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Understanding Nigerian Women’s Access to Credit and Loans: Gender-Disaggregated Data Analysis of the Nigerian Lending Market

May 09, 2022 - By Gender Centre of Excellence

A new study on how gender impacts access to credit services in Nigeria shows that 98 percent of Nigerian women are left out of formal credit markets. This research, conducted by the Gender Center for Excellence (a project fiscally sponsored by Rockefeller Philanthropy Advisors), in close collaboration with EFInA, CreditRegistry, and Innovations for Poverty Action (IPA), analyzed gender disaggregated data and identified potential opportunities to increase women’s access to formal financial credit services.

Formal financial inclusion remains low in Nigeria: just about three percent of adult Nigerians have borrowed from formal sources, and less than half (forty-five percent) have a formal account at either a bank or microfinance institution (EFInA Access to Finance Survey 2020). The most common reasons for not having a formal account are negative perception of formal institutions, little access to banks, or not having enough income to save. This suggests that the broader ecosystem of formal financial services is not conducive toward inclusion—either through low demand or poor provision of the right financial products. While both men and women lack access to formal financial services, especially credit, a “one-sized” approach is not appropriate to onboard all Nigerians.

Some of the key findings and recommendations from the study include:

  • Only 45 percent of adult Nigerians borrow at all.
    • Recommendation: Many informal borrowers lack trust in formal institutions and are not aware of credit products at-market, or believe they lack the qualifications for a loan. Providers need to make the case for why credit is an important part of financial health and resilience.
  • Young women aged 18-25 performed better than their male counterparts on indicators such as account activity, borrowing, performance, and more.
    • Recommendation: These women will benefit from more complex financial products that can encourage them to plan for future financial health.
  • 98 percent of Nigerian women are left out of formal credit markets, a statistic exacerbated by low education, limited decision-making power, and being in a rural area
    • Recommendation: Many of these women require more time to become comfortable with financial products. As such, bundling services with existing platforms like mobile banking and savings groups can address onboarding challenges.
  • Gender norms and household dynamics can shape women’s access to finance; and different segments (e.g. younger vs. older women) have unique financial preferences and behaviors
    • Recommendation: Younger women are more sophisticated with their credit than older women, and will therefore benefit from more complex, high-yield products. For older women, more effort is required to instill trust in financial institutions, as such they will benefit from approaches that they are familiar with face-to-face interactions, and services integrated within existing social networks.

There are currently over 100 million adult Nigerians that would benefit from formal financial services, and this report provides valuable insights on their behaviors and financial preferences.

Download full report here.

Photo by Iurii Krasilnikov on iStock.

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