Nigeria : How embedded finance is driving financial inclusion
- 05 April 2022 / News / 210 / Fares RAHAHLIA
Adaobi (not real name too) moved to Lagos, Nigeria’s commercial capital in 2018 from Enugu hoping to secure a high paying job in 2018, but when none was forth-coming, she decided to embark on the entrepreneurship journey. To realise this, she approached her bank for a business loan.
After weeks of filling all sorts of forms, Adaobi was eventually notified that her loan request had been declined.
“I filled many forms, went to the bank a couple with the hope that they will give me the loan since it was N250,000 to start my business. But I was disappointed when I was turned down,” Adaobi said.
Her experience is one tale out of the many about the different hurdles Nigerians face when trying to access financial services.
But the advent of financial technology is changing all of that as many non-bank businesses are springing up and offering financial services such as; quick loans, bank accounts, savings and investment wallets, payments and lending to a tech savvy audience (banked and unbanked) – without statutory documentation.
The concept of companies offering bank or financial like services to the public is known as embedded finance. The aim is to simplify financial service processes for consumers, making it easier for the public to access money-related services they need, anytime, anywhere.
Imagine not having to approach a bank physically for loans, paying cash when making purchases at a store, logging on to your bank app before making a money transfer, buying global stocks from the convenience of your phone apps, buying insurance on a product when making a purchase, investing your money without needing a fund manager, purchasing a product now and paying later. Those are some of the things embedded finance is enabling.
According to a Forbes report, the estimated market value for embedded finance will be over $138 billion by 2026. It is therefore clear that it’s not just a financial trend, it’s the future of transactions.
Fintech startups like Piggyvest, Kuda, Bamboo, Flutterwave, Paystack, Paystack, RiseVest, FairMoney, Branch, RenMoney, Risevest are a few of the non-traditional finance entities offering customers embedded finance services in savings, loans, investment, money transfer, invoicing etc.
According to Dataphyte, a media and research data analytics organization. N26.17 trillion was the total figure of unbanked money in Nigeria from January to November 2021. Most of these transactions happened outside of traditional banking systems through embedded finance services.
In its own survey, the United Kingdom EFInA (Access to Financial Services in Nigeria 2020) stated that 51% of Nigerian adults now use formal financial services, such as bank, nonbank, microfinance bank, mobile money, insurance, or pension accounts, up from 49% in 2018.
The growth in financial inclusion has in part been aided by digital access, financial services and agent banking. This, therefore, underscores the need to explore the opportunities that will drive faster progress towards financial inclusion, particularly for groups such as young people, men and women in rural Nigeria.
MOROCCO - IMF Mission Highlights Moroccan Central Bank's Transparency Practices
- 28 December 2022
This mission, whose expertise and relevance of recommendations praised Bank Al-Maghrib, focused on examining the bank's transparency practices in five areas, relating to "Governance", "Policies", "Ope...
MOROCCO - Morocco Has Strong Inflation Fundamentals, Says Economy Minister
- 27 December 2022
"Morocco has long had the lowest inflation in the region, and has been able to minimize the impact of the crisis on the purchasing power of citizens despite a difficult economic situation in 2022," sa...
MOROCCO - Ambassador to AU Urges PAP to Ensure Full Participation of African Citizens in Continent's Development
- 20 December 2022
The PAP was established with a clear statutory mandate to ensure primarily the effective participation of African citizens in the economic integration and development of the continent, the Moroccan di...
MOROCCO-Morocco Opposes Modernity, Social Reality's Hopes to Fractures, Fears Expressed in Fragmented World - Azoulay Tells 'The Atlantic Dialogues'
- 19 December 2022
"Carried by the committed and proactive leadership of His Majesty King Mohammed VI, Morocco has chosen, in the land of Islam, to make the legitimacy and richness of all its diversity the central engin...
MOROCCO-Lower House Speaker Visits Austria to Strengthen Parliamentary Cooperation
- 16 December 2022
The visit of Talbi Alami is the first of a speaker of an Arab and African legislative body in the Austrian Parliament and comes to commemorate the 240th anniversary of Moroccan-Austrian relations, cel...