A reputable non-governmental organisation (NGO), Care International Nigeria, has urged the Nigerian government to create a comprehensive policy structure to encourage savings more, especially among women, to enhance economic stability. Speaking at the 2024 National Savings Group Conference in Abuja, focused on the theme “Accelerating Financial and Economic Inclusion: The Pivotal Role of Savings Groups in Nigeria,” the organisation emphasised the importance of savings in promoting financial independence and sustainable growth. Dr. Hussaini Abdul, the Country Director of the NGO, highlighted its crucial importance in Nigeria for reducing poverty, particularly in rural regions.
Dr. Abdul emphasised the importance of strengthening the support systems of savings groups in order to encourage more people from all over the country to join. He noted that Poverty is a significant issue, especially in rural areas, where the lack of vital social services like financial institutions can make it worse. Dr. Abdul recognised the traditional financial strategies like esusu, ajo, and adashi that have developed in rural communities as ways to deal with financial challenges.
Policies to enhance financial structures should be implemented.
In addition, he emphasised the need to enhance indigenous financial structures by implementing better coordination, management, as well as accountability measures. He therefore called for a proactive involvement from government bodies at every level to create a thorough policy framework that promotes the establishment of these systems. He mentioned that the goal of the conference is to create a supportive atmosphere for cooperative initiatives to promote financial inclusion through savings groups across the country.
Nurudeen Zauro, the Technical Adviser on Financial Inclusion to President Bola Tinubu, on behalf of Vice President Kashim Shettima, announced plans to enhance policy frameworks to support savings groups during a recent statement. He highlighted the government’s commitment to creating a conducive environment for these groups. Zauro emphasised the urgency of tackling financial exclusion as a significant portion of the Nigerian population, about 26%, is excluded from the traditional financial system. An additional 36% are categorised as unbanked, mainly stemming from the informal economy.
Multidimensional poverty and security risks should be addressed.
He emphasised the important connection between financial inclusion and larger issues such as multidimensional poverty and Security risks. The initiative has the support of various organisations like Plan International, ActionAid, Mercy Corps, USAID, GIZ, The World Bank, and the Food and Agriculture Organization of the United Nations (FAO). One of the challenges of group saving Culture in Nigeria is the lack of trust among group members. In many cases, individuals may be hesitant to contribute to a group savings account because they are unsure if they will be able to trust other members to manage the funds responsibly.
This lack of trust can lead to conflicts and disputes within the group, ultimately undermining the purpose of collective saving. Another challenge is the lack of financial Literacy among group members. Many individuals in Nigeria may not have a strong understanding of how to effectively save and invest their money. Without proper financial education, group members may struggle to make informed decisions about how to allocate their savings, leading to poor outcomes for the group as a whole. Additionally, the informal nature of many arrangements in Nigeria can pose challenges.
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Without proper documentation and oversight, it can be difficult to hold group members accountable for their contributions and withdrawals. This lack of structure can create opportunities for Fraud and mismanagement, further eroding trust within the group. Economic instability and Inflation can also impact group savings efforts in Nigeria. Fluctuations in the Economy can make it difficult for group members to save and grow their funds over time. Inflation can erode its value, making it harder for individuals to achieve their financial goals through group savings initiatives.