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The Implication Of Financial Illiteracy In Nigeria



Nigeria is a country with a high Gross Domestic Product (GDP) compared to its colleague in the developing yard Bangladesh. Data revealed that with the high GDP, Nigeria harbors 4-time people living below the poverty line than Bangladesh. The reasons can be attributed to the country’s 56 percent income spend on food (highest in the world) as opposed to its counterpart with less than 40 percent. In Nigeria, approximately 60 percent live below the poverty line. In Bangladesh, however, that number is 24.3 percent indicating 55.3 percent likelihood to live below the poverty line in Nigeria compared to Bangladesh.

Source: Country Economy, 2018

Should appropriate financial knowledge (Literacy) solve this discrepancy considering:

  1. The current situation of education curriculum containing only 5% of studied courses about personal finance for non-business students and only 10% studied financial courses in business colleges.
  2. The literacy rate. In Nigeria, the literacy rate is 59.6%. In Bangladesh, it is 72.8% showing a 22.1 percent more likely to be literate in Bangladesh when compared to Nigeria.
  3. The Gross Domestic Product (GDP) of the two economies as shown in the figure below;

Source: Country Economy, 2018

Asides the high GDP in Nigeria compared to Bangladesh, above all others metric, Bangladesh is a better economy owning to Nigeria’s low level of Education and epileptic education structure; education which can increase the level of financial literacy is in shambles. It becomes imperative for the government of the country to devise actionable plans to improve its citizen’s financial literacy which will invariably repress consumption, at the same time, encourage saving and investment. This is based on the assumption that negative relationship exists between literacy level and consumption. In other words, the higher the financial literacy, the more informed the citizens financial decisions are, hence a moderate consumption. As such, it will be concluded upon that high level of is associated with low consumption level. More so, in a study conducted by Adriaan K. et al (2016)[i] to examine the impact of financial literacy on household consumption. It was found that financial literacy of man plays a large role and a higher financial literacy score of the women decreases consumption.

What is Financial Literacy

In simple terms, it is a skill that helps people to make financial decisions effectively. It ensures having the required and appropriate knowledge, skills, and confidence to make responsible financial decisions. Research has found a positive relationship between financial literacy and financial decisions. Putting that into context, a high level of financial literacy translates better financial decisions and its low level equate poor financial decisions in which the latter is attributable to the current situation of the giant of Africa.

Contextually, the position of literature on elucidating a better understanding of financial literacy defines “knowledge as an understanding of personal and broader financial matters; skills as the ability to apply that financial knowledge in everyday life; confidence as having the self-assurance to make important decisions and responsible financial decisions as to the ability of individuals to use the knowledge, skills, and confidence they have gained to make choices appropriate to their own circumstances”.  It gives the twin benefit of protecting from financial frauds as well as planning for financially secured future.

A poor or low financial literacy is often influenced by family background as found by Lusardi(2008) who claimed that 41 percent of required knowledge for better financial decisions usually comes from parenting and home advice. As such, family wealth accumulation lined in the league of factors affecting individual financial decisions. Others factors attributed to poor financial decisions include Education, household income, financial responsibility, and place of residence. The low level of financial literacy has affected and can be attributed to the slow pace with which Nigerians have adopted financial services in rural and urban areas.

Whose Responsibility?

The APEX Bank of Nigeria, Central Bank of Nigeria (The Bank), has released as part of its mandate to improve the level of financial literacy in the country. The bank in a statement stated that:

“An important mandate of the Bank is the promotion of a sound financial system in Nigeria. A key aspect of this function is the entrenchment of effective consumer protection regime that not only protects the rights of consumers but also engenders public confidence in the financial system. Furthermore, the bank added a commitment in 2011 referred to as the MAYA DECLARATION, to reduce the number of financially excluded Nigerians from 46.3 percent in 2010 to 20 percent by the year 2020”.

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The current exclusion rate in 2018 was about 36.8 percent according to a recent report by Enhancing Financial Innovation and Access (EfinA, 2018). To ensure the fulfillment of this obligation.

A National Financial Inclusion Strategy was accordingly developed and launched on October 23, 2012. The strategy identified consumer protection and its constituent pillars of Market Conduct, Dispute Resolution & Consumer Education as critical to the attainment of its objectives.

