According to Uzoma Dozie, the last Group Managing Director of Diamond Bank, and Founder/CEO of Sparkle, a mobile-first platform focused on Nigeria’s retail sector, lack of identity resulting from low collaboration between various institutions in Nigeria and the lack of incentive are reasons for the country’s high exclusion rate.
“To spur financial inclusion; one of the major requirements is identity. India was able to solve its financial inclusion problem through the introduction of the Pradhan Mantri Jan Dhan Yojana (PMJDY) system, which is used as a means of identity, and through that people could open bank accounts,” Dozie told BusinessDay at Sparkle head office in Lagos.
To solve identity problem in Nigeria, the founder said Africa’s most populous nation will have to find a way to bring all the data it has into one platform.
“Nigeria Inter-Bank Settlement System (NIBBS) have data, then we have international passports, and we also have driving licence. All the biometric data that we have are with different institutions, how do we bring them together and form one identity?” the CEO questioned.
For a large number of the country’s population to be provided with identity, Dozie said “we would have to leverage technology, for millions of Nigerians to have means of identification.”
The former Diamond Bank CEO revealed that Sparkle, the AI and Machine Learning Company is going to play a role in deepening financial inclusion in Nigeria “The role will are going to play will be; making is easier for people to start their business, for the businesses to continue to exist and then we’ll partner with them to grow the business.”
According to data by EFInA analysed by BusinessDay, Nigeria’s financial exclusion rate as at December 2018 stood at 36.8 percent, this translates to 36.6 million Nigeria adults who are outside the formal financial cycle.
At the current level, Nigeria has an inclusion gap of 16.8 percent away from the 20 percent target by the Central Bank of Nigeria to be achieved by 2020.To make the dream a reality, the apex bank would have to close that gap in less than five months.
“So we are going to make it easy to do things right. Part of financial inclusion is financial literacy, so we are going to also deploy a lot of resources in communicating and educating the public. One of the reasons we were successful at Diamond Bank in penetrating markets, especially in getting the market women to drop their traditional savings system and come to the formal sector was through education,” Dozie assured.
According to data by the World Bank, Micro, Small and Medium Enterprises (MSMEs) in Nigeria are estimated at 37 million, and are said to have a finance gap of $158.13 billion.
Faced with several challenges, lack of identification prevents the businesses from having a bank account. Thus, lack of financial history daunt their chances of accessing credit especially when they are trying to expand, or finance their operations and growth, checks by BusinessDay revealed.
According to Dozie, the lack of incentive to open a bank account is another reason why exclusion rate is high in Nigeria. “Why do I want to be financially included in Nigeria? What is the benefit, what is the incentive?” The founder added saying “beyond financial inclusion, there is also social inclusion; why do I need a bank account if I can’t afford?”
According to Yele Okeremi, MD/CEO of PFS, Nigerians will remain financially excluded because they are financially disempowered.
“We still have large population living below two dollars a day, how do you want to include them financially?” the CEO questioned.
According to data by the National Bureau of Statistics (NBS) as analysed by BusinessDay, Nigeria’s economic growth rate since 2015 has remained lower than the country’s population growth rate of 2.6 percent
While inflation figure for the month of June fell to a 11 months low of 11.22 percent, the figure, however, falls below the central bank’s target range of 6 percent and 9 percent
According to World Data Lab, a predictive analytics social enterprise, Nigerians living in extreme poverty crossed the 83 million mark in 2018, surpassing India’s number of extremely poor at 73 million.
This means that almost one out of every two persons living in Africa’s most populous nation is now living in extreme poverty. This is despite India having more population at 1.35 billion than Nigeria, who population is about 201 million people.
“Law makers need to come together and look at the regulatory landscape to know if there are laws that hinder inclusion, so it can be reviewed,” Dozie said.
The CEO mentioned that, for example “today, you still need to do address verification, which is the Know Your Customer (KYC) policy. It is better to know the customer biometrically- If someone commits a crime today will they still go back to where they live? Information is still as soon as it is given out but where a person is and what he/she is doing is the correct one and with technology that can be done.”
Endurance Okafor
