Fourteen years after the Central Bank of Nigeria (CBN) launched its financial inclusion strategy, an estimated 40 million Nigerian adults remain outside the formal financial system, highlighting the persistent gaps in access to banking and financial services.
The figure is contained in a new report released by Enhancing Financial Innovation & Access (EFInA).
Titled ‘Unlocking Insights to Accelerate Financial and Economic Inclusion‘, the report shows that 26 per cent of Nigeria’s adult population does not use any formal or informal financial products or services.
Although this represents a 10 per cent improvement since 2020, the sheer number of excluded adults highlights persistent structural barriers in Africa’s largest economy.
The findings come amid rising economic pressures that are compounding vulnerabilities for low-income households.
“A retrospective analysis of the A2F 2020 survey findings using the 2023 EA framework reveals a 10% increase in formal inclusion and an 11% increase in financial inclusion,” the report stated.
Pinnacle Daily reports that CBN officially commenced its formal financial inclusion drive with the launch of the National Financial Inclusion Strategy (NFIS) on October 23, 2012.
At the time, the apex bank had aimed to reduce the percentage of adult Nigerians excluded from formal financial services from 46.3 per cent in 2010 to 20 per cent by 2020.
Economic strain deepens vulnerability
The EFInA’s report paints a picture of widespread financial fragility across the country.
It shows that among adults who experienced financial shocks in 2023, approximately 74 per cent reported being in severe distress, while another 11 per cent said they faced some level of distress.
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A significant 59 per cent of households rely on a single income source, increasing their exposure to economic shocks.
Poverty levels remain stark, as roughly 63 per cent of Nigerians, about 133 million people, were classified as multidimensionally poor in 2022.
It also shows that liquidity constraints are severe, noting that 78 per cent of adults, representing about 87 million people, would struggle to raise N75,000 within seven days to meet an emergency.
Compounding the situation is a 12-percentage point drop in the share of adults considered financially healthy, suggesting that even those within the financial system are under strain.
Poverty now the biggest barrier to banking
The report identifies low and irregular income as the most significant barrier preventing Nigerians from opening bank accounts.
It stressed that the proportion of unbanked adults citing little or irregular income as the main obstacle surged from 31 per cent in 2020 to 49 per cent in 2023.
Of this figure, 25 per cent said they simply do not have enough money to justify opening an account, while 24 per cent pointed to unstable earnings.
Physical access remains another constraint, with 33 per cent of unbanked adults citing the distance to banks and the cost of transportation as key hurdles.
According to the report, about 33 per cent are deterred by their attitudes toward banking, while 29 per cent point to institutional exclusion.
The challenges include 7 per cent documentation gaps and 9 per cent limited literacy or understanding of how accounts operate. It added that 16 per cent of adults say unemployment is the primary reason they do not have a bank account.
Stark regional divide
According to the EFInA data, while national exclusion stands at 26 per cent, regional disparities remain pronounced.
Northern Nigeria records the highest exclusion levels, as all states in the North-East report exclusion rates above the national average, with Borno State posting a high of 75 per cent formal exclusion.
In the Northwest, Sokoto and Zamfara record exclusion rates of 68 per cent and 63 per cent, respectively.
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In contrast, Southern states report far lower exclusion levels, with Lagos having an exclusion rate of just 6 per cent, while Ogun, at 7 per cent, and Anambra, at 8 per cent, also show strong inclusion performance.
The report also shows that financial exclusion is predominantly concentrated in rural communities, where infrastructure gaps and lower income levels limit access to formal services.
It stated that since 2020, there has been a 39 per cent increase in the use of informal providers, including village associations, particularly in the South-East.
Digital finance gains momentum
Despite persistent exclusion, digital financial services (DFS) are expanding rapidly, according to the EFInA report.
It stated that about 45 per cent of adult Nigerians used digital financial services in 2023, up from 34 per cent in 2020, while among adults with transactional accounts, usage rises to 83 per cent.
It noted that digital payments for goods and services are the most common activity, used by 75 per cent of account holders.
The rise of financial service agents, particularly point-of-sale (POS) operators, has been one of the most notable shifts in the ecosystem.
Stating that adoption has surged from 4.4 per cent in 2018 to 54 per cent in 2023, it said these agents are now critical to “last mile” access, extending financial services to 11 million adults who do not use traditional banks or mobile money platforms.
Digital income payments are also gaining traction, with 31 per cent of account holders receiving earnings through digital channels.
The report recalls that the 2022 Naira redesign policy catalysed digital adoption, with 28 per cent of adults either starting to use or increasing their use of USSD codes for transactions.
It said mobile money awareness has grown to 22 per cent, although it remains a smaller component of the digital ecosystem compared to agent banking and direct digital payments.
The report added that while Nigeria has made measurable progress since the CBN’s financial inclusion strategy began over a decade ago, deep-rooted poverty, income instability, and regional inequality continue to impede universal access.
Alex is a business journalist cum data enthusiast with the Pinnacle Daily. He can be reached via ealex@thepinnacleng.com, @ehime_alex on X
