Nigeria: Tight Rope to Gender Balance in Financial Inclusion

19 October 2020

There are indications that the nation's financial system may be forced to create special purpose vehicles to address the challenges of gender gap in its financial inclusion programe.

This comes at the backdrop of a widening gender gap in agency banking services providers where the proportion of female agents appears to be diminishing. The report shows though the number of female agents increased slightly to 300,000, from 294,000 as at April 2020, the percentage position relative to the male counterpart dropped to 19.8 percent, indicating that more male agents than female agents enrolled in the program in the latest report.

The Central Bank of Nigeria, CBN, in its latest push towards addressing the gender gap in financial inclusion, had stressed that more women in agent banking may be the key to close the gender gap in financial access in Nigeria.

However, the apex bank, in conjunction with deposit money banks, financial Vanguard learnt, is banking on other initiatives including creation of special incentives for female agents as well as lowering requirements for assessing financial services for women.

Among other things, the strategy involves the expansion of service delivery channels, through the growth of agent networks under the Shared Agent Network Expansion Facility (SANEF) is underway.

A source close to the SANEF told Financial Vanguard that "the strategic imperatives are to implement a set of measures to support account opening by women on a large scale and in short term; Expand financial and digital literacy programs for low income women in the context of specific financial behaviours and products; Expand delivery channels to serve women customers closer to home; Mandate development of systems of gender disaggregated data collection to meet the needs of Financial Services Providers, FSP's, government and the regulatory/supervisory authorities.

In its framework for advancing women inclusion in Nigeria, the SANEF team said to achieve complete women financial inclusion, there will be an implementation of a set of measures to support account opening by women on a large scale and in the short term.

Vanguard learnt it has recommended, among other things, the expansion of the issuance of National Identity Numbers, (NIN) to reach all Nigerian women, erasing the current gender gap in NIN issuance; determine less cumbersome (and safer, in the post pandemic context) processes of capturing biometrics in the field; where there is relatively greater ease of issuance of BVNs, follow this as an alternative path, with the processes in both cases managed by women as far as possible.

Another strategy mentioned by the apex bank is the expansion of bank service delivery channels to serve women customers closer to home.

It noted that in Nigeria, agent network development was initially slow, with low numbers overall and with most agents operating in urban areas saying, " The expansion of delivery channels through the growth of agent networks is well underway under the Shared Agent Network Expansion Facility (SANEF),designed to deepen financial inclusion in Nigeria through an integrated ecosystem with strong regulatory oversight, consumer protection and interoperable systems with limited concentration risk.

The regulator also stated that developing financially sustainable products and delivery systems that respond to low income women's needs is another strategic imperative to improve financial inclusion.

To achieve this, the apex bank recommended among other things: "A challenge FSPs (financial services providers) to increase the percentage of the loan portfolio and of savings accounts attributed to women; develop a program of innovation grants to incentivize new products and delivery systems with the greatest potential for advancing women's financial inclusion.

"Building resilience by developing savings (including structured savings solutions), insurance, and pensions, and capital market products targeted at women customers, including the bundling of products.

"Develop financial products for SME sector designed to work for women; leverage bank-led mobile money operator models to offer credit solutions to MSMEs.

"Further the development of gender sensitive products for agricultural finance, including structured group finance that link farmers and traders to capital and markets.

"Determine additional ways for community-based financial institutions to serve low-income women across Nigeria, leveraging existing community structures (including via fintech solutions); advance SANEF initiatives to support the offer of products and services suited to low-income women (savings, credit, micro- insurance, and micro-pensions), with particular attention to the North.

"Identify opportunities to develop financial products in the areas of microinsurance and micro-pensions; in the insurance realm, target large groups and take into consideration appropriate cover, simple and easily understood products, manageable premiums, suitable delivery channels, and convenient premium collection methods."

