Mobile Money Adoption Drives Banking Penetration in Nigeria to All-Time High

According to a recent World Bank Global Findex 2021 report, the increased adoption of mobile money is driving the growth of account ownership at financial institutions, especially in Sub-Saharan African (SSA) countries like Nigeria.

An analysis of the report titled “Financial Inclusion, Digital Payments and Resilience in the Age of COVID-19” showed that Nigeria’s banked population increased by 15.6 percentage points to 45.3% in 2021, the most high in 10 years against 29.7% in 2011.

The 45.3% ranks Africa’s largest economy 18th out of 25 SSA countries.

Further analysis also showed that the percentage of women with bank accounts increased from 8.5% to 34.5% while the number of men with bank accounts increased from 22.1% to 55.5 %.

“Mobile money has become an important enabler of financial inclusion in Sub-Saharan Africa, especially for women, as it drives account ownership and use through mobile payments, savings and borrowing,” the report said.

The Global Findex database has become a mainstay of global efforts to promote financial inclusion. Launched with funding from the Bill & Melinda Gates Foundation, the database has been published every three years since 2011.

Despite the improvement, Nigeria still has a high unbanked rate of 54.7%. The World Bank reports that Nigeria, India and China are among the countries contributing to the global unbanked population.

“Globally, approximately 1.7 billion adults are still unbanked without an account at a financial institution or through a mobile money provider. Since account ownership is nearly universal in high-income economies, virtually all of these unbanked adults live in the developing world.

“Indeed, almost half live in just seven developing economies such as Bangladesh, China, India, Indonesia, Mexico, Nigeria and Pakistan.

The report also highlighted that Mauritius (90.5%), South Africa (85.4%), Kenya (79.2%), Namibia (71.4%) and Ghana (68.2 %) are the five SSA countries with the highest percentage of banked population while South Sudan, Sierra Leone, Guinea, Burkina Faso and Malawi are the bottom five with 5.8%, 28, 9%, 30.4%, 36.1% and 42.7% respectively.

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On the improvement for Nigeria, Temitope Omosuyi, Investment Strategy Analyst at Afrinvest Limited, noted that progress is slow and the country still has a long way to go.

“For monetary policy to become extremely effective in achieving its goals such as reducing inflation and ensuring financial stability, it needs more people in the financial system,” Omosuyi said.

Data from the Nigeria Inter-Bank Settlement System (NIBSS) and other sources show that the volume and value of electronic financial transactions increased after the pandemic, as well as some financial services.

According to the NIBSS, the volume of transactions via mobile devices increased by 128.4% to reach 153 million in the first four months (January-April) of 2022, compared to 67 million in the same period last year,

“We now have technology that makes businesses better and easier. It is also in line with the Central Bank of Nigeria (CBN) plan to foster financial inclusion in the country,” said Ayodele Akinwunmi, Senior Relationship Manager, Corporate Banking Group, FSDH Merchant Bank.

Financial inclusion means people have access to basic financial services like a savings account, credit and insurance. He has gone on to assume growing recognition across the world among policy makers, researchers and development-focused agencies.

Its importance stems from the promise it holds as a tool for economic development, particularly in the areas of poverty reduction, job creation, wealth creation and the improvement of the well being and the general standard of living.

A higher rate of exclusion in Nigeria could lead to a poorer population, as the lack of access to credit and insurance puts it at an economic disadvantage.

This is why in 2012, the CBN in collaboration with stakeholders, launched the National Financial Inclusion Strategy aimed at raising the inclusion rate to 80% by 2020.

And with 45.3% of the population banked, it shows that the country has missed its target. Thus, the CBN has set a new target of 95% by 2024, which is considered achievable by exploring new techniques and policies such as licensing and regulatory guidelines for payment service banks, the ease of expanding the shared agent network and generally providing the right regulatory conditions. enabling environment for fintechs to contribute to financial inclusion.