Bridging the Gender Gap in Digital Financial Services: A Key to Nigeria's $1 Trillion Economy Vision

 

As Nigeria strives towards its ambitious vision of becoming a $1 trillion economy by 2030, one critical gap demands urgent attention: the disproportionately low penetration of digital financial services among women. Currently, only 23% of Nigerian women access digital financial services, compared to 43% of men. This gender disparity poses a significant obstacle to inclusive economic growth and the realization of the nation’s economic aspirations.

The Importance of Digital Financial Inclusion

Digital financial services (DFS) are a cornerstone of modern economies, enabling individuals to access banking, credit, savings, and payment services conveniently and securely. For women, DFS offers a pathway to financial independence, increased entrepreneurship, and better household welfare. However, the underutilization of these services by Nigerian women underscores structural barriers that hinder their economic participation.

Factors Driving the Gender Gap

1. Limited Digital Literacy: Many women lack the necessary skills to navigate digital platforms effectively. This stems from lower educational attainment levels and limited exposure to digital tools.

2. Cultural Norms: Prevailing societal norms often prioritize men’s financial participation while restricting women’s access to resources and opportunities.

3. Cost and Accessibility: High costs of mobile devices and data, combined with inadequate infrastructure in rural areas, disproportionately impact women, who are more likely to live in poverty.

4. Trust and Security Concerns: Fear of fraud and lack of trust in digital systems deter many women from adopting DFS.

5. Lack of Tailored Products: Financial products often fail to address women’s unique needs, such as small-scale savings or microloans.

6. Low Income, Limited Education, and Restricted Access to Credit and Insurance: Many women face systemic barriers, including lower income levels, limited educational opportunities, and difficulty accessing credit and insurance services, further compounding the challenges of adopting DFS.

Economic Implications of the Gender Gap

Closing the gender gap in DFS is not merely a matter of equity; it is an economic imperative. Studies show that gender parity in financial inclusion can drive GDP growth by enabling women to contribute more effectively to the economy. For Nigeria, this means unlocking the economic potential of millions of women, leading to:

• Increased household incomes and savings.
• Enhanced small and medium enterprise (SME) growth, as women-led businesses gain access to credit and markets.
• Strengthened resilience against economic shocks, as women’s financial security improves.

Collective Action Strategies for Bridging the Gap

1. Enhancing Digital Literacy: Governments and private sector players must invest in digital literacy programs tailored to women, ensuring they can confidently engage with DFS.

2. Promoting Affordable Access: Subsidizing mobile devices and data costs, especially in rural areas, can make DFS more accessible to women.

3. Designing Gender-Sensitive Products: Financial institutions should develop products that address women’s specific needs, such as low-fee accounts or flexible loan terms.

4. Building Trust: Implementing robust security measures and consumer protection policies can alleviate women’s fears about fraud and misuse.

5. Expanding Access to Credit and Insurance: Policymakers and financial institutions should prioritize creating affordable credit and insurance schemes that cater to women, helping them overcome financial barriers.

6. Engaging Community Leaders: Leveraging influential figures within communities can help shift cultural norms and encourage women’s participation in financial activities.

7. Collaborative Multi-Stakeholder Efforts: Governments, NGOs, private sector organizations, and community groups must work together to develop comprehensive strategies that address the multifaceted barriers women face.

Conclusion

Achieving Nigeria’s $1 trillion economy vision by 2030 requires inclusive growth that leaves no one behind. Addressing the gender gap in digital financial services is a pivotal step towards this goal. By empowering women through accessible, secure, and tailored digital financial solutions, Nigeria can unlock untapped potential, fostering economic prosperity for all.

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Accelerating Inclusive Growth and Sustainable Development: The African Development Bank's Strategic Initiatives

Introduction:

The African Development Bank (AfDB) Group's Commitment to Macro-Economic and Public Policy Management

The African Development Bank (AfDB) Group has undertaken significant initiatives aimed at bolstering institutional capacity for effective macro-economic and public policy management. The goal is to accelerate inclusive growth, sustainable development, and the realization of the Agenda 2063. These tailored programs are integral to the bank's implementation of its capacity development strategy, underscoring its commitment to strengthening Africa's capacity for effective macro-economic governance, policy-making, and implementation.

Milestone Launch in Addis Ababa:

Unveiling the Benchmark Macroeconomic Models for Effective Policy Management in Africa Report

The recent launch of the Benchmark Macroeconomic Models for Effective Policy Management in Africa Report in Addis Ababa, Ethiopia, marks a milestone in this endeavor. The report, a collaborative effort between the AfDB, the African Development Institute, and the African Economic Research Consortium (AERC), is a key implementation activity of the Bank's Capacity Development Strategy approved by the AfDB Group Board of Directors in 2021.

