Financial inclusion and you

The term, Financial Inclusion is trending. What does it mean?Could any of us reading this column be financially excluded? Financial inclusion is defined as the making financial services available to all categories of persons and businesses at affordable prices. From the definition many would be quick to conclude that they are not financially excluded. That thinking would be in line with the assertion that in Nigeria today, we have achieved 64% financial inclusion as against CBN’s2020 target of 80%.A closer look at the definition may get us rethinking. The definition refers to financial services – plural not singular. This is underscored by the financial inclusion targets set by CBN. It has set targets for several financial services includingpension, insurance, access to credit, savings and participation in electronic payments. When financial services are broadened to include all these, would we still be categorised as financially included?

The achievement for inclusion in pension services is 8% as against the 2020 target of 40%. Those who work with government agencies and large private companies are enjoying pension planning services, however, many of our small business owners and their staff are yet to begin any retirement planning. The majority of Nigerians fall into the latter category, consequently, it may be safe to assume that a substantial number of our readers need to pay serious attention to buying a pension product. Last week, the Pension Commission launched a new scheme specifically catering to small business owners and their workers. Let us take advantage of this initiative. Pension /retirement planning is a very fundamental and important financial service, we must not allow ourselves to be excluded from it.

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The achievement for inclusion in insurance services is 2% as against the 2020 target of 40%. Most of that is from the third-party coverage that car owners are mandated by law to buy. Yet, individuals need to buy products to cover life, children’s education, properties, homes etc. Businesses need to buy insurance coverage for their inventory, goods in transit, key man’s (or woman’s) life, equipment, professional liability and much more. Many cite the over-flogged excuse of the unwillingness of some insurance companies to pay claims as and when due as satisfactory reason for not obtaining adequate insurance. But for every bad underwriter, there are many others who play by the rules and pay claims promptly. Effective due diligence would help sort out the ethical from the unethical. Let us rev up our inclusion in insurance services.

The achievement for participation in electronic payment systems is 40% as against the 2020 target of 70%. More people are transferring funds via USSD Codes and other electronic methods. However, for many of us, our bank debit cards are used majorly for collecting cash from ATMs. This defeats the whole “cashless” objective, if we use the card to collect cash and then use the cash for payments. We should instead be fully cashless and use the card for most payments. A sizeable number of petrol stations, supermarkets, restaurants etc. now have Point-of-Sale (POS) machines that we can effect payments on. Please pay no attention to shop attendants who claim the POS is not working, so that they can keep your five naira change. Every time I informed an attendant that I have no cash and so would have to leave him without paying, the POS begins to automatically work. Paying through the POS ensures you pay the exact amount you owe and stems the trail of change you are leaving in various retail outlets. Let us enhance our financial inclusion by increasing our electronic payments.

The achievement for “access to credit” is 2% as against the 2020 target of 40%. Many business owners could enhance their credit worthiness through higher standards of corporate governance, record keeping, banking habits and other credit appraisal criteria assessed by banks. Credit decisions are made in banks’ head offices; therefore, we must ensure that the records they receive of our businesses are accurate and favorable so we can get our loan requests approved. The high interest rates on bank credits are a major deterrent in Nigeria. However, if more of us saved and moved the current achievement for savings from 24% to the 2020 target of 60%, banks would havemore money to lend to us at lower interest rates.

Financial inclusion is more than having a bank account, let us ensure we are included in all the financial services available.