From 1892 when Nigeria’s first commercial bank was established in Lagos, the banking business in Africa’s largest economy has evolved to a point where bank customers can now complete a transaction at the comfort of their palm.
The rapid penetration of Nigeria’s financial services over the years has been noteworthy, and the increasing ownership of smartphones, especially among the low-income groups, has been instrumental in reforming the financial services landscape.
Jumia’s 2019 mobile report shows that Nigeria had over 172 million mobile subscribers in 2018, a 6.4 percent improvement as compared to the 162 million recorded the previous year.
Another study by Global System for Mobile Communications (GSMA) reveals that 53 million Nigerians had smartphones in 2018; this figure represents 36 percent smartphone adoption. The London-based company expects Nigeria’s smartphone adoption to increase to 144million by 2025.
According to market analysts, more affordable smartphones, improved distribution network, and expansion of networks by service providers are some of the reasons for the surge in Nigeria’s smartphone ownership.
Mobile smartphone prices went from N77,867 in 2014 to N63,807 in 2016, and N34,246 in 2018, as compiled from Jumia’s mobile report of 2019.
Meanwhile, in Computer Village, Ikeja, the phone market hub in Lagos, a buyer can get a brand new budget smartphone for as low as N10,000 and pay around N6,000 for a fairly used one.
As more Nigerian households increasingly have access to smartphones, especially low- income households, many more individuals and businesses are now gaining easy access to a range of price-friendly financial services.
Following the successful marriage of smartphones and financial services which is helping to give more Nigerians easy access to financial service, industry analysts believe financial inclusion would certainly not be a distant goal to achieve.
According to the World Bank, digital financial services, powered by fintech, have the potential to lower costs by maximizing economies of scale, to increase the speed, security and transparency of transactions and to allow for more tailored financial services that serve the poor.
“Fintech is helping governments quickly and securely reach people with cash transfers and other forms of financial assistance and reach businesses with emergency liquidity,” Ceyla Pazarbasioglu, Vice President Equitable Growth, Finance and Institutions, The World Bank Group said.
While digital banking is already a widespread trend in most cities in Nigeria, the challenge, however, for financial service providers has been to reach the unbanked population who are mostly in the rural area.
“By giving these people access to basic financial instruments and allowing them to avail easy credit, these Internet-enabled smartphones give enough power in the hands of the poor, who can now be encouraged to save and get rid of the tangles of poverty,” Neel Juriasingani, CEO and Co-founder, Datacultr, a web-based financial software solution, said.
According to Juriasingani, from creating a bank account to making payments, transactions, fund transfers, applying for loans, managing insurance, pensions, and cheque book requests, smartphones can allow people to fulfil all their financial requirements, without them having to physically visit banks or any other financial institution.
The success story of India’s financial inclusion drive which leveraged the use of smartphones is one that holds lessons for Nigeria.
Data by Datacultr shows that over 332 million Indian citizens have already opened mobile phone-based financial accounts under the government’s mass financial inclusion programme, Jan-dhan Yojana. As a result, the share of Indians with at least one financial account has more than doubled to 80 percent since 2011.
Despite having over 196 million active mobile phone users as of June 2020, Nigeria has more 40 million of its adult population without access to a basic bank account and the 80 percent financial inclusion target by the Central Bank of Nigeria is under threat amid the impact of COVID-19.
The country’s extremely poor population which was estimated by the World Poverty Clock to be over 90 million people as of March 2020 is one of the reasons responsible for Nigeria’s high financial exclusion rate.
“Financial inclusion starts with revenue generation. You cannot be financially included if you don’t generate income for yourself or simply put if you don’t have money,” GuyBertrand Njoya, the CFO of Metro Africa Xpress (MAX), said, adding that no one can be financially included if they don’t have the finance to bring into the system.
Promoting widespread financial inclusion is one of the key catalysts cited by analysts needed to ensure continued development and growth of any nation.
“The multiplier effect of bringing people into a system outside of “cash-in, cash-out” is what we need in Nigeria,” Segun Agbaje, the CEO of Gtbank said