Collaborative Efforts:

Partnerships with the African Development Institute and the African Economic Research Consortium (AERC)

The report is a collaborative effort between the AfDB, the African Development Institute, and the African Economic Research Consortium (AERC). This collaboration underscores the collective commitment to enhancing Africa's capacity for effective macro-economic management.

Capacity Development Strategy in Action:

Implementation Activities Aligned with AfDB's Commitment to Governance and Policy Enhancement

This comprehensive report is a key component of the bank's Capacity Development Strategy, approved by the AfDB Group Board of Directors in 2021. It aligns with the bank's commitment to enhancing Africa's capacity for effective macro-economic governance, policy-making, and implementation.

Understanding the African Landscape:

Examining Existing Models and Modeling Capacity Across 54 African Countries

The report provides an inventory of existing models and modeling capacity in African countries. Drawing from an Africa-wide survey implemented by the Bank Group, it delves into the relevance of these models to the complex economic structures across the 54 African countries.

Challenges and Realities:

Assessing the Relevance of Macro-Economic Models Amid Dynamic Economic Structures

One crucial aspect highlighted is the need to assess the relevance of macro-economic models in the face of dynamic economic challenges. The report recognizes the significant heterogeneity in economic structures across the diverse landscape of the 54 African countries.

Macroeconomic models serve as essential tools for countries to understand and predict the behavior of their economies. These models enable the analysis of policy response options, evaluation of possible outcomes, and guidance for implementation, monitoring, and evaluation.

In the face of increased global uncertainties, including challenges posed by the Covid-19 pandemic and climate change, policymakers must make informed decisions about their economic environment.

Executive Training Programme: MEMA - Addressing Capacity Development Needs Based on Comprehensive Study Insights

A key implementation program of the Capacity Development Strategy is the Executive Training Programme on Macro-Economic Policy Management in Africa (MEMA). The study informing the report aims to better understand the macro-economic modeling capabilities and tools in all African countries.

Overcoming Capacity Gaps: The External Model Dilemma and the Importance of National Realities

To bridge this capacity gap, policymakers often resort to external models and tools that may not align with the specific contexts and realities of their economies. The report highlights the challenges faced when relying on external models and emphasizes the importance of national realities in economic decision-making.

Conclusion:

AfDB's Strategic Initiatives in Macro-Economic Modeling for Inclusive Growth and Sustainable Development

In conclusion, the AfDB's strategic initiatives, as reflected in the report, aim to enhance Africa's ability to navigate the complexities of macro-economic governance and policy implementation. By addressing the capacity gap in macroeconomic modeling, the AfDB contributes significantly to fostering inclusive growth and sustainable development across the continent.

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LAPO Microfinance Bank Secures 9th Consecutive 'Microfinance Bank of the Year' at BAFI Awards 2023

LAPO Microfinance Bank, a leading microfinance institution in Nigeria, has clinched the prestigious 'Microfinance Bank of the Year' award at the 2023 Businessday Banks’ and other Financial Institutions’ (BAFI) Awards. 

This remarkable achievement marks the ninth consecutive win in this category since the inception of the BAFI awards. According to Oluremi Akande, the director of communications and branding at LAPO, this recognition underscores the bank's unwavering commitment to its core mandate, industry leadership, and significant social impact.

Akande expressed gratitude to Businessday Media, the organizers of the awards, for their enduring legacy and invaluable contributions to the growth of the financial sector. LAPO Microfinance Bank's founder, Godwin Ehigiamusoe, was recently honored with the title of 'Fellow Chartered Institute of Bankers' in acknowledgment of his substantial contributions to the financial sector's development through LAPO Microfinance Bank. 

The institution remains dedicated to its 30-year mandate of empowering low-income households and owners of micro, small, and medium enterprises in Nigeria in a sustainable manner.

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NDIC Refunds N1.2 Billion to Depositors of Closed Microfinance Banks: Strengthening Financial Confidence and Justice

The Nigeria Deposit Insurance Corporation (NDIC) has announced the reimbursement of over N1.2 billion to approximately 34,000 depositors affiliated with 179 microfinance banks, whose licenses were recently revoked by the Central Bank of Nigeria (CBN).

