Financial inclusion strategies for a thriving economy

Nigeria’s economic potential is clear, full of entrepreneurship and untapped talent. Yet a significant 26 percent of Nigerian adults, representing an untapped market of 28.8 million potential customers, are excluded from financial services. This exclusion hinders economic growth, especially in crucial sectors such as agriculture and micro-retail. Millions of potential entrepreneurs and consumers are being left out, stunting the growth and innovation of businesses across the country, perpetuating poverty and limiting individual ambition. As business leaders, we have a moral and strategic imperative to champion financial inclusion for all Nigerians.

Question: “As business leaders, we have a moral and strategic imperative to champion financial inclusion for all Nigerians.”

My experience in various areas of business, from securing healthcare financing to leading strategic partnerships, has given me a deep understanding of the Nigerian business environment. In my role at Guaranty Trust Bank, where I led a number of financial inclusion initiatives to expand access, I saw firsthand the opportunities hidden within our communities simply because people lack basic banking tools and services can get. Imagine the growth potential of companies like micro retailers if millions of new customers were given access to credit and savings options. They could expand their inventory, improve their stores, and serve a broader customer base.

Also read: Nigeria moves closer to 2024 financial inclusion target, but gaps remain

The ripple effect

Financial inclusion goes beyond opening bank accounts. It’s about helping individuals and small businesses get the tools they need to manage their money, save for the future, get loans to grow and actively participate in the economy. This creates a ripple effect. When more people are able to save their money, it creates a pool of funds that can be used to invest billions back into the economy every year. This leads to more business growth because companies can get loans to expand. Everyone benefits from a strong economy, especially when people have more control over their finances.

Studies by the McKinsey Global Institute, a respected international research group, suggest in their 2016 report titled ‘Digital Finance for all: Powering inclusive growth in emerging economies’ that offering financial services to all Nigerians could significantly boost the country’s GDP , which could potentially unlock billions. of dollars of new economic activity per year. The report highlights how financial inclusion can boost economic growth in developing countries by encouraging increased investment, business creation and consumer spending. This growth would not be limited to the core figures; it could create millions of new jobs, especially at the level of micro and small businesses. Estimates from several development organizations suggest that financial inclusion could lead to significant job creation in emerging economies.

Imagine the impact on our agricultural sector. Access to microloans can significantly improve the agricultural productivity of farmers in developing countries. This allows them to invest in better seeds, fertilizers and irrigation, leading to higher yields and higher incomes. Financial inclusion could also lead to many new inventions and jobs in various sectors, especially in the technology sector. We could see an explosion of new tech startups, creating millions of new jobs in areas like software development and online shopping, by making it easier for people with business ideas to get the money they need.

Strategies for inclusive finance

To give everyone access to financial services, several things are needed at the same time. Technology is making a big difference: mobile money apps and electronic wallets are reaching people in remote areas who have never had a bank account before. These mobile money apps have truly changed the way people access money in Nigeria, reaching millions of people in areas where banking options were previously lacking. Official figures show a huge jump in mobile transactions, with the number of transactions via phones increasing by 128 percent in the first few months of 2022 compared to the same period in 2021. Imagine if we could create similar solutions that are specifically designed for farmers or small farmers. retailers, making it even easier for them to get the financial services they need.

Financial literacy is just as crucial. Collaboration between governments, financial institutions and NGOs can empower individuals through local programs. They can navigate the financial system, make good decisions and build a secure future, equipped with financial knowledge and skills, and become active participants in the economy.

Product innovation is also crucial. Financial institutions must design services specifically tailored to the cash-strapped population. This may include microloans, microinsurance and simplified savings accounts with minimum access requirements.

Public-private partnerships are crucial to unlocking enormous potential. Suppose the government partners with a mobile network operator to extend financial services through mobile phones in remote areas. Kenya’s M-Pesa, a revolutionary mobile money transfer service, is a good example. We can significantly accelerate financial inclusion in the country by learning from such successes and adapting them to the Nigerian context.

Building a more prosperous future

By embracing these strategies, we can empower Nigeria’s unbanked population to realize their enormous potential. As business leaders, we have a responsibility to advance financial inclusion through innovative solutions, strategic partnerships and a commitment to financial literacy. This will not only strengthen our communities and stimulate economic growth, but also create a more prosperous and inclusive future for all Nigerians.

Ota Akhigbe is a results-oriented leader with over 15 years of experience driving impactful change across industries. She is a passionate advocate for financial inclusion and economic development in Africa.