Two ways in which Ethereum can help to drive Financial Inclusion in Nigeria

Long bank queues, stressful account opening procedures, stressful reversal procedures, crowded banks, technical glitches, not being able to withdraw with your ATM card, delays in transaction processing, and spending a whole day in a Bank without getting your complaints resolved is not a strange thing any longer. It is now a normal experience for many Nigerians. You are used to it and sometimes expect it. After all, is it not XYZ Bank again?

The traditional banking systems have failed to meet up the financial demands of the growing population. I do not even think it can meet up especially when the population is constantly growing. There is a need to leverage emerging technologies to solve the problem. In this article, you will understand two ways in which Ethereum can be utilized to solve the problem of financial inclusion in Nigeria.

What is Financial Inclusion?

Financial inclusion is a state or situation where individuals and businesses have access to useful and affordable financial products and services that meet their needs and are delivered in a responsible and sustainable way. Your needs range from making safe and secure transactions, payments, and savings, and accessing credit and insurance services.

When these needs are adequately provided for or met for an individual, that individual is set to be financially excluded. When the needs and services are adequately provided to the individual, he or she is said to be financially included.

Why is Financial Inclusion important?

Financial inclusion is very important, especially in addressing global problems like hunger, poverty, and unemployment. Nigeria is one of the most populous countries in Africa with over 200 million people and more than 51% of the population living in the cities. Over the years, the unemployment rate in Nigeria has risen to above 40% and the poverty rate has risen from the 2018/19 figure of 82.1 million to the projected 95.1 million in 2022.

Poverty and unemployment are global problems with virtually every country including developed countries with a share of poor and unemployed people. However, the World Bank Group strongly believes that financial inclusion can reduce the number of poor, and unemployed people and also achieve seven out of the seventeen sustainable development goals.

When the majority if not all can access financial services and products, people can save money for emergencies, invest, and obtain loans for business expansion, education, or do something that will add value to their lives, thus, making them more valuable with the capacity to earn more.

The State of Financial Inclusion in?Nigeria

According to the World Bank 2021 report, Nigeria is among the seven countries with a huge unbanked population. The reasons for Nigeria’s high unbanked population are not far from factors like lack of adequate infrastructure for the growing population, high cost of banking services, financial literacy, and a couple of other things associated with traditional banking like long queues, delays in service, poor customer service experiences, complicated account opening procedures, Technical glitches, payment failures, and delays in transaction processing.

Accessing financial services looks like work. At 18, I was told that I could not open a bank account. As a result, I could not access financial services tied to owning a bank account like savings or investing because I was believed to be underaged. What they forgot was that Minors have financial needs. To address mine, I resorted to using tea containers to save.

Finally clocked 18. With so much joy, I boarded a bus to my preferred bank on a beautiful Monday Morning. I am going to own a bank account. My uncles can send me money and my mother will not know. That joy...

My joy was crushed with stress. I had to go through stressful procedures that included sourcing the documents required for my account creation. I had to deposit a certain amount of money to complete the process. To obtain my ATM card, I had to go through another set of procedures. I could not complete the processes in one day.

All of these make Nigerians like you and I perceive banks as stressful, unreliable, or inefficient when it has to do transactions. Hence, we find alternatives, use them, and care less about what anyone thinks.

What is Ethereum?

Ethereum is a Blockchain technology that runs on a peer-to-peer network that allows you to communicate and perform secure transactions with another person without any third party. It also allows developers to create decentralized applications that are not controlled by a central authority.

Let's hear what the founders have to say about Ethereum.

Ethereum is a network, made up of many communities, and a set of tools that enable people to transact and communicate without being controlled by a central authority. It is home to digital money, global payments, and applications. There is no need to hand over all your personal details to use Ethereum - you keep control of your own data and what is being shared.

Two Ways in Which Ethereum can drive Financial Inclusion in?Nigeria

• By addressing the Infrastructural challenge witnessed in the traditional Banking?sector

Many Nigerians especially those living in rural areas lack access to physical banks. In Urban areas, physical banks are insufficient compared to the number of Nigerians who need financial services. Banks, especially new ones having only one branch in a state, are very common. Sometimes, an individual has to his or her vicinity to walk for a long time or board several buses just to get to the bank. Most times, after the long walks, their needs are not even attended to. They have to come back the next day, as a result of technical glitches.

Ethereum-based financial services can address these challenges, and provide access to convenient banking and financial services to Nigerians. As it stands, Ethereum has over 3,000 decentralized applications built on its network. These dApps are helping millions of people who are using dApps. If we should keep addressing this problem by building physical infrastructures, should be built to serve the teeming population? It is not even sustainable. Rather than build physical infrastructures, efforts should be made to invest the funds in ensuring that many have to assess to a reliable internet connection.

• By reducing the cost of Banking?Services

Opening a traditional account is not just time-consuming but also involves a specified amount of money which may not be affordable for many. To open a traditional bank account, you need to have a certain amount of money, and some required documents.

When you open a bank account, you are often charged various fees for account maintenance, transactions, and other services. These costs and documents may not be affordable and available to individuals with low incomes.

This is not the case in Ethereum. You do not need a dime to open an account on decentralized financial (DeFi) applications/platforms built on Ethereum. All you need is an internet connection and your smartphone.

To access loans to further your Education or for business expansion, you do not need to go through complicated procedures or any form of inconvenience. All you have to do is to go to a lending platform like Aave , understand how it works, follow the process and you will get the funds you need. All these can be done from the comfort of your home.

Ethereum has the potential of driving financial inclusion, and economic growth in Nigeria. However, it is important to address certain factors that may prevent Nigerians from taking full advantage of what Ethereum has to offer. These factors include:

Connectivity and Technological Barriers

To access Ethereum-based solutions, a reliable internet connection and a Smartphone are required. While the latter may be accessible to many, the former happens to be a challenge in several parts of Nigeria, if not all. In addition, a reliable internet connection is not cheap as of the time of writing this article. If we must take advantage of the solutions Ethereum presents, efforts must be made to ensure that Nigerians have access to a stable and affordable internet connection.

Financial Illiteracy

Understanding how lending, and saving platforms built on the Ethereum network work is very important. Understanding the financial products and services available on Ethereum is very necessary. Knowing the one that is best for you and the goals you want to achieve is very important. Take time to educate yourself and keep doing that because the space is always evolving. Constant education helps you to be up to par with trends in the industry.

Statistics show that over 40% of Nigeria’s population(59 million adults) do not have access to financial services due to some factors which have been previously explained in the article. Ethereum can drive financial inclusion and meets the needs of the unbanked population in Nigeria. In terms of reach and the number of people that can be helped, what Ethereum offers is better.

With the adoption of the Blockchain national policy by the federal government of Nigeria, the land is green for the technology, and one can expect the mainstream adoption of Blockchain Technology as well as its application to real-life problems. One important thing you should do for yourself as a Nigerian is to understand how it works. Ensure you conduct personal research to save yourself from making costly mistakes.

By the way, how long do you think it will take for Ethereum to be fully incorporated and used to solve this problem completely in Nigeria?

This article was originally published at amarachukwuawaeze.medium.com