By Nnenna Ezeah

The dearth of access to financial services by billions of adults all over the world has been a major factor militating against global economic growth and development says the Deputy Governor, financial system stability, Central Bank of Nigeria, Dr. Kingsley Moghalu.

Speaking at the Global Policy Forum of the Alliance for Financial Inclusion, AFI, 2011, Moghalu explained that for this situation to change, barriers, especially those related to education, gender, age, irregular income, policy, regulation and geographical location, need be removed to create access.

According to him the implications of the presence or absence of access to finance are pervasive in the national economies and financial systems of all countries, and for the global economy, because access to appropriate financial services can facilitate the accumulation of wealth, enable individuals save, invest and set up new businesses.

He further added that access to finance has long-term implications for growth and income distribution in a country.

He said “A large percentage of Nigerians remain excluded from financial services. The 2010 Enhancing Financial Innovation and Access (EFInA) study revealed a marginal increase of those served by formal financial market from 35 per cent in 2005 to 36.3 per cent in 2010.

“When those that had financial services from the informal sector, such as savings clubs/pools, Esusu, Ajo, money lenders are included; the total access percentage for 2010 was 53.7 per cent which means that 46.3 per cent or 39.2 million adult population were financially excluded in Nigeria.

“A further analysis of the EFInA survey results showed that within some selected countries in Africa, Nigeria was lagging behind in terms of financial access. For instance, South Africa, Kenya, Botswana had 26 per cent, 32.7 per cent and 33 per cent, respectively, of their population excluded from financial services compared with 46.3 per cent for Nigeria.

“The access gap is further revealed by the savings pattern of Nigerians. In 2010, out of 52.8 million (62.3 per cent) adults who saved, only 22.0 million (58.3 per cent) were banked. Ironically, the number and percentage of those who took loans was very minimal compared with savings.

“For instance, only 8.2 million adult Nigerians, representing 9.7 per cent had a loan as at 2010. Out of this number, 5.8 million or 71.0 per cent took their loans from family members or friends, 2.0 million from informal societies, savings clubs and cooperatives and only 1.5 million from formal institutions.

“This means that adult Nigerians are not taking full advantage of facilities available in the formal financial institutions and reveals a gap between the supply and demand for financial services”.

He said further that adult Nigerians who save do so for reasons revolving around security, consumption smoothening, education tuition and for festivities rather than for investment in productive activities. Of the reasons for saving, 40.5 million saved for emergencies, and 20.9 million for day-to-day ordinary household needs.

Out of the 52.8 million savers in Nigeria, only 6.5 million saved to start a business, meaning that more still needs to be done to increase effective and productive access to financial services.

He noted that from a financial inclusion standpoint, the principal challenge that faces Nigeria is to turn the advantage of its large population and large market into an opportunity to utilize finance as a driver of inclusive economic growth.