Review: Achieving Financial Inclusion in Africa
Share This Article
A significant percentage of the adult population do not enjoy the benefits of financial inclusion in Nigeria and some parts of Africa.
According to the latest Findex data, about 1.7 billion adults remain unbanked. Half of these unbanked persons are women from impoverished households in rural areas or those who are not in the workforce.
To enable even distribution of the good of the economy and their access, financial inclusion is one thing that needs to be achieved.
Without requisite financial services, institutions and individuals will be unable to participate fully in the affairs of the economy.
Over the years, Fintech evolution— and particularly mobile money financial services — have caused a rapid increase in account ownership of individuals while micro-small and medium enterprises (MSMEs) have had their finances facilitated.
It is important that this situation posed by lack of financial inclusion is challenged and changed accordingly.
What is Financial Inclusion?
Financial inclusion is defined as the process or steps that are taken to ensure that vulnerable people or persons can access financial products and services at an affordable price and in a well-suitable manner as given by financial institutions.
Also, this means that individuals and businesses can have easy access to affordable and useful financial products and services that can meet their needs, and this includes; Payment transactions, savings, Credit services, Insurance, Mortgage, etc).
The first step to achieving financial inclusion is one’s access to a transaction or bank account since it allows people to save or store money, make investments and send or receive money.
Imagine that no one in Nigeria had a bank account, how can they be included in a financial system that works? Getting them fully included will be a difficult task to accomplish.
As part of the World Bank goals, financial inclusion is one of its key goals in the coming years.
Financial inclusion aims to include people of a given society financially by giving them basic financial services regardless of their net worth or savings.
With Financial inclusion, the economically underprivileged will be provided with financial solutions in an inexpensive way.
Also, loans, Overdraft, and savings services will be provided to the poor in society through an easy method or form.
With the advancements in the financial technology ecosystem, different startups are now making financial inclusion achievable.
- Financial inclusion has been identified as a facilitator for number 7 of the 17 Sustainable Development Goals.
- The G20 committed to advance financial inclusion worldwide and reaffirmed its commitment to implement the G20 High-Level Principles for Digital Financial Inclusion.
- The World Bank Group notes that financial inclusion is a key enabler that will reduce extreme poverty and boost prosperity and has put forward a global goal to reach Universal Financial Access (UFA) by 2020.
Governments of countries can identify loopholes and implement a set of policies that can promote solutions that will improve how financial services are rendered to underserved persons and corporate institutions through national financial inclusion strategies. This can help articulate the financial framework of a given nation.
Currently, about 69 countries of the world have adopted and are developing financial inclusion strategies.
While some are reviewing past progress made, some are adjusting to new trends and developments.
When nations decided to take an approach to develop national financial inclusion strategies which bring together financial institutions, regulators, telecommunication industries, and other stakeholders, they increase the pace and impact of financial reforms.
Countries that have achieved progress toward achieving financial inclusion have had their policies delivered, allowed mobile financial offerings to thrive, welcomed and encouraged new business models and, leverage e-commerce data.
Great efforts have been made toward achieving financial inclusion and thus far, 1.2 billion adults worldwide have gotten access to an account since 2011. Today, 69% of adults have a working bank account.
All economically active people— business owners, next-door neighbors, and even street vendors have needs for payments, credit, insurance, and savings. They want to send their wards to school, just like everyone else, and save funds for rainy days.
What are the objectives of financial inclusion?
In no particular order, the objectives of financial inclusion are to:
- Ensure that individuals have banking account for making and receiving payments
- To promote saving products and this includes investments and pension
- To facilitate remittance or money transfer facilities
In addition, the 5As of achieving financial inclusion are Affordability, Accessibility, Awareness, Availability, Adequacy.
The World Economic Forum committee on promoting global financial inclusion has outlined 8 ways of achieving financial inclusion.
- Sign an Oath for financial inclusion that puts customer needs first
- Encourage financial institution’s expansion in rural or remote communities
- Treat financial inclusion as a journey to develop multi-product methods
- Create and encourage the use of e-payments systems through mobile phones, debit cards, etc. This will ultimately reduce costs and fraudulent activities
- Ensure that the information customers provided are safe and securely protected
- Organizes forums where stakeholders can share their perspectives, thereby, everyone involved will change their approach if need be or take action
- Ensure that the low-income earners are included in the strategy, vision and, objectives of a given business
- Be sure to design products or services based on neutral assessments. Sentiments and biases should be eliminated so as to reach every customer.
Dont miss important articles during the week. Subscribe to blockbuild weekly digest for updates.