On-boarding Financially Excluded Rural Women


Oluchi Chibuzor in this report as part of the Civic Hive 2020 Atupa fellowship programme supported by US embassy writes on the need for the development of tailor-made products and services that captures the needs of rural excluded women for all inclusive financial society

Improving rural women’s access to financial services has been described as a proven strategy for contributing to their social and economic empowerment, while improving overall the livelihoods of rural households and communities.

Rural financial access is important for both poverty alleviation and the non-oil growth agenda, a fact recognized by the Nigerian government and its partners and the President Muhammadu Buhari in consistently advocating for the nation to produce what it consumes.

As urban populations continue to benefit from broader access to finance than rural communities, the World Bank in its Global Findex Database report 2017 stated that Nigeria and six other countries are home to nearly half of the 1.7 billion people without accounts.

Nigeria’s 22 commercial banks, 942 microfinance banks, and numerous financial technology (fintech) and mobile money operators, the nation stills records 46.5 per cent of adult female financially excluded as against 36.8 percent of adult males, with rural financial exclusion rate at 52.2 percent as against 24.4 percent for the urban areas.

The percentage showed that adult Nigerians aged between 18 and 25 years had a financial exclusion rate of 53.5 percent relative to the national exclusion rate of 41.6 percent of about 73.2 m adults. A bulk of this unbanked population comprises rural dwellers, farmers and petty traders, widows, single mothers, teenagers.

The high exclusion rates are attributable to cultural and religious barriers, difficulties in profitability of serving excluded groups, high levels of unemployment, security challenges and continuing high levels of informality in the economy.

For the rural excluded women of the entire population, financial inclusion remains the answer to their problems in order to impact them with financial services as the weaker section of the society.

With 50 per cent of Nigerians living in extreme poverty and approximately half earning less than N700 per day, achieving the planned targets set by National Financial Inclusion Strategy (NFIS) by 2020 remains elusive without actively reducing the exclusion rate among the women.

Financial inclusion is described as delivery of banking and other financial services at reasonably priced to the vast sections of low income groups helps to improve the standard of living of citizens, especially those outside the net of banking operations.

Considering Nigeria’s vast population, geopolitical divisions and social norms that in some case constrict women’s activities, it has not seen substantial policy change initiatives that aimed specifically at financially excluded rural women located within the hard to reach regions.

Access to financial services, aside deposits and withdrawals, such as credit and insurance, pensions empowers anybody to start and expand businesses, invest in education and health, mitigate risks, and withstands financial shocks, and ultimately improve quality of their lives.

Therefore, highlighting the important role that Financial Service Providers (FSP) and governments can play in the economic empowerment of women, especially those in remote areas with active income sources or becomes imperative for a nation that prides itself as the largest Gross Domestic Product (GDP).

Achieving sustainable economic development for Nigeria requires rural revolution and the empowerment of its dwellers; hence, the need for major stakeholders in the financial sectors in line with the National Financial Inclusion Strategy (NFIS) policy to speed up its commitment to task of alleviating poverty and aiding financial inclusion among the economically active poor.

Statistics from the Enhancing Financial Innovation and Access (EFInA) also has it that the vast majority of 80.4 percent of those who are fully excluded from formal and informal financial services live in rural areas.

Explaining the rationale, the report attributed this to the physical distance to bank branches in most rural areas making it difficult and expensive to access financial services. Secondly it said that lower levels of economic activity in rural areas limit the profit potential of financial institutions and thirdly, education levels and financial literacy are typically lower in rural areas, making it less likely that clients will make use of financial products and services.

The trend

In Nigeria rural areas, women financial exclusion are 1.7 times higher than in urban as low income by EFInA.

Speaking last year, at a forum in Port Harcourt, the Head, Financial Inclusion Strategy for the CBN, Mr. Joseph Attah, had disclosed that Nigeria’s Financial Exclusion rate dropped from 46.3 percent to the current 36.8 percent, representing a 10.2 percent reduction.

Similarly, EFInA in its 2019 report on Assessment of Women’s Financial Inclusion in Nigeria, had stated that financial exclusion stands at 36 percent for women and 24 percent for men.

Going by what the Head of innovation at EFInA, Dayo Odulate-Ademola, said at a Social Media Week held earlier this year, “what we saw between the 2016 and 2018 data was that more people were becoming financially included but not at the same pace as the population growth rate which is why the 80 percent target of financial inclusion for this year or conversely the 20 percent exclusion target is unlikely to be met if we are all particularly realistic.”

