By Akanimo Sampson
Despite advances in technology and multiplication of financial institutions, 1.7 billion adults are still un-banked globally.
Global Financial Inclusion Database, otherwise known as Global Findex, which documents how people save, borrow and make payments, says close to one-third of adults are still un-banked globally.
Global Findex database is the world’s most comprehensive data set on how adults save, borrow, make payments, and manage risk. Launched with funding from the Bill & Melinda Gates Foundation, the database has been published every three years since 2011. The data are collected in partnership with Gallup, Inc., through nationally representative surveys of more than 150,000 adults in over 140 economies.
Executive Vice Chairman/CEO, Nigerian Communications Commission (NCC), Prof. Umar Garba Danbatta, an engineer, made this known at the fifth annual The Bullion Lecture organised by the Centre for Financial Journalism (CFJ).
He said so in his lecture, titled, Driving Pervasive Broadband Penetration to Deepen Digital Financial Inclusion for Nigeria’s Socio-economic Transformation at the hybrid virtual and physical participation event.
Dantata pointed out that great strides are being made toward financial inclusion and that 1.2 billion adults worldwide have got access to an account since 2011.
Quoting the World Bank Report, he added that 69 percent of adults have an account, insisting that about half of un-banked people include women, poor households in rural areas or out of the workforce.
According to Dantata, such a situation hinders women from being able to effectively control their financial lives, as financial inclusion has been identified as an enabler for seven of the 17 Sustainable Development Goals 2030.
He further opined that financial inclusion is considered a key enabler to reduce extreme poverty and boost shared prosperity and that countries with high mobile money account ownership have less gender inequality.
“Reports indicate that since 2010, more than 55 countries have made commitments to financial inclusion, and more than 60 have either launched or are developing a national strategy.
‘’When countries take a strategic approach and develop national financial inclusion strategies which bring together financial regulators, telecommunications, competition and education ministries, among others, they increase the pace and impact of reforms”, he said.
Noting that one percent increase in financial inclusion increases the real Gross Domestic Product (GDP) per capita by 3.6 percent, Dantata affirmed that access to financial services is a crucial enabler of economic and social transformation of any country.
Until recently, the NCC boss stated that policy efforts to develop financial services have focused on the formal banking sector and its intermediating function in converting savings into investment.
“This meant that the urban population enjoyed access to financial services while financial institutions neglected low-income population segments (who generated low or negative returns) and rural areas users”, he said.
He, however, listed some identified barriers to financial inclusion on the demand side which include: affordability, such as high interest rates on loans, high premiums on insurance products, and minimum balances on accounts.
Others according to him are: awareness and understanding, both as to availability of products and how they are structured, priced and used; accessibility, with financial products typically offered in urban centres and near high income users, and subject to heavy bureaucratic processes; and desirability, with many products not designed for the needs of low income users.
On why people are unbanked, Dantata said “It is pertinent to ask this question bordering on why certain people are unbanked. The answer to this poser is not far-fetched: It is simply because formal financial services are unavailable to certain categories of people.
“The Global Findex report shows that, three out of four of the world’s poor do not have a bank account, not only because of poverty, but also due to cost, travel distance and paperwork involved. The lack of adequate access to formal financial services has left most people in all regions, with the exception of high income economies, borrowing from friends and family as the most commonly-reported source of credit for current loans. In fact, it was reported that 55 per cent of borrowers in developing economies use only informal sources of credit.
“It should be emphasised that the need to boost inclusiveness with respect to access to financial services necessitated the paradigm shift by most countries from simply pursuing financial inclusion to focusing more on digital financial inclusion, by leveraging the digital platforms to provide tailored-made, low-cost financial services to people that are excluded from the formal financial services circle”, he stated.
