Tough Task Awaits Financial Brands As Nigeria, 6 Others Emerge Home Of World’s Unbanked Population
It seems financial brands in Nigeria and six others countries still have a lot of grounds to cover as the World Bank has revealed that over half of the world’s unbanked population resides in the seven developing nations.
According to the 2021 Global Findex report by the World Bank, the seven economies are Nigeria, China, India, Pakistan, Bangladesh, Indonesia, and Egypt.
The report stated that, globally, about 1.4 billion adults are still unbanked, meaning that they do not have an account at a financial institution or even with a mobile money provider.
Interestingly, the report reveals that the number has declined from 2.5 billion in 2011 and 1.7 billion in 2017, adding that since account ownership is nearly universal in high-income economies, virtually all unbanked adults live in developing economies.
The report added, “Fifty-four per cent which represents 740 million people of the unbanked population live in only seven economies around the world”.
The report also stated that Nigeria has made progress in the last decade, with its unbanked population falling by 50 per cent. Some 45 per cent are banked now compared to 30 in 2011.
Still, poorer adults in Nigeria and other parts of the world are less likely than wealthier ones to have an account. Among adults in the richest 60 percent of households worldwide, 79 percent have an account, while only 72 percent of the poorest 40 percent of households have accounts, it said.
This gap has halved since 2011, adding that in developing economies, the income gap is eight percentage points, a decrease from 20 percentage points in 2011.
In May, the Deputy Governor of the Central Bank of Nigeria, Aishah Ahmad, said financial inclusion in Nigeria improved significantly as the nation achieved 64 per cent of its inclusion target. The CBN has set an additional target pegged at 95 percent by 2024.
Nigeria has recorded significant improvement in its financial inclusion rate in recent years. A few developing economies do not have a significant income gap, the report said.
Despite having relatively high rates of account ownership, China and India claim large shares of the global unbanked population (130 million and 230 million, respectively) because of their sizes. Pakistan, with 115 million unbanked adults, and Indonesia, with 100 million, has the next-largest population of unbanked.
“These four economies, together with Bangladesh, Egypt, and Nigeria are home to more than half of the world’s unbanked population,” the report said.
“The top five economies hosting the largest share of the world unbanked were the same in 2017 and 2021.”
In many developing economies, however, the report said the income gap in account ownership is still in double digits. In Kenya, where account ownership is 79 percent, wealthier adults are about 20 percentage points more likely than poor adults to have an account. In Nigeria and other economies such as Mozambique, Myanmar, Uganda, and Zambia, where account ownership ranges from 45 percent to 66 percent, the gap is more than 20 percentage points.
In the Philippines and Turkey, account ownership grew significantly over the past decade, but the income gap remained stagnant at more than 20 percentage points.