Findings by the Central Bank of Nigeria (CBN) have shown that the Financial Inclusion Strategy, an initiative of the apex bank aimed to make bank services available to majority of the populace, is being threatened by low awareness, insufficient financial literacy, cultural values and other environmental challenges.
This is contained in the “National Financial Literacy Baseline Survey Report – October 2015”, published by CBN and posted on its website Monday.
The National Financial Inclusion Strategy (NFIS) was launched by Nigerian Government in 2012 to reduce the number of adult Nigerians who are financially excluded from 46.3 per cent in 20101 to 20 per cent in 2020. The scheme also aimed to empower the public through an increase in co-ordinatedfinancial literacymeasures that are complemented by consumer protection.
According to the Baseline Survey Report, poor level of awareness and understanding of various financial matters relating to the NFIS, constitutes a major obstacle to the successful implementation of the scheme. The survey, for instance, pointed out that a high number of the people are not aware of the Cashless Policy components such as Point of Sale (PoS) and financial matters that facilitate savings or stock of wealth such as bonds, stocks, insurance and pension.
It identified “current levels of awareness and understanding of various financial and economic terms and levels of knowledge of financial processes” as serious hitches to the NFIS initiative and impacts negatively on the role of financial literacy as a tool for achieving the objective of the NFIS. The report expressed concern that about 70 million or 70 per cent of the adult population are unaware of mobile-money.
“While it is not surprising that so few people (7.6 per cent) have heard of Point-of-Sale (essentially a practitioners’ term) and of terms like bonds, stocks and mortgages, it is of concern that more than 70 per cent (69.7 million) of the adult population have not heard of mobile-money; more than a third (35.9 million) have not heard of pensions or a current account; a
third (32.8 million) have not heard the terms interest or current account; and one in four people have not heard of a savings account.
“If people have not even heard of these terms, they are a long way from understanding these terms and ultimately using these products.Of equal concern are the poor ratings the respondents gave themselves with respect to financial processes.
“For example, 85.3 per cent indicated that they have ‘no knowledge’ of processes such as paying or receiving money through a mobile phone or obtaining insurance; more than two thirds do not know how to calculate an interest rate; and a third indicated that they had no knowledge of how to plan for old age,” the report says.
The report also expressed concern that respondents to the survey questionnaires gave themselves poor ratings in terms of financial process while more than two thirds do not know ow to calculate interest rate.
‘Of equal concern are the poor ratings the respondents gave themselves with
respect to financial processes. For example, 85.3 per cent indicated that they
have ‘no knowledge’ of processes such as paying or receiving money through
a mobile phone or obtaining insurance; more than two thirds do not know how
to calculate an interest rate; and a third indicated that they had no
knowledge of how to plan for old age.”
The CBN explained that the overall goal of the Baseline survey was to measure levels of financial capability in Nigeria to guide financial literacy policy options so that key areas of concern can be addressed through financial education interventions, and progress measured over time.
According to the report, Nigerians are averse to credit due to various reasons ranging from fear of getting deeper into debt to poor knowledge of the process.
“Of the 63.1 million Nigerians who do not have any form of loan/credit, 37.6 million indicated that they do not need or like credit or that credit is too expensive. A further 17.6 million indicated that they do not know where to get a loan or how to apply for it and an additional 11.0 million have no access to credit basically because they do not qualify, have no guarantors/collateral or nowhere to borrow nearby.”