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Wednesday 18 June 2014

New Financial Inclusion Study Spotlights Nigeria’s Financially Excluded

MasterCard today unveiled the “Road to Inclusion” report at the Card, ATM and Mobile Expo in Lagos, Nigeria. The new report profiles the financially excluded and underserved in Nigeria and five other emerging markets (Egypt, India, Indonesia, Vietnam, and Philippines), providing insights into how to bring them into the economic mainstream.

“Road to Inclusion” was commissioned by MasterCard to better understand what financial exclusion or underservice means to the millions of people within this group, and what has triggered their choices. This is to better provide services that engage this marginalized audience and help them to reap the benefits of financial inclusion.

“Understanding the needs and attitudes of consumers provides us with important insights that will help us serve them better. For instance, communicating bank safety and interest rates could potentially encourage the financially excluded and the financially underserved to use electronic payments more often than cash. With the right approach there is huge potential to bring many people into the financial fold,” said Omokehinde Ojomuyide, Vice President and Area Business Head, West Africa, MasterCard.

In Nigeria, the average age of the financially underserved and excluded is 28 years old. Ninety one percent have achieved secondary education or above, and 64 percent hold a job. The average family household income of Nigerian respondents is just US$200 a month. This results in lower disposable income, leading 41 percent of this group to cite “not having enough money” as the main reason for not having a formal bank account. Other reasons were that they “don’t want or need” a bank account (17 percent) or they feel that they need cash on a daily basis (4 percent).

Both the financially excluded and financially underserved still live within a cash economy. Instead of benefitting from bank account features like direct debits, internet banking or buying discounted goods online, the bulk of excluded and underserved Nigerians use cash to pay for everyday items such as telecommunication (93 percent), clothing (92 percent), transportation (91 percent) and food (73 percent).

Though cash as a payment method remains prevalent, there are strong concerns about the safety and security in carrying cash. Fifty six percent said that the main benefit of a bank account is that it is safer than keeping cash at home. Another benefit of banks is the interest that they offer.

In testing whether prepaid cards would appeal to the unbanked and under-banked, the research showed that 66 percent thought that prepaid cards were “unique and different”, 60 percent said that prepaid cards were “relevant”, and 58 percent said they are likely to apply for a prepaid card.

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