The prospects

The CBN has plans to eliminate gender gap in financial inclusion by 2024 using its revised framework for advancing women's financial inclusion in Nigeria.

The framework, according to the apex bank, builds on the revised targets of the 2018 National Financial Inclusion Strategy, which aims at reducing the financially excluded adult population to 20 percent by the end of this year.

But the apex bank has said that the achievement of the goal was disrupted by the emergence of the Corona Virus Pandemic.

According to Enhancing Financial Innovation and Access (EFiNA) 2018 survey report, the gender gap in financial access is present across regions, income groups and age groups, indicating that there are systemic obstacles to women's financial inclusion in Nigeria and women are still more likely than men to rely exclusively on informal financial services.

It stated: "While women in the North West and North East are most likely to be excluded, the highest relative gender gap is in the South West (23 percent for women and 14 percent for men)."

The apex bank cited Demand-related barrier, supply related barrier, legal regulatory/supervisory barrier and financial and technical infrastructure barrier as key barriers to women financial inclusion in the country.

It however noted that the framework has set up eight strategies to enable the attainment of an equal gender financial inclusion by 2024.

The CBN said: "The strategic imperatives are consistent with the priorities identified and adopted in the 2018 National Financial Inclusion Strategy, in addition, they take into account the December 2019 Assessment of Women's Financial Inclusion in Nigeria.

"Complete and consolidate an enabling environment required to enhance the government financial inclusion agenda, integrating a gender lens; Develop financially sustainable products and delivery systems that responds to low income women needs;

"Promote , at the industry level, the expansion of DFS (Digital Financial Services) and fintech solutions aimed at improving women's financial inclusion; and build a culture of women leadership and staffing in financial institutions and other key agencies."

The regulator noted that a monitoring and evaluation plan will be adopted at the outset of the implementation of the framework, following the identification of specific activities (actions) under each strategic objective/ recommendation, classified as short, medium, or long-term actions.

Constraints to financial inclusion

There are indications that some huge barriers still exist in the efforts towards achieving financial inclusion for women in Nigeria.

The Central Bank of Nigeria, CBN, said the country is lacking a consolidated data base as the slow pace in the issuance of the National Identity Number (NIN) is hindering bridging of the gender gap in financial inclusion.

Stating the financial infrastructure and technical barriers to achieving women financial inclusion in Nigeria, the regulator said: "NINs have not been issued at the desired pace; the deployment is costly; a consolidated national database is still lacking. Connectivity infrastructure does not meet the need for integration of low income population segments, disproportionately represented by women.

"The data needed to monitor the progression of women's financial inclusion, and the barriers along the way are not available; most financial sector data are not disaggregated by gender."

According to CBN, regulatory and supervising bodies in the financial sector often assume that their practices are gender neutral but otherwise are the case.

"At the policy and regulatory level, central banks and other oversight bodies often assume that their policies, regulations, and supervisory practices are gender neutral.

"In reality, policies and regulatory frameworks significantly impact women's financial inclusion differently from men's financial inclusion. The regulatory framework for DFS / Fintech is not yet consolidated.

"Possible adjustments to the existing regime for Payment System Provider (PSP) licensing regime to accommodate Fintechs (notably tiering). This regulatory framework does not incorporate considerations of the promise of digital financial services (DFS) for women.

"There are overlapping new and draft guidelines and policies, with implications for women's financial inclusion not defined, leading to uncertainties for FSPs."

On pricing schedule, it said: "The pricing schedule for agent fees, while intended to keep down the cost of financial services, is a barrier to expanding agent networks; the lack of motivation for the specific recruitment of female agents reduces the impact of agent networks on the inclusion of lower-income women as clients.

"The rules-based Guidelines for Micro-insurance Operations in Nigeria (January 2018) aim at bringing new players into the market. Unfortunately, they have created additional uncertainty mainly with regard to statutory deposits and capital needs and raised concerns from insurers as to whether they could offer microinsurance as part of their normal business."

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