Understanding the position of the bank, the metric for financial literacy is financial inclusion. It was claimed that 68.2 percent of the population is financially included of which 56 percent of income is spent on consumption. Should a high level of financial literacy not better position saving or investment ahead of consumption?

What is my Position?

The dominance of financial mistakes will not come as a surprise; this is due to the relative inadequate financial knowledge among households. High level of financial literacy is what differentiates the two countries mentioned earlier. As long as a larger portion of income is spent on consumption, the poor will remain poor.

As such, Quality Education in all sectors of the economy becomes imperative which includes

  1. Review of Education Curriculum to include 30 percent of financial related knowledge.
  2. Provision of incentives to promote savings and investments through financial institutions.
  3. Public sensitization and awareness on the need for better financial decisions through instilled financial knowledge which could involve partnership with media houses and agencies.

In all, a conscious effort must be made to scale financial inclusion in the country, through financial literacy. An increased level and quality of education can enhance better financial literacy.

Worth noting in a country with a high level of illiteracy is that financial knowledge will be abysmally low and higher proportion of the income will be spent on consumption

This poor knowledge will lead to low savings and investment and the cycle of poverty ensues. The implication of illiteracy can never be overemphasized on nation’s economy.


[i]Milena Dinkova, AdriaanKalwij, & Rob Alssie (2016), The impact of financial literacy on household consumption

Credit: Taiwo Oyekanmi


African Risk Capacity Group and African Development Bank provide US$5.3 million to Zambia



Representatives from the African Risk Capacity Group and the African Development Bank presented a symbolic US$5.3 million cheque to the Zambian Government, to aid in the country’s recovery from the extreme drought event during the 2021/2022 agriculture season.

The payout is the result of drought insurance taken out by the Government of Zambia under the Africa Disaster Risk Financing Programme Multi-Donor Trust Fund, a fund supported by the Governments of the United Kingdom, through the Foreign, Commonwealth and Development Office, and Switzerland, through the Swiss Agency for Development and Corporation. The fund is managed by the African Development Bank. The payout will enable the country to carry out timely emergency response activities in communities affected by drought, through the provision of cash transfers and food assistance to ensure food is available for the targeted households during the lean season period.

Zambia’s Acting President, Her Honour W.K Mutale Nalumango, received today the payout cheque on behalf of the Zambian Government. In her keynote address, the Acting President welcomed the payout from ARC to the Republic of Zambia, stating that the funds would help the government to meet the relief and livelihood reconstruction requirements of the most vulnerable households impacted by the 2021/22 drought.

Her Honour W.K Mutale Nalumango expressed gratitude that her government, through the Ministry of Finance and the Disaster Management and Mitigation Unit (DMMU), took up insurance as a mitigation measure against drought.

“With the national treasury experiencing unlimited demand for the provision of public goods and services, the government stands ready to support disaster risk transfer initiatives that lighten the burden on government. I urge other organisations such as the World Food Programme and other international and local civil societies to come on board to help expand the ARC insurance coverage in Zambia by partnering with my government to take up replica and micro insurance,” the Acting President further stated.

The adverse impacts of climate change and climate variability caused droughts in Zambia in 2021 and 2022. Substantial lack of rain impacting crop production resulted in severe food insecurity in districts in the southern and western parts of the country.

The Government of Zambia had earlier signed a memorandum of understanding with the African Risk Capacity Group to participate in the 2021/2022 drought risk pool to better deal with the drought and protect vulnerable populations from its adverse impacts. The Zambian Government made a premium budgetary allocation from its national budget and sought additional premium financing support from the Swiss Agency for Development and  Corporation and the African Development Bank to maintain the insurance policy for the 2021/22 agriculture season.

The African Development Bank is pleased to see this African Risk Capacity Group payout to the Government of Zambia. We expect this to be the beginning of continued support to help the country enhance their resilience to the shocks of climate change.  The Bank’s support has brought assistance to farming communities hit hard by drought and poor crop yields, by enabling Zambian authorities to provide them with cash payments and sustaining them from eating their seeds as food, quitting farming as livelihoods, or migrating in search of food and non-existent jobs,” said AfDB Vice President for Agriculture, Human and Social Development, Dr. Beth Dunford.

