At such a time when the novel coronavirus is shredding the fabrics of the Nigerian society and creating huge tons of panic across the country, the Biblical account of a group of lepers who were caught in an Israeli famine is very relatable. From the account, the group, who were in a quarantine situation, were in a dilemma as to whether they should starve to death or die by the swords of ‘quarantine’ enforcers. As they battled the dilemma, a tiny voice suggested their common fate; whether they remained in the isolation colony, or journeyed to the city in search of survival, they were bound to die!
Perhaps that is the case with the regular Nigerian at such a time. Since the outbreak, several disease prevention procedures have been pointing to social distancing and self-isolation. Nigerians have been repeatedly advised to reduce social contacts and in fact, stay at home to help contain the pandemic. While these preventive procedures are necessary at such a time, several people have suggested that they may be impracticable in Nigeria. The employment demographics, the hygiene situation in many traditional markets, and the state of financial inclusiveness are some of the perceived reasons for the impracticability of these preventive measures against COVID 19.
Currently, many Nigerians are unbanked and lack access to formal financial services. Even before the first COVID 19 case was reported in Nigeria, the country’s performance on financial inclusion was below average. The 2018 survey conducted by EFInA revealed that 36.6 million adults, representing 36.8% of the adult population, are financially excluded. Another report in 2019 presented an even higher figure on financial exclusion, stating that 73.2 million adults representing 41.6% of the adult population in the country were financially excluded. While financial exclusion is strongly perceived to be a causal factor for poverty, it means much more at such a time. With the COVID 19 pandemic, economists are beginning to suggest the possibility of a global recession. Already, the pandemic is causing financial distress in many countries and governments are beginning to give cash handouts to citizens in many countries. In Nigeria, economic experts project that the country may experience compounded economic problems due to the pandemic. However, with regards to financial exclusion and the preventive measures that are being promoted by the country’s disease control agency, a couple of possible financial crises situations are envisaged.
First of these is an expected paucity of cash among many Nigerians. If according to EFInA, 60 million Nigerian adults are unbanked, one can assume that this category of persons may have little or no savings. Expectedly, they should also have limited access to credit facilities. In fact, a recent DATAPHYTE article suggests that a significant percentage of these unbanked persons may be daily wagers who often earn less than $1.92. With these realities, as well as the reality that Nigeria had a dependency ratio of 87% as of 2018, enforcing a ‘sit at home’ policy may reduce the purchasing power of many Nigerians. Many may be financially incapable to even purchase food items. Consequently, Nigeria may risk losing a significant portion of its population to starvation if it embarks on full lockdown, especially if adequate provisions are not made for these unbanked persons.
Another implication of Nigeria’s huge financial exclusion is the impact on electronic transactions. Ordinarily, e-transactions should provide an alternative to physical transactions at such a time and online purchases should replace regular everyday transactions. However, with the country’s high unbanked population, e-transactions may not provide so much of an alternative at this point. In fact, chargebacks, fraud, the barrier to entry, ignorance of law enforcement agencies on e-commerce and fintech, unclear regulation and lack of trust have been recognized as some of the challenges facing Nigeria’s fintech and e-commerce industries. Thus, e-commerce has not gained as much weight in the country even among the banked population and a new outlook may not be expected even with this raving pandemic.
Although Nigeria’s current economic reality does not indicate that the country can afford cash handouts to its citizens, the financial exclusion of a significant portion of the country’s population will frustrate such attempt even if it is proposed. If the country resorts to a full lockdown and cash handouts are considered for the poorest and vulnerable, reaching the unbanked population will be impossible without physical contacts. Of course, the situation will be worsened by Nigeria’s inadequate citizen’s data. Thus, financial aid to the poor either from the government or from the donor community may not be a functional alternative in the situation of a full-blown crisis.
While Nigeria joins the rest of the world in the hope for a soon end to the COVID 19 pandemic, lessons from these times must re-echo in the coming years of the country’s future. These lessons should inform policy decisions and inspire attempts at overhaul the current weak financial framework. Particularly, efforts to increase financial inclusiveness should be intensified and e-commerce should be promoted in everyday life. These efforts should also attempt to reduce illiteracy and poverty that are commonly connected to financial exclusion in the country. Overall, this pandemic calls for a healthy reflection on our national realities as well as a robust strategy for our common future.