Saturday, April 19, 2014

56m Nigerian adults have never had bank accounts, transactions – Survey

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The survey showed that about only about 28.6mn Nigerian adults have bank accounts.

About 56.3 million Nigerian adults, one third of the country’s population, have never been banked, a recent Survey by EFInA, a financial sector development organisation promoting financial inclusion, stated.

According to EFInA, the banked include all adults who have access to or use a Deposit Money Bank in addition to having/using a traditional banking product, including ATM card, credit card, savings account, current account, fixed deposit account, mortgage, overdraft, loan from a bank, or Islamic banking product; including indirect access.

“64.1 per cent of the adult population (of Nigeria) has never been banked, an equivalent to 56.3 million people while 3.4 per cent of the adult population, an equivalent to 3.0 million people, were previously banked,” the survey stated.

The Survey, which has the objective to provide “relevant and reliable data on the demand for and usage of a range of financial products, both formal and informal in Nigeria,” said that Nigeria lags behind in the quest for financial inclusion, when compared with some of its African counterparts.

Results from the survey showed that Nigeria lags behind South Africa, Namibia, and Botswana in terms of the percentage of the population who are financially included formally or informally.

It also showed that females form a greater number of Nigeria’s financially excluded population.

“From 2008 to 2012, the proportion of adults that are formally included increased from 23.6 per cent to 43.0 per cent, which is an increase of 17.4 million. The proportion of adults that are financially served increased from 47.5 per cent to 60.3 per cent, which is an increase of 11.7 million.

“The numbers of adults that are financially excluded decreased by 10.5 million, 62.6 per cent of adult males are unbanked and 72.8 per cent of adult females are unbanked,” the survey stated.

Despite these feat, 76.2 per cent of the rural population is still unbanked and only 32.5 per cent of the adult population currently has a bank account, an equivalent of 28.6 million people.

The survey showed that major factors which would encourage the previously banked to use a bank again are the availability of regular income, being employed and having a bank closer to home/place work.

“56.3 million adults have never had a Deposit Money Bank account, of which 47.3 million adults would like to have a bank account. The top three factors which would most likely encourage them to open a bank account are being employed, having a bank closer to home/place of work and understanding the benefits of being banked”.

“Location, bank stability, reputation and staff attitude are the main criteria used when opening a Deposit Money Bank account,” according to the EFInA survey, which is funded by the Department For International Development, DFID, and the Bill & Melinda Gates Foundation.

“There is a general lack of awareness of the location of the closest financial access point to homes/places of work, with the exception of Deposit Money Banks,” the organisation said in the report.

Bank proximity and accessibility is of greater concern to the rural population. 3 million adults used to have a Deposit Money Bank account, and have been previously banked, of which 2.6 million could be encouraged to have a bank account again, the survey stated.

CBN intervened

Saddled with these challenges, the Central Bank of Nigeria set out to define a Financial Inclusion strategy that is executable and achievable, as financial inclusion will support it in achieving its core mandates.

According to the Central Bank, the purpose of defining a Financial Inclusion, FI, strategy for Nigeria is to ensure that a clear agenda is set for increasing both access to and use of financial services within the defined time-line, by 2020.

Financial Inclusion, according to the draft strategy, is achieved when adults have easy access to a broad range of financial products designed according to their needs and provided at affordable costs.

The introduction and pursuit of mobile money banking is one of the strategies the Central Bank of Nigeria has taken in efforts in order to embrace the unbanked. The regulatory body, in the bid to draw the unbanked, recently relaxed its Know Your Customer, KYC, requirement for account opening. The regulatory body ordered the banks to accept the voters’ card as means of Identification, in a quest to ease banking requirements.

Financial exclusion is, however, not only a Nigerian problem as the World Bank has decided to help Nigeria and other countries affected with guideline on how to reverse the trend.

World Bank’s solution

To help countries in their quest to increase financial inclusion, the World Bank, has released a new individual-level data research paper which would help more countries make evidence-based decisions and draft policies that will in the long run remove barriers to financial inclusion and boost the number of people using formal financial services.

The new Global Findex micro-dataset, which is the largest of its kind, provides valuable details about individuals and their banking habits, according to the World Bank. The data set covers 41 indicators ranging from the use of informal savings clubs, the prevalence of formal borrowing, to the use of mobile payments. The data also include individual characteristics, such as gender, age, education, and income, as well as reasons given by the unbanked for not having an account.

“Our results can help more countries make evidence-based decisions that will ultimately remove barriers to financial inclusion, so more people can begin to save in a safer and more effective manner,” Asli Demirguc-Kunt, the Bank’s director of development policy and chief economist of the Finance and Private Sector Network said.

In the research paper, which analyses newly released micro-data as part of a large, multi-year Global Financial Inclusion data project, the World Bank said financial regulators and policy makers should begin to focus on policies that would help reduce the cost, documentation requirements, and travel distance associated with accessing a bank account, to boost financial inclusion.

The research paper, which revealed that the “Unbanked” are deterred by cost, documentation, and travel requirements, was collected by Gallup, Inc. using the Gallup World Poll Survey. The Bank’s Development Research Group is building the database with a 10-year grant from the Bill & Melinda Gates Foundation. The complete data set will be updated again in 2014 and 2017, according to the report.

“Policies addressing financial barriers have proven to be especially effective among the world’s 2.5 billion “unbanked,” including 75 per cent of the world’s poor and those living in rural areas. Among other things, the new data helps explain why adults in countries such as India and Bangladesh use more financial services than those in countries with similar gross domestic product per capita,” a report by the World Bank, which has its financial inclusion portfolio totaling over $3 billion, with projects in over 60 countries and supports country action plans for financial inclusion as well as increasing access to financial products and services, said.

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