Echoing their Voices

Generally most women in the rural areas do not feel they have enough income to save, make investments, or take risks on loans, as stated by EFInA.

To achieve a more inclusive financial system at an affordable rate, experts advised that Nigeria would need to leverage technology to give access to its excluded population.

Samson Olatunde, a technological innovator, urged the government to start utilising simple technological innovation to reduce financial inclusion, noting that in-line with FAO, “we can use technological to design a diversified range of innovative agricultural financial services and products that respond to the specific needs of rural clients in general, and specifically those of rural women.”

Paul Onu, a 57 Mason worker in Lagos, told THISDAY that he transfers money to someone else in Owerri Imo state to give his aged mum in the village that do not have bank accounts, while Tawa Musuliu, a petty trader in Fish said she prefers to keep her money to avoids unnecessary delays in collecting money back.
“I prefer to have access to my money anytime I want it and to use it to buy my markets. Also, the charge to collect money by agents of mobile money is too high,” she said.

Understanding Needs of Women

Having access to financial services allows rural women to purchase inputs, labour and equipment needed for their agricultural or rural off-farm activities, take better care of their children, as research has shown that women spend most of their income and savings on their children’s education, nutrition and health.

According to CBN, financial inclusion has continued to assume increasing recognition across the globe among policy makers, researchers and development oriented agencies, its importance derives from the promise it holds as a tool for economic development, particularly in the areas of poverty reduction, employment generation, wealth creation and improving welfare and general standard of living.

CBN and EFInA indicated that women adoption of financial services is influenced mainly by their levels of income, education, and trust in FSPs, marital status, and their community.

Therefore, if the CBN’s quest in deepening financial products in the country like micro-insurance, savings credit, insurance and payment services through financial service agents and the achievement of the 20 percent exclusion rate is anything to go by, one thing that is synonymous among rural women is products and services that meets their needs. The gender gap in Nigeria represents a major issue to be resolved if the country is to achieve the targets it set in the National Financial Inclusion Strategy (NFIS).

According to FirstBank’s Chief Executive Officer, Dr. Adesola Adeduntan, the banking sector in Nigeria remained the primary partner to the government with regards to economic growth and development in the country.

“If we do not utilise those opportunities and mainstream them properly, the country and the entire economy will be left behind,” he stated.

Considering the huge economic consequences of COVID-19, improving rural women’s access to finance becomes necessary for their social-economic empowerment, as well as for supporting their well-being and development of their households and communities.

The Food and Agriculture Organisation (FAO) report on “Women’s Access to Rural Finance: Challenges and Opportunity,” stated that rural women face several constraints that limit their access to financial services, such as socio-cultural, economic and legal and in some cases educational barriers.

Despite obstacles faced by financial institutions in extending services to rural women, it stressed that, “various good practices can be adopted in order to overcome both the demand- and supply-side challenges in order to improve the provision of financial services for rural communities and underserved groups, such as rural women.”

The UN agency added that, “Some of these practices include the design of inclusive packages of financial products and services intended for women, as well as the promotion of alternative collateral and the use of ICT. The promotion of access to information and the improvement of financial literacy for women are also key practices.

“Aside from these strategies, there must be changes in the policy environment and at the institutional level to ensure the sustainability of these initiatives.

These changes consist of building capacity and raising awareness for the sustainable adoption of gender-sensitive practices as well as the collection of sex-disaggregated data.

“All in all, these efforts should aim to ensure that by increasing rural women’s access to finance, their empowerment and wellbeing are likewise strengthened.”

Similarly, EFInA proposed a family-oriented financial products and services, adding that a joint family accounts for household spending or savings, particularly where multiple people have a stake in household finances.

Others include structured savings solutions to help women save effectively while meeting their competing daily needs, Payment systems that formalise social giving to enable tracking of contributions and create transparency in an effort to help ensure participants get some return for their contributions, Financial products that enable widows and traders to manage business purchases and savings.

It noted also that structured group finance products that link farmers and traders to capital and markets so they can expand their businesses, increase revenue, and/or access efficiencies, informational services that build trust and rapport between women and FSPs by leveraging existing community structures to promote and deliver financial services and corresponding skills.