It took winning an international writing prize for me to realise how excluded I was from banking in my country.
Before this, I had a savings account that I had opened at school, during a financial literacy session, with nothing but my school identity card, a blue pen, and a 500 naira (£1) required balance.
Fast-forward to 2020: a call from my bank told me of a deposit to my account, made by the Commonwealth Foundation. I would need a valid identity card and a utility bill to upgrade my account tier to access my prize money. This could be done at any of the bank’s branches. I double-checked these were the only requirements. The answer was yes.
At the bank, I was presented with a new requirement – two current account holders to sign a referral form. A slight inconvenience. My friend has a salaried current account, and he also got a work colleague to act as a second referee. I submitted the forms and was assured I could access my funds within 48 hours.
Forty-eight hours would bleed into 96 hours. When I called, I was told that my references had been rejected. Customer service had forgotten to specify that the referees must be non-salaried current account holders.
I live in Lagos, several hundred kilometres away from family. I began making a mental list of people I knew who might have a non-salaried current account. Luckily, my friend’s mother was able to get two colleagues to act as my referees. This was after painstaking explanations of the legitimacy of the funds and attesting that she knows me.
It would take 15 daily trips, bracing Lagos traffic, which has not tapered down in the heat of the pandemic, to get access to my prize money. On one trips, I was upstaged by a torrential rainfall that soaked and damaged my passport. On my ninth visit, my outrage burst out, partly out of frustration at all the bank trips and partly because I had to make a payment for a professional exam that day.
A bank official pulled me aside. The new references were taking time to confirm because they were accounts from a different bank. They could help me “arrange” two non-salaried accounts from my bank to be confirmed “sharp sharp” and I would be able to access my funds. Of course, this would come at a price. I was faced with the dilemma of succumbing to the financial malpractice of “buying” referees or following due process. I chose the latter.
Nigerian banking tells itself that the “strict regulations” it imposes on foreign remittances such as mine are to mitigate against rampant cyber fraud. What this red tape actually does is to exclude ordinary Nigerians from financial services. The fraudsters have designed ways, such as “buying” referees, to bypass regulations unscathed. If these regulations were up to best practices, payment platforms like PayPal and Swift would not exclude Nigerians living in Nigeria from using their services.
According to the World Bank; financial inclusion gives people and businesses access to financial products and services they need – delivered in a responsible and sustainable way. A research paper, published in July 2017 by Noelia Cámara and David Tuesta for the Bank for International Settlements, ranks Nigeria 105, 80, and 82 out of 137 countries in access barriers and usage of financial services.
In a country bedevilled by poverty and homelessness, needing a utility bill to prove an address and a government-issued driver’s licence, international passport, national ID card, or permanent voter’s card to open a standard savings account is impractical. The national ID card and permanent voter’s card are technically issued free of charge but may take years – I registered for an ID card in 2016 and am yet to receive it.
An international driver’s licence cost between 6,000 and 10,000 naira, while a passport costs between 15,000 and 20,000 naira, excluding extra charges and bribes that change hands in the registration offices. So millions of Nigerians are excluded from financial services – especially the 98 million people living in rural areas.
According to data from the Nigeria Inter-Bank Settlement System, there are 25.1m current accounts in Nigeria. This data is not broken down into active/dormant or salaried/non-salaried accounts.
To put this all into perspective: of the 10 calls I made, only one person knew someone who knows someone with a non-salaried current account. Such accounts require a substantial initial balance and attract maintenance fees.
So in Nigeria, I am only able to access my prize money because of my proximity to someone with access to a more privileged socioeconomic class. Without that, I would have been forced to take the bank official’s whispered offer. So, where does the banking sector draw the line between “regulations” and downright exclusion?
My undergraduate thesis was on the nexus between foreign remittances and economic growth, based on two sub-Saharan African countries (Nigeria and Ghana). It helped me understand the importance of foreign remittances in improving standards of living and stimulating the economy by substantially adding to the national income cycle. In 2019 alone, Nigeria received a foreign remittance inflow of $23.8bn (£18bn), about 5.3% of the country’s GDP.
Most Nigerians have to use go-betweens – people with domiciliary foreign currency accounts – to receive money from family abroad. This comes at a commission cost and, in extreme cases, the go-betweens may spirit away with the money.
Nigerian banks continue to make towering progress in technology, efficiency, and stability, but need to do better. An overhaul of the banking sector is long overdue to design an easy, accessible, and inclusive framework for Nigerians accessing financial services to truly build a modern, fair and fraud-free economy.