Scaling up Rural Financial Innovations for the Transformation of Inclusive Financial System: Micro- Financing Option in South West, Nigeria

Abstract

There is growing evidence that designing financially sustainable models which increase outreach and scale of operations for the poor significantly contributes to the productivity of the rural areas. The situation in Nigeria is complex, as financial innovations have not been as effective as hoped in driving an inclusive financial system and providing easy access to financial services for the poor, primary due to challenges like low financial literacy, infrastructure gaps, and a high population growth rate that outpaces financial inclusion growth. Therefore, this study examined the impact of rural financial innovations on the transformation of the inclusive financial system in Nigeria. The study used primary data collected through interviews conducted with local villagers, MFI officials, village/local leaders, and religious personalities. Also, in analyzing the primary data, the study used descriptive and inferential statistics, probit and tobit regression techniques. The study concluded that the financial inclusion agenda has been considered and adopted in a concerted manner. The study recommended that the Central Bank of Nigeria should create a comprehensive regulatory framework for digital banking, which focuses on existing community resources and potentials to stimulate rural financial innovations for a
transformative and inclusive financial system.