Financial Inclusion is a stepping stone to attaining the SDGs

I magine an Africa where we have finally eradicated poverty and hunger, malaria and typhoid rarely if ever, claim millions of lives, girls are empowered to get an education and pursue their dreams and careers, just like boys, and a vibrant economy.

This is the future the United Nations is trying to forge through the 17 Sustainable Development Goals (SDGs). By 2030, the plan is to have a planet that is significantly better off than it is today.

Since 2016, individuals, governments, institutions and organizations from all over the world have bought into the vision and have executed to the best of their ability, projects which will address one or more of these goals.

We in the financial inclusion space strongly believe that increased inclusion will aid and catalyse several of these SDGs and with good reason. In at least 6 of the seventeen SDGs, financial inclusion is mentioned (sometimes explicitly) as a metric used to determine the success of the SDG. These include SDG 1 – Eradicating poverty; SDG 2 – Zero Hunger; SDG 3 – Good Health and Well-Being, SDG 5 – Gender Equality; and SDG 8 – Economic Growth and more Jobs.

In Nigeria’s quest to fulfil the SDGs, addressing financial inclusion will have far reaching and cross cutting effects as it enables us kill multiple birds with one stone on the national development order. In fact, the National Financial Inclusion Strategy is so ambitious that should it succeed, will result in a turnaround in the national economy, personal income, and general well being of many Nigerians.

We’ve seen similar results in Kenya. In an MIT study, the incredible success of M-PESA was found to have lifted as many as 194,000 households – 2% of the Kenyan population – out of poverty, and has also improved the economic lives of poor women and households where a woman is the breadwinner.

SDG 1 (Eradicating Poverty): in particular holds a special significance for Nigeria as we have struggled to tackle the high poverty level over the last three decades. In the World Bank’s 2017 Atlas of Sustainable Development Goals, a publication tracking the progress countries are making to meet the SDGs, Nigeria recorded an increase in the number of citizens who live in extreme poverty (less than $1.90) over the period of the study. In fact, between 1990 and 2013, 35 million more people sunk into extreme poverty.

One of the ways we can flip this script is increased financial inclusion. Financial inclusion is the access to and use of financial services. Access to savings, credit, microinsurance and the like have been shown to be powerful levers in the transition out of poverty. Research also shows that access to financial services is a key indicator of how an individual builds and maintains reserves, plans, prioritises, manages and recovers from financial shocks. Such savings, when invested in small businesses, provide income flows that helps pay for food, education and health which are all indices for poverty measurement.

Financially included individuals are better equipped to save and plan, thus, improving their economic well being and standard of living. Access to credit also empowers low-income earners to invest in agriculture ( a main source of livelihood in rural regions) thus improving production, food security and increasing the sector’s contribution to GDP.

SDG 2 (Zero Hunger): Financial inclusion plays an instrumental role in eliminating hunger, especially among those trapped in poverty – living in rural areas and excluded from formal financial services.

80% of the food consumed in the developing world is produced by farmers who themselves live in poverty. These farmers live majorly in rural areas that are sparse of infrastructure and have seasonal income (due to the inherent nature of farming seasons). As such, they are vulnerable to natural disasters, climate change, or war. Access to financial services such as microcredit or insurance can directly impact the small farmer’s financial health and food security.

Under the auspices of the Federal Ministry of Agriculture, the Growth Enhancement Scheme (GES), operated by FETS ensures agricultural inputs are distributed to farmers.

SDG 5 (Gender Equality): Studies have revealed a financial inclusion gender gap in Nigeria i.e. higher rates of exclusion exist among women than men. Access to financial services enables women to manage their finances and be less dependent on their spouses. Addressing gender equality means figuring out ways to bring access to females since research has also shown that women tend to invest savings returns on their families and communities (which has potentially broad economic benefits). This premise has informed a few initiatives such as the partnership between Diamond Bank and Women’s World Bank which specifically empowers women with bank accounts.

With increasing efforts towards increasing women’s access to financial services, several economies are now promoting policies that give women the right to full economic participation, thus lowering gender inequality.

SDG 8 (Economic Growth): There exists a positive and substantial relationship between the access to and use of financial services and economic growth in Nigeria as evidenced in a technical paper we published last year. The research suggests that increasing financial inclusion would restore vitality to Nigeria’s economy and maybe even sustain it. Access to savings and credit stimulates economic activity that ultimately increases employment, gross domestic product (GDP) and economic growth.

The numerous links between financial inclusion and SDG fulfilment are undeniable. The more people get included and gain access to financial services, the easier it will be for us to attain the Sustainable Development Goals.

And the better our collective future will be.

Ibukun Taiwo & Olayinka David-West