PRESS RELEASE: Enhancing Financial Innovation & Access (EFInA) Receives $3.5m Gates Grant to Increase Access to Savings in Nigeria

Source: EFInA.

Original press release available online.

LAGOS, Nigeria, June 15 – Enhancing Financial Innovation & Access (EFInA) today announced that it received a $3.5 million grant from the Bill & Melinda Gates Foundation for its Innovation Fund, a special facility which seeks to promote innovation in the development and deployment of financial services by expanding financial access to the underserved population in Nigeria. This funding specifically helps establish savings and branchless banking services for people who live on less than USD 2 a day and builds on support already provided by DFID (the UK’s Department for International Development) and the Ford Foundation.

EFInA’s mission is to make the Nigerian financial system work better, especially for the poor. One of EFInA’s key objectives is to become an innovation centre targeting catalytic change across Nigeria’s financial sector. The Innovation Fund is designed to reduce the risk to organisations of investing in pro-poor financial services. In effect, EFInA’s funding would act as a one time, limited duration subsidy while new products and delivery mechanisms are designed and launched.

The results of EFInA’s 2008 National Survey on Access to Financial Services in Nigeria revealed that Nigeria’s unbanked population is equivalent to 68 million people, of which 46 million people do not have access to either formal or informal financial services. Also, only 14% of the rural population is currently banked, compared to 39% of urban population.

The penetration of formal financial products to the lower income bracket is low. Existing formal savings services in Nigeria are not designed with the needs of the poor in mind (in terms of convenience, flexibility and cost). Of those currently saving (38% of the adult population) – informal methods of saving are predominant among the lower income segments.

“Safe places to save help the poor increase their financial security, enabling families to manage life’s risks and take advantage of life’s opportunities,” said Amolo Ng’weno, deputy director of Financial Services for the Poor for the Bill & Melinda Gates Foundation. “Technology and innovation are making it possible to provide affordable and effective financial services to the poor and we’re excited to partner with EFInA on this important venture.”

Traditional banking is too expensive, especially for people in rural areas or with low incomes, so it cannot compete effectively against informal savings practices in terms of convenience, proximity and flexibility. Therefore, EFInA believes that innovation, such as new business models, distribution channels and technology, is key to improving financial access, as existing products and distribution channels currently have a very low uptake amongst the poor.

“We are delighted that the Bill & Melinda Gates Foundation will be making this substantial contribution to the EFInA Innovation Fund,” said Modupe Ladipo, Chief Executive Officer, EFInA. “This additional support will help EFInA ramp up its activities in the financial sector, stimulating greater innovation.

This grant is part of the foundation’s Financial Services for the Poor initiative, which is working with a wide range of public and private partners to harness technology and innovation to bring quality, affordable savings accounts and other financial services to the doorsteps of the poor in the developing world. The foundation believes that setting aside small sums in a safe place allows people to guard against risks, build assets, and provide opportunities for the next generation.

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