Counting gains, pains of extending financial services to grassroots

• Published date: 16 January 2023
• Publication title: Nigeria - The Nation

The easiest route to grassroots empowerment and poverty reduction is improved access to financial services, especially at the informal sector dominated by grassroots savers. The Central Bank of Nigeria (CBN) is taking major steps to ensuring that 95 per cent of adult population have access to financial services, from 63 per cent. Although there are challenges making it difficult for stakeholders to bring financial services closer to the people, the activation of Payment Service Banks (PSBs) has further expansed access to financial services to grassroots population.

The grassroots is the biggest target in banks, governments and multilateral institutions' drives to bring financial services closer to the people.

Hence, the benefits of improved access to financial services to the population and economy cannot be underestimated.

The Enhancing Financial Innovation and Access (EFInA) says an inclusive financial sector is characterised by the diversity of financial services providers, the level of competition between them, and the legal and regulatory environments that ensure the integrity of the financial sector and access to financial services.

Also, evidence worldwide shows that access to financial services contributes to growth and wealth creation and is therefore key to tackling the 'poverty' trap in Nigeria.

'It is critical for regulators and policy makers to create an enabling policy environment to actively promote both the demand for and the supply of financial services to the unbanked and under-banked,' it said.

The banked and underbanked, are however expected to protect their accounts from e-fraudsters to avoid loss of their hard earned resources by keeping their confidential account information away from their parties.

The impact of having more people save their funds in banks or other financial services or have more access to credit on the population and businesses especially at the informal sector cannot be overemphasised.

For instance, Nigeria's informal sector is a sleeping giant. The potential of the sector, estimated at $240 billion, is largely untapped. The billions of naira that circulate through the informal sector has a negative impact on the country's economic growth and development.

The EFInA, a financial sector development organisation that promotes financial inclusion in Nigeria survey shows that 23 million adults save at home.

If 50 per cent of these people were to save N1,000 monthly with a bank, then up to N138 billion could be incorporated into...