1. Why Nigeria Has the Most Banked People in Africa

Why Nigeria Has the Most Banked People in Africa

The high degree of loans from microfinance institutions in Nigeria is one way in which mobile money is making important inroads in this vast African nation. In this post, I will look at some of the areas covered in the Ericsson ConsumerLab report Financial Services for Everyone (February 2016) with regards to mobile money usage in Nigeria.

High Numbers of (Unsatisfied) Banked People 
Nigeria records the highest proportion of banked people in Sub-Saharan Africa. At 53 percent, the journey to using mobile money is going to be a challenging one for mobile financial service providers to successfully gain the traction and scale needed to help transform Nigeria into a more open, inclusive, digital economy.

Challenges faced with current options provides opportunities for mobile money. These include lengthy processing times, queues, waiting periods and the time taken for money to reach recipients. Regardless of these inconveniences, and the high service charges incurred for sending money internationally, there’s a high degree of usage and dependency on banks in Nigeria. 47 percent of those we surveyed currently save in banks, while 69 percent said they would prefer to save in a bank and use them for paying things like tuition fees, loans and rent.

The Popularity of Microfinance – a Path to Mobile Money? 
The buoyant microfinance market has made significant headway towards making a more open money society in Nigeria. Large numbers of microfinance institutions are offering loans and other forms of credit to some 2.6 million borrowers.

Microfinance services have been popular in Nigeria since 2005, when the government inaugurated a microfinance banking scheme. “This was founded to provide finance to economically active poor excluded from financing by conventional banks, provide employment, engender rural development and reduce poverty,” according to a fascinating paper called Microfinance Banking in Nigeria: Problems and Prospects published by the University of Uyo.

According to the Association of Non-Bank Microfinance Institution of Nigeria (ANMFIN), “Easy Access to affordable and effective financial products and services remain out of reach to most Rural Nigerians, despite the active role the Central Bank of Nigeria is playing in promoting Micro financing. For many Nigerians, access to small amount of credit can make a considerable difference in their ability to earn a self- reliant income [sic].” Hon. Hamid Afolabi, National President of ANMFIN, calls microfinance, “the solution to the financial puzzle of our present day”.

Mobile technology – such as mobile broadband and mobile phones – is by far the fastest, most affordable solution to the distribution of microfinance services such as loans, credit and insurance. What’s needed is the establishment of a supportive mobile money ecosystem based on public-private partnerships and designed to make financial services available to as many people as possible.

As the author of the University of Uyo paper argues, “with proper regulatory interventions and commitment of other stakeholders to the core mission of microfinance banking, its challenges can be addressed and its prospects enhanced. This paper therefore concludes that the future of microfinance banking in Nigeria is bright.”

Read more about Nigeria and ways to encourage mobile money usage in the Ericsson ConsumerLab report Financial Services for Everyone with data based on the responses of 6,215 participants aged 17–59 years. The report examines mobile money usage in Angola, Democratic Republic of Congo, Ghana, Nigeria and Uganda. These five sample countries are home to some of the poorest people in the Sub-Saharan Africa region but are also among the world’s fastest growing economies.

 

Today we feature a post first published on the Ericsson’s Mobile Services blog.

 

Written by Patrik Hedlund

Senior Advisor at Ericsson ConsumerLab. Patrik is responsible for managing market research projects and conducting marketing consulting with focus on consumer trends, preferences and behaviours. He is also a spokesperson, speaker and chairman at several events and industry fairs.



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