Nigeria’s financial sector is undergoing a digital renaissance, driven by collaboration between commercial banks and Fintechs to expand access through digital platforms. The Central Bank of Nigeria’s (CBN) financial inclusion policies are enhancing digital payments and bringing services closer to the people. Analysts note that the apex bank is not only strengthening digital infrastructure and closing regulatory gaps but also promoting financial literacy and building an inclusive system that fosters business and financial services growth, writes Assistant Editor COLLINS NWEZE
Across the world, financial inclusion is being acknowledged among policymakers, researchers and development-oriented agencies as a key element in business and economic growth. Its importance derives from the promise it holds as a tool for economic development, particularly in the areas of poverty reduction, employment generation, wealth creation and improving welfare and general standard of living.
At the heart of financial inclusion is the deployment and use of technology to reach the banked, unbanked, and underbanked. Interestingly, the Nigerian payments ecosystem has been ahead of many advanced economies yet has not always received the recognition it deserves. Many innovations that other countries are only now experiencing have been part of Nigeria’s system for years.
According to the Central Bank of Nigeria (CBN), there is need to celebrate these successes, as they contribute to building our global reputation. For instance, Nigeria’s dynamic fintech ecosystem has driven financial inclusion and positioned the country as a hub of innovation in Africa. Despite a challenging external environment, Nigerian fintechs continue to shine, attracting significant foreign investment and several have achieved global unicorn status this year. Their innovations, alongside other financial service providers, have fuelled growth in transactions and made financial services more affordable and accessible for many more Nigerians.
CBN Governor, Olayemi Cardoso, said Nigeria must continue to leverage this channel to enhance access to finance and credit, particularly for under-served populations. However, he urged fintech companies and banks to ensure their platforms are not exploited for fraudulent activities. “Strengthening the Know Your Customer (KYC) onboarding process is essential to prevent malicious actors from exploiting the financial system. Additionally, these institutions must prioritise improving transaction monitoring and bolstering consumer protection measures to ensure that digital channels remain safe, especially for the most vulnerable segments of our population,” he said during his address to bankers in Lagos.
E-payment milestones in Nigeria
Electronic payment transactions in Nigeria rose to $702.6 billion (N1.07 quadrillion) in 12 months ended December 31, 2024, report from the Nigeria Interbank Settlement System (NIBSS) has shown. The e-payment data reached an all-time high and the first time to hit the quadrillion mark. According to NIBSS industry statistics on e-payment report, the value recorded on the NIBSS Instant Payment (NIP) represents a 79.6% increase over the N600 trillion ($400.5 million) recorded in 2023.
Although the e-payment data shows a steady increase throughout the 12 months of the year, the highest value was achieved in December 2024 because of the high level of business transactions within the month. Being a festive period with lots of spending activities, Nigerians spent a total of N115.1 trillion ($76.7 billion) over electronic channels in December 2024. This came as the all-time high monthly record on the NIBSS electronic payment platform. Also, the volume of transactions processed by NIBSS for the year also jumped from 9.7 billion in 2023 to 11.2 billion in 2024. This represents a 15.5 per cent rise in the volume of electronic transactions year on year.
Stakeholders insist that the surge in e-payment transactions can be linked to the recent cash crunch experience and the cashless policy of the Central Bank of Nigeria limiting the amount of cash that can be withdrawn daily. The e-payment transactions are usually carried out through cheques, Automated Teller Machines (ATMs), Point of Sale (PoS), m-Cash, CentralPay, Remita, Nigeria Interbank Instant Payment (NIBSS) Instant Payment (NIP), mobile money, among other channels. The e-payment powers were conferred on the CBN by Sections 2 (d) and 47 (2) of the CBN Act, 2007, to promote and facilitate the development of efficient and effective systems for the settlement of transactions, including the development of electronic payment systems.
While pushing for the full use of the e-payment system, the CBN said for Nigeria to actively play at the world stage, “our payment system must be successfully benchmarked against the global best practices, as in most developed nations of the world.” It said e-payment provides safe and efficient mechanisms for making and receiving payments with minimum risks to the CBN, payment service providers and end-users. To make the e-payment vision a success, the CBN, in collaboration with key stakeholders in the payments community, developed the National Payments Systems Vision 2020 (NPSV 2020). The NPSV 2020 is a sub-set of the Financial Systems Strategy 2020 (FSS 2020).
In his keynote address titled: “Nigeria’s economic hardship and pathways to recovery,” Group Chief Economist & Managing Director, Research and Trade Intelligence, Afreximbank, Dr. Yemi Kale, said Nigeria has made significant progress in the e-payment space. Mobile money transactions have surpassed N8 trillion, while digital lenders are reaching new borrower segments. “To fully leverage this sector, we must strengthen digital infrastructure, close regulatory gaps, and promote financial education. The financial system can and should be a catalyst for inclusive growth—not just a channel for elite capital,” he said.
