Nigeria's strategy to reduce the unbanked population

Nigeria has been on a mission to reduce its unbanked population through the National Financial Inclusion Strategy launched by the Central Bank of Nigeria in 2012. The goal was to bring down the percentage of unbanked individuals to 20% by 2020. However, as of now, the country is still far from reaching this target, with approximately 41.6% of the adult population remaining financially excluded. This translates to a staggering 96.4 million people, according to data from the Financial Inclusion in Nigeria (FINA) report. What is even more concerning is the fact that this number has increased since 2014 when there were 36.9 million financially excluded adults. This regression raises questions about what has gone wrong in Nigeria's efforts to promote financial inclusion. Khayadu Lubi, Head of Financial Inclusion at Diamond Bank, sheds light on the challenges and progress made so far. One of the major setbacks cited by Lubi is the economic downturn that hit the country, pushing many individuals further into poverty. When people are struggling to meet their basic needs, saving and accessing financial services become secondary concerns. Despite the obstacles, the government has initiated interventions like the school feeding program to enhance financial inclusion. Lubi notes that certain regions in Nigeria, such as the Northeast, have shown improvement in financial inclusion due to targeted payments made in the area. The Northeast region, which includes states like Borno, Yobe, and Adamawa, has witnessed a decrease in financial exclusion from over 70% to 62%. However, challenges persist in states like Kano, Kaduna, Katsina, and Sokoto, where a high number of individuals remain financially excluded. Factors contributing to this include a lack of financial literacy and cultural barriers. To bridge this gap, initiatives focusing on financial education and cultural sensitivities have been introduced. For instance, Diamond Bank has been at the forefront of promoting financial literacy and empowerment in underserved communities. In light of the persisting challenges, the need for innovative financial services tailored to the needs of the unbanked population becomes crucial. Fintech solutions have emerged as a promising avenue to engage individuals who may not be familiar with traditional banking practices. Mobile-based platforms like USSD banking offer a convenient and accessible way for people to access banking services using their phones. With 60% of Nigeria's adult population owning mobile phones, leveraging digital financial solutions can be instrumental in driving financial inclusion. Lubi highlights the success of Diamond Bank's product, Diamond G-Yellow, developed in partnership with MTN, Nigeria's leading telecom provider. This initiative allows individuals to open bank accounts, conduct transactions, and receive payments directly from their mobile phones. Additionally, the 'Winning the North' strategy by Diamond Bank aims to expand financial inclusion in Northern Nigeria. Through initiatives like market location-focused banking and mobile agent networks, Diamond Bank is striving to reach marginalized communities and empower them financially. The collaboration between financial institutions and fintech companies holds promise for driving financial inclusion in Nigeria. By harnessing the power of mobile technology and innovative banking solutions, the country can make significant strides in reducing its unbanked population and fostering financial empowerment.