The disclosure was made by Mr. Bello Hassan, the Managing Director of NDIC, during the 2023 Sensitisation Seminar held in Port Harcourt, Rivers State. Speaking at the event on behalf of Mr. Hassan, Mr. Mustapha Ibrahim, the Executive Director of Operations at NDIC, emphasized the importance of the seminar in facilitating an understanding of NDIC's operations and intricacies among stakeholders. 

Addressing the theme of the seminar, "Strengthening Depositors’ Confidence in Banks and Other Financial Institutions through Speedy Dispensation of Justice," Mr. Hassan underscored the significance of strategic collaboration with the judiciary to enhance financial system stability in Nigeria.

Highlighting NDIC's primary mandate of deposit guarantee, Mr. Hassan explained the ongoing resolution of the closure of 179 microfinance banks and four primary mortgage institutions in an organized manner. He revealed that the corporation had already settled over 34,000 depositors, disbursing N1.2 billion to meet the financial obligations of these depositors, with the process still underway. 

Elaborating on NDIC's statutory functions, including deposit guarantee, bank supervision, distress resolution, and bank liquidation, Mr. Hassan emphasized the corporation's authority to liquidate insured financial institutions upon the revocation of their banking licenses. 

Despite facing challenges such as the execution of judgments against the corporation, attachment of NDIC's assets, and difficulties in recovering debts owed by failed banks, Mr. Hassan acknowledged the remarkable achievements of NDIC and the CBN in intervening and resolving issues with problem banks. These accomplishments, he noted, included the successful liquidation of various banks, with depositors and claimants being fully settled through recovered debts and realized assets. 

He concluded by listing ongoing challenges, including the lack of specialized winding-up rules for failed financial institutions and an increase in labor law and securities-related matters from ex-staff of banks under liquidation. Nevertheless, he expressed confidence in the continued success of the CBN and NDIC in managing and resolving challenges within the financial sector.

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$100 Million Credit Facility for Women-led SMEs by FirstBank and CDC/BII

UK Government's Development Finance Institution, CDC which is now being renamed as British International Investment (BII) has announced $100 million credit facility to First Bank of Nigeria. 

This facility will be available to Women-led business as well as SMEs in Nigeria. 

The fund will be channelized through FirstBank which has expansive network of over 700 branches and 150,000+ agents, leveraging its market leading expertise to scale financial solutions to under-banked entrepreneurs, particularly women. 

Adesola Adeduntan, Managing Director and CEO, FirstBank, said: “Beyond the mutual benefits this partnership offers to both organisations, this transaction offers yet, another occasion for FirstBank to contribute immensely, to the United Nation Sustainable Development Goals.”

Adesola also added, “Enabling financial inclusion for SMEs has been a strategic priority for FirstBank over the last 128 years.  Similarly, FirstBank has been at the forefront of financially empowering women-owned and women-led businesses on the continent.  This partnership with CDC/BII offers a fantastic opportunity to accelerate the momentum.”

CDC/BII will also offer technical assistance which will build on the FirstBank's existing knowledge base of women-led initiatives in its portfolio. Strengthening FirstBank's technical capabilities is being considered as important agenda. 

This facility comes in at a crucial juncture in Nigeria where nearly 59 million are unbanked. The fund is likely to create new opportunities for the marginalized groups and also accelerate financial inclusion. Nigeria is striving from all fronts to ensure microenterpreneurs, small business owners, unemployed youth to participate in the country's formal economy. 

FirstBank has been in the Microfinance Banking industry in Nigeria for a long time now. This facility will enable the Bank to further leverage the facility to provide vital funding to scale business growth across Nigeria’s market – increasing job creation and improving livelihoods throughout the country.

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Central Bank Draft Guidelines for the regulation and supervision of microfinance banks in Nigeria

The Central Bank of Nigeria (CBN) has published the Guidelines for the Regulation and Supervision of Microfinance Banks (the "Guidelines"), which took effect on April 1, 2020. The Guidelines will have an influence on the operations of various digital financial services offered by Microfinance Banks in Nigeria. 

Here are the salient features: 

Earlier there were three categories of licences (unit, state and national licences). However, with the current revision of the Guidelines, there are now the following four (4) categories: Tier 1 Unit, Tier 2 Unit, State and National. 

 Individuals, groups of individuals, community development associations, private business companies, and foreign investors may be awarded an MFB licence with a maximum shareholding of 49 percent for individuals and aggregate linked parties. 

As a result, no individual, group of individuals, their proxies, corporate entities, and/or their subsidiaries shall own controlling interest in more than one MFB, except as approved by the CBN. 

