Despite Nigeria’s best efforts at ensuring more Nigerian adults are financially included, the goal of achieving that still remains far-fetched as more reports have revealed that only 6 per cent of Nigerians use Microfinance Banks (MFBs) as their primary place of banking.
With the Nigerian adult population standing at 106 million and mobile phone users of 81 per cent, it was expected that the country’s National Financial Inclusion Strategy target of 80 per cent by 2020 would have been met, however, it is standing at 64 per cent.
Moreover, it is worrisome that MFBs have continued to be left behind as regards customer base compared with commercial banks, which have 80-90 per cent.
According to EFInA Access to Financial Services in Nigeria 2020 Survey, less than 30 per cent of adult Nigerians have or use products or services from non-bank formal financial institutions and a third of Nigerians use informal financial services to manage some of their financial needs.
The EFInA report further said the number of adults using informal services increased by 5.3 million between 2018 and 2020 and this has led to financial analysts calling for digitalization and deployment of sustainable products especially in the rural areas, which remain heavily untapped.
Speaking during the virtual annual financial inclusion seminar organized by Accion Microfinance Bank in Lagos recently, the Founder, LAPO Microfinance Bank, Dr. Godwin Ehigiamusoe, noted that MFBs started out as a result of failure in rural finance and also fail to address financial exclusion properly in rural communities.
Delivering a keynote address themed; “The Future of Microfinance banking; Any Existential Threat,” Ehigiamusoe, said even though eligibility criteria was the challenge as at when MFBs started, visibility, sustainability and commercialization has changed the face of MFBs.
“MFBs are currently termed as “walking dead” and that is because there is continuous mainstreaming into the national financial system, migration of capital, the influx of several ad-hocs in the MFB space and changes in the composition of profiles”, He explained.
Corroborating him, the Managing Director, EDFIN MFB, Bunmi Lawson, the 6 per cent figure is quite a cause for concern and blamed it on the challenged infrastructure in the economy.
Responding to these comments, the Director, Special Institutions Insured Department, Nigeria Deposit Insurance Corporation (NDIC), Veronica Ogbo-Ikwue, said the NDIC will continue to respond to the evolving ecosystem to de-risk and secure the future of insured institutions through a number of initiatives.
“We are creating a niche around accelerating microfinance institutions and we also think digitalization is the way forward for these MFBs to grow. I also think that these MFBs can adopt survival mechanisms and I am optimistic we will continue to protect depositors who are the primary source for banks and microfinance institutions”, she said.
