Blog

Digital Financial Inclusion to Propel the 2030 Goals

In 2018, this report was released to encourage the prioritization of digital financial inclusion in support of achieving the UN Sustainable Development Goals.

Financial INclusion

Financial inclusion is key to giving marginalized communities access to financial solutions that meet their specific needs.

The Time Poverty Of Women

The women of the world complete approximately 75% of the world’s unpaid work.

POverty in Nigeria

According to World Poverty Clock, “Nigeria has more people living in extreme poverty than any country in the world (2018).”

The Time Poverty of Women

In 2018, The World Bank reported that 6.4% of the female labor force in Nigeria was unemployed, and only 13.2% of female workers received formal salaries/wages. These numbers are in stark comparison to the 23% of male workers who received formal salaries/wages in 2018. 

The women of the world complete 75% of the world’s unpaid work, which on average is equal to 2.5 times more than their male counterparts (UN Women, 2018). 

Unpaid work can include any means of social reproduction, from household duties such as cleaning, washing and cooking, to childcare and other chores necessary to a meaningful livelihood. 

This unequal distribution of unpaid work leaves women in “time poverty,” which means that they have significantly less time to engage in paid labor activities - not to mention time for rest or leisure activities. Still, World Bank reports that approximately 21% of all contributing family workers in Nigeria are female, while only about 11% are male. 

Although times are changing for women from more privileged socio-economic backgrounds, the vast majority of women in Nigeria still experience strong cultural and social patriarchal norms, which often limit their participation in or access to meaningful employment, financial services, access to higher education and healthcare. 

Financial Inclusion

financial inclusion is the access to essential financial products and services that individuals and businesses require to meet their needs.

Financial inclusion is considered one of the key elements to enabling people from low socio-economic backgrounds to participate in the formal economy and access to financial opportunities and solutions. 

Bottlenecks to financial inclusion can include:

• income level/affordability of products and services

• eligibility (lack of formal identification or available collateral)

• technology/internet access

• gender

• financial literacy

• physical barriers (distance/transportation to existing bank branches)

The livelihoods of women and girls (and in turn their families and surrounding communities) can be improved by empowering women to achieve financial independence that is both sustainable and inclusive.  In order to achieve positive economic outcomes, a gendered approach to the investment in human capital, specifically education, health and nutrition is pertinent.

The total percentage of the population in Nigeria who have accounts open with formal financial institutions has increased for both sexes, however the gender gap in this figure has nearly doubled (FINDeX, 2019). Females went from 26% in 2011 to 33.6% in 2014, while males increased from 33.3% in 2011 to 54.3% in 2014. 

Experts report that empirical data from a slew of microfinance firms in Nigeria denote a positive correlation between loan repayment rates and female clients, affirming that increasing access to needed financial solutions and products and promoting female financial inclusion is integral to reducing extreme poverty (Ogunley, 2017).

Bottlenecks to financial inclusion can include: income level, physical barriers (particularly related to distance and transportation in rural areas, financial literacy, affordability of products and services, and eligibility (related to national ID, available collateral, or other formal requirements).  Another roadblock to be considered is inclusive banking policy. In many developing countries the government can act as a negligible bystander to the disempowerment of women in the economic system (Suresh & Dutta, 2018). Alliance for Financial Inclusion (AFI) covers barriers, opportunities and progress made in Nigeria with regard to women’s financial inclusion. The report upholds that consideration of gender differences in this realm of economic policy is imperative to reducing poverty and income inequality in Nigeria. 

While the challenges to financial inclusion are great, particularly for women, opportunities for inclusion shine through as the number of mobile and digital financial services grow and products are being tailored to the “unbanked”. Nigeria, like much of Africa and the rest of the Global South, is in a unique place to leapfrog development.

 Poverty in Nigeria 

According to World Poverty Clock, “Nigeria has more people living in extreme poverty than any country in the world (2018)” - that’s more than 44.2% of the population living on under $1.90 per day.

About 71% of total employment in Nigeria, referred to in this study as “the working poor,” survives on approximately $3.10 per day. 

Poverty inhibits families from accessing formal education, information about health and/or adequate health facilities/treatment, basic necessities such as clean water, food, decent housing, transportation and decent employment. 

Poor distribution of wealth, lack of access to education, as well as other resources and services (basic infrastructure, information, capital, financial services, hospitals) are amongst the key bottlenecks to overcoming poverty.

Presently, there is a lingering 7% unemployment rate, where 80% of the population are vulnerably employed and literacy rate is just above 51% (age 15+) (HDI, 2019). Children are among the most affected by poverty and have the least amount of power to change their circumstances. 

Primary school drop-out rate is at 35% and there is an extremely high percentage of child labor with 31% of children aged 5-17 participating as household contributors (HDI, 2019). 

Nigeria is also experiencing explosive population growth, with its population projected to rise to 398 million by 2050 and making it the 3rd largest population in the world. There is just 13% contraception prevalence in people aged 14-49 years and 44% of children are married before the age of 18 (HDI, 2019). 

This rapid growth, in addition to internal corruption, regional religious and ethnic conflicts and food insecurity related to climate change exacerbate the effects of poverty.