Recession worsens financial exclusion …experts

The challenging recession in Nigeria has been attributed to the inadequate efforts of the nation’s economic drivers to enhance financial inclusion of more Nigerians.

The recent release of survey by the Enhancing Financial Innovation and Access (EFInA) in conjunction with the National Bureau of Statistics, it has been described by experts as revealing “Alarming North-South divide,” showing that more and more Nigerians are not included in the banking and insurance financial transactions.

Experts at the FBN Quest in its recent analysis of the survey, noted that, while every economy has regional disparities in income and wealth, Nigeria is particularly striking, as reflected by the latest 2016 financial inclusion survey by the EFInA.

The decline in financial inclusion, the report noted, was spurred by unemployment created by economic slowdown, economic recession and drop in petroleum price, among other factors.

According to the report, “The deterioration in financial exclusion over the period covers the economic slowdown in 2015; and the recession in 2016. The unemployment rate rose steadily to 14.2 per cent in Q4 2016”.

The EFInA report for 2016; showed that all zones other than the South West; reflected the challenges of economic slowdown, as it noted that the slide in the oil price resulted to a fall in government revenues, employment and export earnings, leading to a squeeze on incomes.

The access to Financial Services 2016 Survey shows the best ratio for the South West and the worst for the three northern zones. Only the South West attained the official target of financial exclusion below 20 per cent by 2020 with a ratio of 18 per cent in 2016.

The report further showed that for the North East and the North West, the financial exclusion rates were as high as 62 per cent and 70 per cent. Whereas, across the country, the survey of 23,000 adults showed a rate of 41.6 per cent.

The survey, which is the work of Enhancing Financial Innovation and Access (EFInA) in conjunction with the National Bureau of Statistics., divides the financially served between the banked, those with access to other formal services rated 10.3 per cent of the total in 2016 and the balance tapped into informal financing 9.8 per cent.

The share of informal financing ranged from 4 per cent in the South West to 14 per cent in the North East, the North Central and the South- South. The EFInA survey also showed that 58.3 per cent of adults were under the age of 35 and just 2 per cent, had access to insurance.

The FBNQuest report noted that, other than the South West, all zones recorded an increase in financial exclusion between 2012 and 2016. This amounted to seven percentage points for the North Central, six for the North West and two for the North East.

The analyst’s report, however, noted that with ongoing effort and response of the FGN, positive signs have started emerging “we can see in successive budgets and its Economic Recovery and Growth Plan, has been to encourage the diversification of the economy and establish safety nets for the poorest through its social interventions”

The report pointed that another route of enhancing financial inclusion is to “revisit the basis for the monthly distributions from the federation account”
It, however, noted that public disorder and violent anti-government protest are likely to breed where exclusion in all forms, including the financial variety, is widely felt.