A financial holding company that intends to set up any category of MFB as subsidiary shall be required to meet the prescribed capital and other requirements stipulated in the CBN Guidelines for MFB. Such new subsidiary can only be registered with the CAC after obtaining the approval of CBN. 

 Read the complete Guidelines for the regulation and supervision of microfinance banks in 

Nigeria:

 

 Download your copy here: Central Bank of Nigeria https://drive.google.com/file/d/1KTAEQK7hgXzEEGET2IwI241hZI1tJ-mx/view?usp=sharing

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FINCA Microfinance Bank Opens 2nd Branch in Owerri, Imo State

FINCA Microfinance Bank opened a new branch at the Relief Market in Owerri (Imo State) in 2016. This is its 2nd branch. The Bank has started operating with a single branch in December 2014 after its license was approved by the Central Bank of Nigeria on 30th October 2014. Within a quick span of time, it has now opened another branch.

FINCA in Nigeria

Finca is an international organziation focussed on delivering microfinance services to the poor across the globe. In Nigeria, FINCA entered in 2014. After a well-prepared market research, FINCA has chosen Owerri in Imo State as its base and applied for the license to operate. 

Central Bank has granted the license on 30th October 2014. Since then FINCA has produced some amazing results with nearly 9,063 clients with average loan size of $727. The branch operating since 2014 has an outstanding portfolio of $2M. 

FINCA Microfinance Bank (FINCA MfB) began its operations with simple but innovative financial services. It has been offering savings, term deposits and loans to help clients build their micro businesses. 

Nigeria is the 6th country in Africa for FINCA. Besides Nigeria, FINCA's network of microfinance institutions are in Uganda, Malawi, TAnzania, Zambia and Democratic Republic of Congo. FINCA is in Africa since 1992.  

New Branch in Owerri, Imo State

The new branch will be the 2nd branch being started by FINCA MfB in Nigeria. Speculations are that it will double its size of portfolio and client base with this expansion. The MfB is expected to start new recruitment in the new branch in order expand its operations team. 

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Per-Capita Access to Finance is Better in Abuja than in Lagos

Here is a quick bite of a statistical fact: The total number of financial access points in Lagos are 2,248. Compared to this, Abuja Federal Capital Territory (FCT) has only 1,193 access points.

Lagos is better than Abuja - isn't it? But wait, we need to read this statistic by putting it in context with population. With a low population, Abuja FCT has a better access, 8.48 access points per 10,000 people while Lagos has 2.46 per 10,000 people as at the end of 2014.

Stumped? Yes, the fact is that people living in Abuja FCT have better access to financial services than those living in Lagos merely because Abuja FCT isn't as populated as Lagos is. And, therefore, even though Lagos has more number of financial access points, it is not just sufficient for this highly populated city of Nigeria.

What are Access Points?

Access Points are all the possible point of contacts setup by the financial institutions that offer financial services such as savings and loans to the people. They include Commercial Banks, Microfinance Banks, Savings and Credit Cooperatives, Microfinance Institutions etc. The access points (point of contacts by the financial institutions) could be like the bank offices, motorparks (where transactions of some savigns and credit groups happen), post offices, ATMs, mobile POS (Point of Sale devices) etc.

Access Points are an important indicator for measuring performance of financial inclusion because availability and access are critical to the masses.

Per-Capita Access to Finance

In statistics, this is called 'per-capita availability of financial access points'. In a layman's language it can simply put as 'financial institutions in Lagos are not just sufficient to meet the demands of the growing population in Lagos'.

Lets take a deeper look at what's going wrong and why Lagos has low per-capita access to finance.

	Lagos	Abuja FCT
Total Population	9,113,605	1,406,239
Financial Access Points	2,248	1,193
Access Points Per 10,000 People	2.46	8.48

As you could see from the above table, its obvious that Abuja FCT, with a population of 1.4 million has 1,193 access points that translates to 8.48 access points per 10,000 people. Lagos on the other hand, is 8 times more populated than Abuja but with only twice the number of access points than Abuja.

Commercial Banks Per-Capita Access to Finance

Per-capita Access to Finance is more worse when we study the commercial banks in Nigeria. In the past, the total number of financial access points by Commercial Banks in Lagos are 1,504. Compared to this, Abuja Federal Capital Territory (FCT) has only 324 access points. However, with a low population, Abuja FCT has a better access, 2.3 access points per 10,000 people while Lagos has 1.6 per 10,000 people.