ARC offers an African solution to one of the continent’s most pressing challenges, the shocks of climate change, transferring the burden of climate risks away from governments to ARC through sovereign insurance,said Dr Abdoulie Janneh, ARC Group Deputy Board Chair and ARC Ltd Board Chair. “The Government of Zambia is our privileged partner, and we stand with them to ensure their vulnerable population and livelihoods are protected against extreme weather-related disasters,” he added.

The funds disbursed to the Government of Zambia will also boost the local economy and help communities build back better.


“We are extremely honoured by the trust vested in us by the Government of Zambia. We are confident that this payout will assist the country in supporting its affected population to recover from the effects of the drought and prevent them from resorting to negative coping mechanisms,” said United Nations Assistant Secretary-General and ARC Group Director General, Ibrahima Cheikh Diong.

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Fast-track urbanization to spur growth, shelter Afrique urges African Countries



Shelter Afrique Head of Policy, Research and Partnerships Dr. Muhammad Gambo leading a panel discussion on financing Urban development at the 9th Africities Conference in Kisumu. With him are (from left to right) Dr. Kamal Ben Amara, Mayor of Bizerta, Tunisia; Hashting Chikoko Regional Director, Africa at C40 Cities; and Kevin Ouko, Director of Corporate Banking at Ecobank. (Photo: Supplied).

Pan- African housing and urban development financier, Shelter Afrique has urged African countries to fast-track urbanization to stimulate economic development across the continent.

Speaking at the 9th Africities Conference held in Kisumu, Kenya between 17-21 May, 2022 and attended by over 11,000 people, including 8,000 official delegates from across Africa and globally, Shelter Afrique’s Head of Policy, Research and Partnerships Dr. Muhammad Gambo said urbanization could play a major role in economic and social progress, if well managed.

“No country has grown to middle income without industrializing and urbanizing and none has grown to high income without vibrant cities. China, for instance, is widely held up as an example of how urbanization can fuel industrialization and transform living standards. This is why we strongly believe African countries should put more emphasis on effective urbanization if they intend to lift their people out of mass poverty, and doing so, fast,” Dr. Gambo said.

A report by the Organization for Economic Co-operation and Development (OECD), Africa’s Urbanisation Dynamics 2020: Africapolis, Mapping a News Urban Geography”, the pace of urbanization and urban population growth in Africa has changed significantly across the continent generally as well as within its various regions.

According to the report, Africa’s urbanization rate will continue to grow among the fastest of the world regions in the coming years as its population grows, which is expected to double by the year 2050.

“We urge policymakers across the continent to enact policies that will encourage urban growth modeled around economic development and poverty eradication,” Dr. Gambo said.

Dr. Gambo, however, noted that funding urban growth still remains a formidable challenge for many countries, but believes it’s achievable.

“Shelter Afrique recently completed a debut ₦46 billion (US$110.7 million) Series 1 Fixed Rate Senior Unsecured Bond Issuance in Nigeria’s capital market under its ₦200 billion (US$481.3 million) bond issuance programme for housing and urban development in Nigeria. This issue was 60.7% oversubscribed, meaning there is an appetite for such bonds, not only in Nigeria but also in other countries like Kenya, South Africa, Morocco, etc. What African countries need is the know-how to create financial ecosystems that can support the mobilization of municipal and subnational finances for urban infrastructure development,” Dr Gambo said.

The African Development Bank estimates that the continent’s infrastructure financing needs will be as much as US$170 billion a year by 2025, with an estimated gap of around US$100 billion a year.

Africities is a Pan Africa conference that is convened by the United Cities and Local Governments of Africa’s (UCLG-A) and brings together the leadership of cities and sub-national governments and their associations for the advancement of decentralization and local governance aimed at improving the living standards of the citizens. This year’s conference discussed the role of Intermediary Cities of Africa in the Implementation of Agenda 2030 of the United Nations and the African Union Agenda 2063.



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Fuel Scarcity Menace In Nigeria



Fuel scarcity has been noted to be one of the maladies of the Nigerian economy (Sunday Akpan, 2020). Nigerian economy with a rising population of about 200 million, was formally a predominant Agricultural based economy before the advent or discovery of crude oil in Oloibiri River state in 1958. Shell started exploration earlier before a merger occurred between  two major companies Shell and BP. They both had a 50/50 joint venture share in 1960 which led to the establishment of the Nigerian Petroleum Refinery Company (NPRC). This pact between these companies gave birth to the first oil refinery in Rivers.

