In Subol Hospital in Idimu, a suburb of Lagos, Abosede Amao, five months pregnant, is now able to access better, more affordable healthcare and less expensive drugs because she has subscribed to a low-cost local government-subsidised health insurance scheme through her mobile phone.
She completed an online questionnaire about her financial situation and based on the personal data entered at the point of registration, she was given an insurance scheme. This might look like a trivial thing to some, but for the vast majority of Nigerians that live below one dollar per day, this step has not only improved the quality of her life but has provided an opportunity that might not have been possible without an insurance scheme.
The pilot project was launched at the request of the Lagos State government in cooperation with the not-for-profit organization, PharmAccess and is available at several hospitals and health centres. Also at Paelon Memorial hospital in Lagos, a credit facility of 5000 Euros from Lydia, an online financial lending facility has made it possible for patients to buy drugs 30 percent cheaper than they would elsewhere. Entrepreneurs apply for loans electronically from Lydia and because the entire process is digitized, the applicant’s credit-worthiness to granting or rejecting the loan can be easily assessed.
These are a couple of instances of financial inclusion and how mobile money has helped, is helping and will help improve the lives of thousands of Nigerians in the nearest future. Preaching this message of financial inclusion and equitable economic growth was the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), Her Majesty, Queen Maxima of the Netherlands who was in Nigeria for a three-day working visit. Commending the Lagos State government’s initiatives to improve service delivery especially in the area of easier access to affordable healthcare, she said that a lot of work still needs to be done. Comparing health insurance in both countries, she noted that health insurance was compulsory and universal for all citizens compared to Nigeria where health insurance is still very low due to a number of factors.
Why is financial inclusion important, one might ask? About 40 per cent of adult Nigerians struggle to get by without the basic financial services they need for protection against hardship and invest in their future. Financial inclusion seeks to unlock economic opportunity for all, especially the poor, by expanding access to catalytic financial services. The impact of financial inclusion can transform lives as the right financial services can play an important role in fostering equitable growth and stimulate vital development goals such as poverty reduction, job creation and food security. With access to tools such as savings, insurance, payments and credit, families can move out of poverty, small businesses can expand into larger ones and our society and economy can grow stronger and more inclusive.
Financial inclusion is considered a key building block for a country such as Nigeria, to become a developed nation and has been recognized as a vital tool to achieving many of the UN’s Sustainable Development Goals (SDG).
According to the UN, significant progress on financial inclusion is being on a global scale with 700 million more people gaining financial access between 2011- 2015. However, several billions more, including millions of Nigerians remain excluded from the financial system.
According to Queen Maxima, two promising steps the country can take to build financial inclusion are expanding access to mobile money and building a wider and more accessible network of banking agents to serve the more remote areas. Financial services provided digitally through mobile phones can make services more affordable and practical for the very poor and those living far away from banks and other financial institutions. Currently, just 48.6 percent of Nigerian adults have access to financial services such as savings, loans, insurance or payments and this number drops even more to 24 percent in the remote northwest. According to the UN advocate, mobile money is not a futurist fantasy requiring new technologies and is capable of transforming the landscape of opportunity in the country.
Queen Maxima added that there is a big gender gap presently as women own just 42.6 per cent of bank accounts compared to 54.6 per cent for men, reflecting 12 per cent difference.
Also, women have limited access to other financial possibilities; just as a mere two per cent of adults use mobile money even though there are 88 million mobile telephone subscribers. “As long as more women don’t have access to their own finance, this would continue to be a problem as this gap would continue to recycle poverty.”
According to a 2016 Efina survey, the number noticeably drops in the Northwest as just 24 per cent adults have an account at a formal institution with women making up less than 10 per cent. This number is just one percent higher in the Northeast and this difference is even more noticeable when compared with the Southwest, with 78 per cent. Financial inclusion among 18-25 years old has dropped to 27.5 per cent from 29 per cent and is at 44.2 per cent for people in age bracket 26-35. This portends that the youth are struggling even more than before and something needs to be done urgently to save the situation from deteriorating even further.
The monarch noted that financial sector access points are very limited in Nigeria with 42, 000 access points for a population of almost 200 million compared with Kenya’s 83,000 points for less than 50 million people. She revealed that less than one per cent of adults have been able to receive a loan from formal institutions in Nigeria just as a mere 27 per cent save using formal channels. She went on to praise the Lydia model for trying to bridge this gap between entrepreneurs and urged the private sector to tap into this area by providing very low interest loans to startups, considered vital for economic growth.
Four beneficiaries at Lydia’s offices in Lagos briefed Queen Maxima how the model works, how loans can be accessed, and how the credit facility offered has changed the way they do business presently and how the business has grown as well as the challenges they face.
One of the business owners, Omobolanle Ogbamola, a fish-feed manufacturer, admitted that she couldn’t get a loan from the banks even after meeting their demands as they were asking for landed property and collateral worth almost half of the business and was on the verge of dying out before receiving a loan from Lydia which has enabled her expand, move to a bigger place and employ more workers.
The United Nations Resident/Humanitarian Coordinator and United Nations Development Programme (UNDP) Resident Representative, Edward Kallon also lent his voice to financial inclusion. He advocated increased participation of private sector operators in surmounting the challenges besetting the growth of financial inclusion in Nigeria, just as he prescribed a ‘centre-stage’ role in policy formulation and implementation processes.
Kallon praised Her Majesty’s role as UNSGSA advocate since 2009, lending a global voice in advancing universal access to affordable, effective, and safe financial services through raising awareness, encouraging leadership, working to break down barriers and supporting action to expand financial inclusion.
Her words: “The UN system in Nigeria supports the national development initiatives of the Government including the Economic Recovery and Growth Plan and the Sustainable Development Goals using our Partnership Development Framework.
“In doing so, our main goal is to ensure that all Nigerians can enjoy the benefits of good governance and sustainable economic growth and development in a society characterized by peaceful co-existence and security. “Financial inclusion is positioned prominently as an important enabler of reaching these goals as it supports improvement of the welfare of the poor, contributes to financial stability; and to growth of micro-business that ultimately stimulates growth of other sectors in the economy.
“The task ahead of us to achieve these goals is enormous. For us to succeed, the private sector must be involved and move to the centre-stage and occupy the ‘engine room’ of the implementation process. And to reach this desired level of, and results from, private sector engagement, there is a need for national policies and strategies that define, guide, and support such an engagement process.”
Vice President, Yemi Osinbajo affirmed that the country needs to ensure financial inclusiveness for all towards the revamping of the nation’s economy. While hosting Queen Maxima in Abuja, the Vice President said financial inclusiveness is important for development of the individual, community and country. “We need to be able to ensure that all of our people, wherever they live, no matter how far away they are, can be reached with financial products; have bank accounts; payments can be made to them and they also can make payments; in other words, they can participate in the entire financial architecture that the country offers and even that the international community offers. And that really is important for development, for their development as individuals and as communities.’’