'Access to Finance' in other parts of Nigeria

No prize for guessing the condition of other parts of Nigeria when Lagos itself isn't properly equipped to offer enough financial service points. The per-capita access to finance in other parts of Nigeria is not very encouraging. Lets take a look at this graph:

Leading Questions and Conclusion

The situation across the country is best summarized by the above image. Majority of the places in Nigeria have a very poor per-capita access to finance. Infact most of them are less than the median line (less than 1 access point per every 10,000 people).

Also, the entire focus is on Abuja FCT and to a great extent we can include Lagos but what about the rest of Nigeria? 75% of Nigeria still lives in rural areas where access to finance is sparingly lowest.

What responsibilities does the government have towards providing infrastructure to financial institutions? What responsibilities does the private sector have towards making access to finance reach more and more people with a good mix of economies of scale? Should we just focus on making Abuja FCT a better place to live without developing the rest of Nigeria?

What do you think can be done to make this situation better? Share your opinions in the comments below. 

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Microfinance Bank to be established by Lagos Government - Pros and Cons

A Micro-finance Bank (MFB) will be established by Lagos Government very soon. This announcement was made by the Governor Akinwunmi Ambode, Governor of Lagos State on 19 February at 5th edition of the Lagos Corporate Assembly tagged “A-plus meets business” held at the Lagos House Banquet Hall, Alausa.

Now the question that quickly comes to our mind is: OK, Whats so good about it? You'd be interested to learn that there are number of pros and cons of government setting up this bank and therefore this makes an interesting topic to ponder.

Pros of having a Micro-finance Bank by Lagos Government

There are number of benefits of having a microfinance bank owned by a committed government. 

SME and Artisans

• Lagos Government owned and operated micro-finance bank will be a big boon for the Small and Medium Enterprises and artisans. Majority of the entrepreneurs in Lagos are in this segment. The MFB is planning to target this particular segment. If the bank is successful, this has a potential to revive the entire SME sector of Lagos and also has potential to act as role model for other states and other MFBs to follow.

Interest Rate

• Interest rate for loans to these segments is going to be highly affordable. Governor Ambode made an announcement that the plan is to lend at a rate of 3%. Cheaper funds always help in reducing their financing costs and increasing profitability of the potential SMEs. 

Boost in economy and increase employment

• Economy in Lagos is struck with lot of difficulties. The new microfinance bank in Lagos will help in ease of doing business. Ambode's assurance that his administration is committed to maintain a business-friendly environment. 

Cons of having a Micro-finance Bank by Lagos Government

There is a section of our community which has completely a different view about Lagos Government starting a micro-finance bank. The reasons why they do not like this initiative are:

Reinventing the Wheel

There are number of Micro-finance Banks in Nigeria. Majority of them are based in Lagos. The question then will be why do we need yet another micro-finance bank when there are already many existing. Would it not be better for the Government to partner with these MFBs and support their initiatives rather than reinventing the wheel altogether? 

Capital is a Scarce Resource

We all know that the capital is a scarce resource. Reviving an economy would require putting the scarce resource to the optimal use. Given the fact that Micro-finance does not have concrete evidence to show that it is a panacea for the poor, how prudent it is for government to start a microfinance bank? Instead, it could work with other areas of providing some basic amenities like roads and drinking water. 

Infrastructure Challenges 

Financing infrastructure development projects and making sure they are implemented indeed fetches more results than financing SMEs who will struggle with the infrastructure bottlenecks. Lagos is still gripped with deplorable roads, multiplicity of taxes and traffic gridlock. Shouldn't government be focused on addressing these challenges rather than merely creating a new financing of sick SMEs that cannot overcome these challenges to make a profitable living. 

Private - Public Partnership with Foreign Collaborations

Lagos government's plan to start a micro-finance bank completely ignores the potential in leveraging private-public partnerships. More importantly, as a business capital, Lagos has the potential to attract foreign investors with state-of-the-art technologies to boost the micro-finance sector. A large number of Micro-finance Banks still lack training on financial management, treasury management, marketing and Human Resource Management. These are the areas where capacities of local Nigerians needs to be improved through an outsourced expertise from other countries that were successful at it. Government should focus on these strategic areas rather than diverting its energies in an operational task such as starting up a micro-finance bank. 

Government owned Micro-finance leads to High Default Rates

It is a well-known fact that most of the state-owned projects have operational inefficiencies. This is not to undermine the potential of these projects but the clients do not pay properly because they consider Government is always a soft lender. With a low interest rate of 3%, Government is already positioning itself as a Messiah of the poor. But does it know the impact of taking such a position. There will be high default rates, loss of portfolio and low profitability. These are perfect recipes for becoming a sick institution. 

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