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The growing attraction and adoption of mobile money services across sub-Saharan African (SSA) has seen a 43 percent growth in individuals with access to financial services.
Growth in Nigeria, however, is not keeping up with peers in the region, disclosed a new report ‘Future of Financial Inclusion in Africa’ released by the International Finance Corporation (IFC) in May 2018. The number of financially excluded in the country grew by 2.1 percent to 40.1 million while microfinance bank clients shrunk by a third. In addition, both non-bank financial institutions and informal sectors have shrunk in the last two years.
A large number of Nigeria’s rural dwellers – particularly female and younger people living in the northern region of the country – remain excluded.
“The slow uptake of digital financial services is principally due to the unforeseen consequences of the Central Bank of Nigeria’s ‘Guidelines on Mobile Money Services in Nigeria’ published in 2009, which specifically excluded mobile network operators from providing mobile money,” IFC noted.
The apex bank later issued licenses to 24 companies ranging from small fintech start-ups to large retail banks after an extended qualification process.
Mobile money adoption by adults within the SSA region grew by 21 percent. IFC disclosed that partnership with 14 African financial services providers that began in 2012 to 2016 have led to 7.2 million new digital financial services in Africa, 45,000 new banking agents, and $300 million in monthly transactions.
Although West Africa was singled out as the new growth market in the report, Nigeria failed to make the cut of potential markets to watch. Meanwhile, the countries pulling the most weights in the entire sub-Saharan region are Burkina Faso, Cote d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe.
“Banks in the sub-region are increasingly forming partnerships with mobile money operators to offer accessible and affordable services beyond the historical target market, and are investing in their own digital operations to build new ways of banking,” IFC explained.
The report also highlights mobile money’s potential to drive financial inclusion given that 43 percent of adults now have an account, an increase from 34 percent in 2014. By way of comparison the share of adults in the region with a financial institution account barely budged while the share with a mobile money account almost doubled – to 21 percent.
While mobile money accounts in the frontline countries grew by double digits, Nigeria only saw a 6 percent increase in 2017.
“The need for greater access to finance is clear. Of the 66 million Nigerian adults who save, less than half do so with a financial institution; one-third of Nigerians borrow money, but this is nearly all done informally,” the IFC report noted.
It recommended support for widespread availability of mobile wallets if Nigeria will attain its 2030 sustainable development goals.