How it started
A survey conducted in Nigeria in 2008 by a development finance organisation, the Enhancing Financial Innovation and Access revealed that about 53 per cent of adults were excluded from financial services. The global pursuit of financial inclusion as a vehicle for economic development had a positive effect in Nigeria as the exclusion rate reduced from 53 per cent in 2008 to 46.3 per cent in 2010. Encouraged by the positive development, the Central Bank of Nigeria, in collaboration with stakeholders, launched the National Financial Inclusion Strategy on 23rd October 2012 aimed at further reducing the exclusion rate to 20 per cent by 2020.
Specifically, adult Nigerians with access to payment services is to increase from 21.6 per cent in 2010 to 70 per cent in 2020, while those with access to savings should increase from 24 per cent to 60 per cent; and access to credit from two per cent to 40 per cent, access to insurance from one per cent to 40 per cent and pensions from five per cent to 40 per cent, within the same period. The channels for delivering the above financial services were equally targeted to improve, with deposit money bank branches targeted to increase from 6.8 units per 100,000 adults in 2010 to 7.6 units per 100,000 adults in 2020, microfinance bank branches to increase from 2.9 units to 5.5 units; ATMs from 11.8 units to 203.6 units, POS from 13.3 units to 850 units, Mobile agents from 0 to 62 units, all per 100,000 adults between 2010 and 2020.
The targets were based on a benchmarking exercise carried out with peer countries, while also taking into consideration critical growth factors in the Nigerian environment. Also, the Enhancing Financial Innovation and Access (EFInA) says an inclusive financial sector is characterised by the diversity of financial services providers, the level of competition between them, and the legal and regulatory environments that ensure the integrity of the financial sector and access to financial services for all.
Also, evidence worldwide shows that access to financial services contributes both to economic growth and wealth creation and is therefore key to tackling the ‘poverty’ trap in Nigeria. “It is critical for regulators and policy makers to create an enabling policy environment to actively promote both the demand for and the supply of financial services to the unbanked and under-banked,” it said.
The impact of having more people save their funds in banks or other financial services or have more access to credit on the population and businesses especially at the informal sector cannot be over-emphasised. For instance, Nigeria’s informal sector is a sleeping giant. The potential of the sector, estimated at $240 billion, is largely untapped. The billions of naira that circulate through the informal sector has a negative impact on the country’s economic growth and development.
Other moves to boost financial inclusion
Recognising the inherent benefits of expanding financial services network, especially to Nigerians in diaspora, the Central Bank of Nigeria under the leadership of Cardoso recently launched the Non-Resident Biometric Verification Number (NRBVN) platform in Abuja. During his presentation at the programme launch in Abuja, Cardoso explained that historically, Nigerians in the diaspora have faced significant hurdles when seeking access to financial services such as payments, savings, loans, insurance, and pension products in Nigeria.
The mandatory physical verification required for obtaining a BVN often incurred considerable costs in terms of time and financial resources, especially for individuals residing in remote locations. The NRBVN platform addresses these very concerns. Through digital verification and robust Know Your Customer (KYC) processes, Nigerians across the globe can now remotely obtain their BVN swiftly and securely. This single digital gateway will enable seamless access to banking services, including opening accounts and securely sending funds, dramatically enhancing convenience and reducing costs.
“In developing this solution, we draw valuable lessons from countries such as India and Pakistan. India’s Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts have significantly simplified banking processes for its diaspora, and Indian banks currently hold approximately $160 billion in diaspora deposits, achieved by providing attractive and tailored products and services,” he said.
According to the CBN boss, in developing the NRBVN, the team also took cognisance of Pakistan’s innovative Roshan Digital Account, offering fully online onboarding and investment opportunities and successfully attracting nearly $10 billion since its inception. These examples, Cardoso explained underscore the power of digital financial inclusion and specifically tailored products in driving meaningful engagement and substantial economic inflows from diaspora populations.
“Our NRBVN platform is similarly designed to offer more than access, it is about opportunity. It is complemented by the Non-Resident Ordinary Account (NROA) and Non-Resident Investment Account (NRNIA) initiatives, collectively forming a robust framework designed to incentivize our global diaspora to channel their funds through formal financial systems into productive uses at home.
“By providing investment accounts, diasporans will have access to a variety of growing investment opportunities in our debt and equities markets, as well as products such as mortgages, insurance, and pensions. Importantly, diasporans will also have the flexibility to fully repatriate the proceeds of their investments in accordance with existing regulations, ensuring confidence and convenience in managing their assets,” he said.
Cardoso advised Nigerian banks to proactively develop and offer products specifically tailored to meet the unique needs and preferences of the diaspora community. He said that offering innovative and attractive financial solutions can greatly enhance diaspora participation, deepen financial inclusion, and significantly boost remittance inflows. “Over the past year, our policy frameworks have undergone extensive refinements, informed by sustained dialogue with International Money Transfer Operators (IMTOs). The introduction of the willing buyer, willing seller regime, licensing of additional IMTOs, and market reforms that have facilitated currency convergence are notable examples. Consequently, remittance flows through official channels have risen markedly, from $3.3 billion in 2023 to $4.73 billion last year,” he said.
