Back in 2012, the Central Bank of Nigeria (CBN) published the National Financial Inclusion Strategy, setting the financial inclusion target to 80% by 2020, due to the inadequacies within the financial system, in 2019, the apex bank revised the target to 95% by 2024.
Since then, the CBN has taken several steps to boost the industry and encourage the shift to digital payments, including introducing charges on large cash-based transactions to reduce the amount of physical cash.
To achieve this daring target, Musa Jimoh, CBN’s director of payment system management highlighted Fintechs to be major stakeholders in driving financial inclusion objectives in the nation.
Globally, ‘fintech’ is among the fastest growing and more appealing sectors for investors looking for the next wave of disruptive innovation. Digital “neo-banks” are expanding their market share, especially among younger consumers, while bespoke apps and platforms are taking once-elite financial services, such as stock market investing, into the mainstream. Total investment activity globally—combining venture capital, private equity and merger and acquisitions—reached a peak of US$120bn in 2018, up from US$51bn in 2017.
Nigeria, Africa’s largest country by GDP and one of the world’s youngest population is among the continent’s fintech leaders alongside Kenya and South Africa, who host a number of lively start-ups and a growing bouquet of digital offerings from mainstream banks. Fintech revenues are forecast to reach an estimated US$543m by 2022 in the country, driven by increasing smartphone penetration and its unbanked population.
In a report titled ‘State of Play: Fintech in Nigeria’ by The Economist Intelligence Unit, sponsored by MTN Nigeria and Mastercard, examined key trends in the fintech sector in Nigeria and assessed both industry drivers and impediments to growth in the sector.
A major impediment highlighted to the growth of intechs in the country, is the unavailability and quality of identifiable data for a large number of the population that remain unbanked and financially excluded.
Despite the influx of digital financial services by many fintechs over the years, and improvements in the numbers of the financially included, over 36% of the population were unbanked by the end of the year 2018.
To remedy this shortage of data, Usoro A. Usoro, MTN Nigeria’s general manager for mobile financial services said “ It will take a lot of collaboration across all sectors within the financial system to get credible data, at the moment, there is a lot of data that can be integrated, the banks using the Biometric Verification Number (BVN), mobile operators using the Subscribers Identification Module (SIM) registration, and the government with the National Identity cards.
In order to meet the financial inclusion target of 95% by 2024, set by the CBN, it is imperative to have an accurate and robust database of the population to onboard them first, into the financial system and then to digital platforms.” Usoro added.