Role of Financial Inclusion in Economic GrowthEconomicRole of Financial Inclusion in Economic Growth
With financial inclusion playing a pivotal role in Nigeria’s economic transformation, Nume Ekeghe examines the strategies driving the nation’s progress and the steps needed to overcome persistent barriers
In Nigeria, where poverty, unemployment, and economic inequality remain significant challenges, financial inclusion offers a pathway to inclusive growth by expanding access to critical financial services for underserved populations. Over the past decade, the country has made notable strides in reducing financial exclusion, leveraging technology, partnerships, and targeted policies. However, significant gaps remain, particularly among women, youth, rural dwellers, and micro-businesses.
As stakeholders gathered at the recent International Financial Inclusion Conference themed ‘Inclusive Growth—Harnessing Financial Inclusion for Economic Development,’ the Central Bank of Nigeria (CBN) and its partners reaffirmed their commitment to accelerating progress. With ambitious targets, innovative programs, and a renewed focus on digital transformation, Nigeria is poised to unlock the economic potential of millions, creating a more equitable and resilient financial ecosystem.
Governor of the CBN, Olayemi Cardoso, set the tone for the event, emphasising the transformative power of financial inclusion: “Nigeria, as Africa’s most populous country, continues to pursue sustained and inclusive economic growth. One of the most pressing challenges with this mandate is the integration of more citizens into the formal financial system. Financial inclusion is not a peripheral issue; it is central to achieving broad-based economic growth.
“Economically, financial inclusion impacts poverty reduction, income equality, employment generation, and overall productivity. When more people have access to formal financial services, they are better able to save, invest, and contribute to the economy. This participation ensures efficient capital allocation, fosters innovation, and builds a more resilient economy.
“In its simplest form, Financial Inclusion ensures that people have access to bank accounts, credit, savings, and other essential services. However, its implications for national development are far-reaching.
“Widespread access to financial services is an enabler of economic activity. Micro, small, and medium enterprises (MSMEs) which are the backbone of Nigeria’s economy can thrive with improved access to credit, creating jobs and boosting productivity. Moreover, as more Nigerians can save, and invest in education, healthcare, and housing, their quality of life improves, fostering broader economic development. Financial inclusion unlocks untapped potential, making it a vital instrument for national progress.”
A Decade of Progress
Nigeria’s financial inclusion journey formally began in 2012 with the launch of the National Financial Inclusion Strategy. It was a response to Nigeria’s commitment at the Alliance for Financial Inclusion’s Global Policy Forum in Mexico, where over 80 countries pledged to expand access to financial services under the Maya Declaration. The strategy provided a roadmap to tackle the systemic barriers that excluded large segments of the population from participating in the financial system.
The results so far are noteworthy. According to the CBN, Nigeria’s financial exclusion rate dropped from 46.3 per cent in 2010 to 26 per cent by 2023. This progress was achieved through targeted initiatives such as the expansion of agent banking, partnerships with fintech companies, and increased digital financial services adoption.
However, significant challenges remain. More than 28 million Nigerians are still unbanked, with women, youth, rural communities, Northern regions, and Micro, Small, and Medium Enterprises (MSMEs) disproportionately excluded.
Bridging the Gaps
Addressing these disparities requires tailored interventions, and the CBN has stepped up to the challenge. One of its flagship initiatives is the Women Entrepreneurs Finance Initiative (We-Fi) Code, launched in collaboration with the Development Bank of Nigeria (DBN) and the Bank of Industry (BOI). This initiative aims to empower women entrepreneurs by improving their access to financial resources, a critical factor for fostering gender equity and economic growth.
Cardoso highlighted the importance of the program: “Through the We-Fi Code, we aim to fully integrate women entrepreneurs into the economy, ensuring that their contributions are recognized and supported.”
He explained that the youth demography, which constitutes a significant portion of Nigeria’s population, has also received targeted support, disclosing that through entrepreneurship programs and digital platforms, the CBN is equipping young Nigerians with the tools to achieve financial independence.
