1.5% Nigerians use insurance products, says survey

1.5% Nigerians use insurance products, says survey

Chuks Udo Okonta

Enhancing Financial Innovation & Access (EFInA) made public the results from its Access to Financial Services in Nigeria) 2012 survey at its Innovation Forum titled, ‘From Data to Action: Making Financial Inclusion Real in Nigeria’, which held in Lagos, recently. Specifically, the EFInA Access to Financial Services in Nigeria 2012 survey among other things, aims to measure trends in access and usage of financial services in Nigeria from 2008 to 2012, and to establish credible benchmarks and indicators of financial penetration in Nigeria. EFInA is the leading financial sector development organisation promoting financial inclusion in Nigeria.

Financial inclusion is the provision of a broad range of high quality financial products such as savings, credit, insurance, payments and pensions, which are relevant, appropriate and affordable for the entire adult population, especially the low income segment. An inclusive financial sector is characterised by the diversity of financial services products and providers, the level of competition between them, and the legal and regulatory environment that ensures the integrity of the financial sector and access to financial services for all.

The absence of relevant and reliable data and analysis about how individuals and households manage their finances was one of the biggest hurdles to improving access to financial services in Nigeria. Since 2008, the biennial EFInA Access to Financial Services in Nigeria survey has consistently provided credible market information on the Nigerian financial sector, by highlighting regulatory and market obstacles to growth and innovation in the financial sector, identifying the financial needs of the adult population, and thereby giving service providers the opportunity to develop innovative products to serve the low income population in Nigeria.

Unveiling the results from the EFInA Access to Financial Services in Nigeria 2012 survey, Ms. Modupe Ladipo, Chief Executive Officer, EFInA, said "Only 37.8 million Nigerians, representing 43.0% of the adult population have access to and/or use formal financial services; whilst 34.9 million Nigerians representing 39.7% of the adult population are financially excluded. The good news is that between 2008 and 2012, the number of adults that are financially excluded decreased by 10.5 million."

Keynote speakers at the EFInA Innovation Forum were Mallam Sanusi Lamido Sanusi, Governor, Central Bank of Nigeria (CBN), and Fola Daniel, CommissionŝkzInsurance, National Insurance Commission (NAICOM). Mr. Peter Gross, Business Development Manager for Africa, MicroEnsure was the international guest speaker.

Mallam Sanusi, in his address titled, ‘Overview of the National Financial Inclusion Strategy and the role of banks in promoting financial inclusion in Nigeria’ said, "There has been some improvement in the move to drive financial inclusion in Nigeria, however we still have a lot of issues to cover, such as access to financial services and to the right financial product. In addition, consumer protection and financial literacy are critical issues that are paramount to making financial inclusion work. The Central Bank has therefore set a target to reduce the percentage of financially excluded adults to 20.0% by 2020, as stated in the National Financial Inclusion Strategy."

In his address titled, ‘The role of NAICOM in facilitating the development of inclusive insurance products and services,’Daniel stated that, "The National Insurance Commission is fully committed to driving financial inclusion through the development of Takaful (non-interest ethical insurance) and microinsurance for the excluded and low income segment of our society. NAICOM has also put in place a strategic roadmap to reposition the insurance sector to effectively serve the low income segment in Nigeria."

Gross acknowledged that the cost of delivery and operations of conventional insurance products put them out of reach of the mass market. He added that understanding the barriers to the uptake of insurance will allow providers to deliver simplified microinsurance products through innovative channels such as mobile phones. He stated that, "The opportunity for microinsurance in Nigeria is significant given that the EFInA Access to Financial Services in Nigeria 2012 survey shows that only 1.3 million adults (1.5% of population) has an insurance product."