Faith Nyasuguta
Poor individuals disproportionately represent the unbanked population, with the World Bank reporting that half of unbanked adults come from the poorest 40% of households. This stark divide highlights a significant challenge in achieving financial inclusion, particularly in Africa, where a large segment of the population remains without access to basic financial services.
Over 1.6 billion adults globally lack protection for their money, having never encountered financial products like insurance, loans, or mortgages.
The growing number of unbanked individuals contributes to a higher poverty headcount ratio in certain regions, ultimately hindering economic growth. A World Bank report emphasizes that the majority of unbanked adults originate from lower-income households, with a notable number also found among wealthier segments of the population.
Globally, regions with the highest rates of financial exclusion are primarily developing or emerging economies. According to Global Finance, the Middle East and Africa account for 50% of unbanked individuals, followed by South and Central America at 38%, Eastern Europe and former Soviet republics at 33%, and Asia Pacific at 24%.
Consulting firm EY Global indicates that increasing access to banking, savings, and lending products could potentially boost GDP by up to 14% in large emerging markets like India and up to 30% in frontier economies such as Kenya. This underscores the significant economic potential of enhancing financial inclusion.
In Sub-Saharan Africa, the rise of financial technology (fintech) solutions -”such as payment gateways, lending platforms, and investment apps” has played a crucial role in bridging the gap for unbanked populations. These innovations not only provide access to financial services but also foster entrepreneurship, particularly in rural areas. This enables individuals to engage in digital banking without the need to visit traditional banking institutions.
A recent Access to Finance (A2F) survey by Enhancing Financial Innovation & Access (EFInA) revealed encouraging trends in Nigeria. The percentage of financially included Nigerians increased from 56% in 2020 to 64% in 2023. This growth signifies notable progress as Nigeria aims to reduce financial exclusion to 25% by 2024.
In summary, addressing the challenges of financial exclusion is critical for fostering economic growth and reducing poverty, particularly in Africa. The integration of fintech solutions holds promise for improving access to financial services, ultimately enabling more individuals to participate in the economy and secure their financial futures. The journey towards greater financial inclusion is vital not only for individual empowerment but also for broader economic development across the continent.
| Rank | Country | Population (Millions) | % Unbanked |
|---|---|---|---|
| 1 | Morocco | 36.9 | 71 |
| 2 | Vietnam | 97.3 | 69 |
| 3 | Egypt | 102.3 | 67 |
| 4 | Philippines | 109.6 | 66 |
| 5 | Mexico | 128.9 | 63 |
| 6 | Nigeria | 206.1 | 60 |
| 7 | Peru | 33 | 57 |
| 8 | Colombia | 50.9 | 54 |
| 9 | Indonesia | 273.5 | 51 |
| 10 | Argentina | 45.2 | 51 |
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