Deputy Governor, Financial Systems Stability, CBN, Phillip Ikeazor, remarked, “There are over 28 million Nigerians who still have no access to formal financial products and services and certain challenges persist, particularly in ensuring financial access for five most excluded demographics: women, youth, rural communities, Northern Nigeria and Micro, Small and Medium Enterprises (MSMEs).
“In recognition of these key excluded demographics and in a bid to address these disparities, the Central Bank of Nigeria has rolled out targeted programs and initiatives, including financial inclusion drives, financial and digital literacy awareness, sensitization campaigns, and the release of frameworks and guidelines targeted at accelerating financial inclusion and guiding players in the space,” he said.
Ikeazor also disclosed, “Most recently to drive women’s financial inclusion, the Central Bank of Nigeria alongside the Development Bank of Nigeria (DBN) and Bank of Industry (BOI) made a public declaration to the Women Entrepreneurs Finance Initiative (We-Fi) Code, which seeks to provide women entrepreneurs with access to financial resources, empowering them to participate in the economy fully.
“Other excluded demographics are not left behind such as the youth, who represent a significant portion of Nigeria’s population. Through entrepreneurship programs and digital platforms, young Nigerians are equipped with the financial tools they need to become financially independent and contribute to National growth. Thereby promoting financial inclusion and stimulating job creation and innovation. For Northern Nigeria, despite substantial progress nationally, the region continues to present financial exclusion rates above the national average.
This is further exacerbated by infrastructural challenges and economic disparities. To address these issues, the CBN has introduced region-specific interventions aimed at reducing exclusion rates in these areas.”
Role of Digital Financial Services
One of the most significant drivers of financial inclusion in Nigeria has been the rise of Digital Financial Services (DFS). Mobile banking, agent networks, and fintech collaborations have bridged the geographical and infrastructural barriers that historically excluded millions of Nigerians from formal financial systems.
Digital platforms now allow Nigerians to send and receive payments, save, and access credit seamlessly. The Governor underscored the transformative impact of DFS, noting, “Today, millions of Nigerians can send and receive payments, save, and access credit via digital platforms, which are reshaping the financial landscape.”
Collaborations between financial technology companies and telecommunications operators have been particularly impactful in expanding access to financial services in remote areas. These partnerships are redefining the financial ecosystem, making it more accessible and inclusive.
Collaboration and Innovation
Achieving Nigeria’s ambitious goal of 95 per cent financial inclusion requires collective effort. Government agencies, financial institutions, development organizations, civil society groups, and private sector players must align their strategies and resources to sustain momentum.
Ikeazor, reiterated collaborative imperative stressing that, “Financial inclusion is the cornerstone of any robust economic development strategy. By ensuring that all citizens, especially those in underserved regions, have access to essential financial services, we unlock the potential for sustainable and inclusive growth.”
The conference served as a platform for sharing insights, challenging assumptions, and exploring innovative approaches. Discussions centered on leveraging digital tools, enhancing financial literacy, and fostering partnerships to address exclusion persistently.
While the gains of the past decade are evident, sustaining progress requires a deeper focus on systemic challenges. Expanding infrastructure, particularly in rural areas, remains critical. Similarly, addressing cultural and gender-related barriers to financial access will play a key role in accelerating progress.
The rise of fintech offers immense opportunities to innovate and expand financial services.
Nigeria’s financial inclusion journey represents more than just economic empowerment. It is a vehicle for reducing inequality, fostering resilience, and driving national development. Governor Cardoso aptly summarised this broader vision: “Financial inclusion unlocks untapped potential, making it a vital instrument for national progress.”
As the country moves toward its financial inclusion target, the focus must remain on equity and inclusion, ensuring that no demographic or region is left behind. With unwavering commitment, innovative strategies, and strengthened partnerships, Nigeria is well-positioned to achieve its financial inclusion ambitions, paving the way for a more inclusive and prosperous society.