Currently, there are four oil refineries in Nigeria (Warri, Port-Hacourt, Kaduna) but they are not functional. The Nigeria crude oil is refined majorly in the United States of America, Netherlands, United Kingdom, France, and Belgium. It is also Interesting to note that Nigeria is a frontline member of the Organization of Petroleum Exporting Countries (OPEC), with 2.7 barrels of crude oil production and 445000 barrels refining capacity per day. It is said to be the largest oil producing country in Africa and the 6th in the world (Oduntan, 2015). Nigeria appears to be the only oil-producing country globally where fuel availability is a major challenge over the years (Ugwu, 2016). 

Fuel Scarcity could be described as the non-availability of fuel in time of need at the approved price. In other words, fuel scarcity is not limited to the absence of fuel at the required time, but also the availability of it at a higher rate (Nnabuife  etal, 2016). Fuel Scarcity usually happens when the government or petroleum marketers wants to increase the pump price so there is false scarcity then the hike is effected. Nigeria has witnessed different periods of fuel scarcity from Gen Yakubu Gowon regime in (1966-1975), it was increased from 6k to 8.45k, in 1993. During Gen Sani Abacha regime in 1996, he increased the pump price three times from N5-11N at this period the refineries where not functional and were left with the option to export our crude oil.

President Obasanjo increased pump price seven times from   N20 to N75. It is important to note that only late president  Shehu Musa Yar’adua that did not increase fuel price during his tenure. Dr Jonathan regime had relatively stable pump price from N75 to N147  this happened 1st January 2012 when the then president removed subsidy and the whole nation revolted before it was brought down to N97 then to N87. President Muhammadu Buhari regime has seen fuel price fluctuating from N87 to 147 now current pump price at N165 at filling stations and to as high as 500 buying from black market.

Fuel scarcity is caused by different factors which are not limited to the following; Removal of subsidy as seen during the President Jonathan Ebele Goodluck administration. The then government wanted to use the subsidy money for revitalization of the economy, this was not welcomed by the Nigerian Masses. In 2014 the government decided to pursue the initiative of subsidy removal by lowering number of licenses to independent marketers and importers. But this was unsuccessful and made fuel in circulation to be reduced causing unnecessary fuel scarcity

In 2017 The scarcity was caused by rumors of increased pump prices. This rumor pushed people into panic buying.  The Independent Petroleum Marketers Association of Nigeria (IPMAN) during that period withdrew their service, this worsened the situation of fuel scarcity.

The current fuel scarcity started sometimes in January in Lagos when adulterated fuel was noticed from the petrol imported from Europe. Where particles of methanol was found in about four petrol cargoes, this was only noticed when motorists who purchased fuel had problems with their cars had to report the development. The GMD OF NNPC ordered an investigation into the course of the problem.

The report of the investigation by the quality inspection officers had it that there was presence of emulsion particles in four cargoes owned by MRS, Oando, Duke Oil, Emandeb/Hyde/AY/Maikifi/Brittania-U Consortium. Since this report was established the petroleum companies have refuted such claims. The GMD of NNPC Ltd and everyone who failed to do their work has not been sanctioned and it has been over a month.

Nigerians are suffering the inaction of the Government, the multiplier effects has negatively affected manpower productivity, people spend long hours on fuel queue hoping to get PMS in other to get along with their day, transportation has sky rocked to the highest minimum. The current double digit inflation is not helping matters, food prices has gone up. There is epileptic power supply and the major option of alternative power supply used by both private individuals.

Companies and government(generator) is mostly not a better a choice due to scarcity and hike in prices. You get to some offices and you see people sleeping or telling you there is no network due to power outage. Hundreds of cars have been damaged because of the purchase of black market fuel mixed with water or any other substance for profit making, this black market fuels are  sold exorbitantly. Nigerians indeed have a long span of patience, but our patience should not be taken for granted.

If it were a proper democratic government, solutions should have been implemented, persons involved should have been sacked or suspended but absolutely nothing has been done, meaning this will definitely repeat itself in the near future since there is no consequence for this action.

Written By Ojamaliya Abuh, An Economist.



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