‘Z-Woman’ by Zenith Bank and more recently ‘Alpher’ by Union Bank, etc. These initiatives usually involve hosting various events and workshops that are designed to inspire and empower women so that they do not become complacent with their finances but begin to take deliberate actions to plan for a better financial future.

Whilst these are all welcome developments, there is always more that can be done to drive female financial literacy particularly on the part of private financial services institutions, to augment the efforts of the government and other organisations towards improved financial literacy.

In the past two years, we have seen a resurgence of the agent banking network of financial institutions which have addressed one of the major challenges of financial literacy and inclusion being the previous inadequate level of access to financial services. These agent networks could prove to be even more valuable if leveraged to deliver more targeted training, particularly in the rural North of Nigeria, to educate women on financial services. This interaction with women could potentially have several benefits as follows:

• Improve the confidence women have in the banks which should translate to trust in the financial system. Currently, that trust resides only with the head of their home who they believe will always make the best decisions for the family.

• Enhance the financial institution’s knowledge of this demographic segment and enable them to develop better strategies to make them more commercially viable and bankable

• As a result of the perceived female role in rural communities as the carer for the family, they are also likely to share her newly acquired financial knowledge with friends and family, creating a multiplier effect that results in a higher financial literacy rate

Mobile money penetration is also key to improving financial literacy. While the adult literacy rate in Nigeria is 62% , mobile phone penetration rate is 87% , reinforcing that individuals need only a basic education to make use of phones. Therefore, driving the mobile money penetration will not only make banking services accessible to these women, but also empower them to take charge of their personal finances through subscription of mobile money without having to leave their local communities in search of a bank.

Financial services innovation will also be a major enabler to improving financial literacy for all. Leveraging digital technology to create financial management is one way this can be leveraged to improve financial literacy. With the dawn of the internet-of-things, such tools can be tailored to suit the lifestyle of each individual user so that it recommends products and services that the consumer would need. For the already banked women who require further financial management skills, this allows them to acquire such skills discreetly and positions them to create a better and more stable financial future.

Involvement of non-banking financial services institutions such as insurance, asset management, pension fund administrators also key to improving financial literacy. So far, the onus has been on banks to drive efforts of financial services institutions, but this does not present a robust catalogue of financial services for women. Pensions for example will allow women to plan for retirement better rather than rely on an ordinary saving account or inheritance to survive.

In conclusion, there is a lot to gain economically from the improved financial literacy of women either through increased financial inclusion or economic activity from the increased number of financial transactions that will follow. Also as important, is the confidence and independence that women will gain from owning their financial journey and being able to make better decisions for their well-being and that of their family. It is important that financial literacy is not looked at only as the need to educate women of low socio-economic status about the banking system as this is only the beginning of the financial literacy journey. There must be a deliberate and measurable effort to continuously engage women throughout the various seasons of life so that they are always able to make the best and most informed decisions regarding their finances and well-being. Only when this is achieved can the financial literacy gap begin to tighten, and it can be said that Generation Equality has been achieved.

Osibogun, the President, Consumer Awareness and Financial Enlightenment Initiative, wrote in from Lagos