An alarming north-south divide
While every economy has regional disparities in income and wealth, Nigeria’s are particularly striking. The Access to Financial Services 2016 Survey shows the best ratio for the South West and the worst for the three northern zones. Only the South West meets the official target of financial exclusion below 20% by 2020 with a ratio of 18% in 2016. For the North East and the North West, the rates were as high as 62% and 70%. Across the country the survey of 23,000 adults shows a rate of 41.6%.
· The survey is the work of Enhancing Financial Innovation and Access (EFInA) in conjunction with the National Bureau of Statistics. It divides the financially served between the banked, those with access to other formal services (10.3% of the total in 2016) and the balance tapped into informal financing (9.8%). We had not thought that as many as 38.3% of adults (of 18 years’ age and above) surveyed were banked.
· This was the only positive finding of the survey. Other than the South West all zones saw an increase in financial exclusion between 2012 and 2016. This amounted to seven percentage points for the North Central, six for the North West and two for the North East.
· The share of informal financing ranged from 4% in the South West to 14% in the North East, the North Central and the South South.
· Two other statistics we have lifted from the EFInA survey are that 58.3% of adults were under the age of 35 and just 2% had access to insurance.
· The deterioration in financial exclusion over the period covers the economic slowdown in 2015 and the recession in 2016. The unemployment rate rose steadily to 14.2% in Q4 2016.
· All zones other than the South West bore the footmarks of the Achilles heel of the economy. The slide in the oil price has brought a fall in government revenues, employment and export earnings, leading to a squeeze on incomes.
· The response of the FGN, which we can see in successive budgets and its Economic Recovery and Growth Plan, has been to encourage the diversification of the economy and establish safety nets for the poorest through its social interventions. Another route, albeit sensitive, would be to revisit the basis for the monthly distributions from the federation account.
· Finally we should make the point that public disorder and violent anti-government protest are likely to breed where exclusion in all forms, including the financial variety, is widely felt.