In Osun communities, a lack of privacy discourages merchants from taking out loans

Funlola Abdulsamad’s first-hand knowledge of how to access financial aid and other services for women entrepreneurs came in the form of a humiliating episode at the Odo Ori market in Iwo, Osun State in 2017.

A trader who allegedly defaulted on her micro savings loan was forced to dance around the market with plastic and other dirty materials around her neck. The woman, Ms Abdulsamad told PREMIUM TIMES, was then taken to the Feesu bus station and other strategic parts of the city of Iwo by officials from the microfinance bank that lent her money.

“It was an extremely embarrassing and frightening moment, even for me,” Ms Abdulsamad said of the memorable occasion in an interview with the newspaper, her voice a mixture of fear and anger.

“Although it didn’t happen to me, I thought about it and came to the conclusion that I would never be a part of anything like that [financial services] support system. I can’t imagine going through such humiliation. It was very embarrassing.”

Ms. Abdulsamad sells fruit and other farm produce at the Oluwo Market on the outskirts of Iwo. Every day she exhibits her products at the edges of the Ibadan-Osogbo Expressway. With a total share value of less than N10,000. She admitted she could expand her business and rent a shop if she got the right financial support. But despite her financial challenges, she vowed never to seek support from the many organizations that provide micro-savings and other financial products and services to women entrepreneurs and merchants in and around Iwo Town.

“They have no respect for privacy,” she said. “They can humiliate you anytime, anywhere. They don’t care if you really don’t want other people to know about your business or your financial status and challenges.”

Adijatu Kareem, a trader at Iwo’s Odo Ori market, told PREMIUM TIMES how “public” the application process could be for potential loan applicants, exposing them to the “curious eyes of the entire market.” Ms. Kareem, who lives in Papa, a village on the outskirts of Iwo, said that in their efforts to conduct due diligence, financial services officials often reveal applicants’ information and pay less attention to privacy.

“Before you can access a loan or open an account, you have to do an ‘inspection’ at your store or kiosk,” she began. “That’s how they take photos and rate your wares. You do this publicly and it draws the attention of everyone in the market to your shop. A lot of us don’t like that at all.”

The trader added that because of these privacy concerns, many women in the market have chosen not to participate in a formal lending service.

Financial Inclusion

In October 2012, Nigeria launched its National Financial Inclusion Strategy with the overall goal of reducing the rate of adult financial exclusion from 46.3% in 2010 to 20% by 2020. Central to these goals is a strong network of financial access points such as commercial bank branches, microfinance bank branches, automatic teller machines (ATMs), point-of-sales (POS) terminals, agent banks and mobile money agents.

In January 2019, the strategy was changed and five of the most marginalized population groups were identified: women; Youth; micro, small and medium-sized enterprises (MSMEs); country dwellers; and individuals living in the northern regions of the country.

Discussions on financial inclusion will focus on issues of women’s entrepreneurship and access to and use of financial products and services in relation to how they affect job creation, economic growth and women’s empowerment.

According to a 2018 Enhancing Financial Innovation and Access (EFInA) survey, nationally, financial inclusion was 59.1 percent for women compared to 67.5 percent for men, an 8.4 percent gender gap. While this represented a slight improvement from a 9.8 percent gap in 2016, it was still considered poor.

In cooperation with its Financial Inclusion Secretariat (FIS), the Central Bank of Nigeria has developed policies and partnership programs targeted at women. Examples of such initiatives include the establishment of the MSME Development Fund (MSMEDF), a NGN 220 billion (approx. NGN 717 million 132 billion or approximately US$ 430 million) intervention fund for women. There is also the National Financial Inclusion Special Interventions Working Group (NFISIWG).

women still at risk

Despite the various interventions by government and other private sector actors, women are still largely excluded from the financial services ecosystem. According to the World Bank Group’s Global Findex report, over 1 billion women still do not use or have access to the financial system.

The International Finance Corporation (IFC) has estimated that there is a US$300 billion funding gap for formal, women-owned small businesses globally, and more than 70 percent of women-owned small and medium-sized businesses have no or inadequate access to financial services .

Iya Sodiki, a trader in Ile-Ogbo commune in Ayedire county, Osun state, told this newspaper that she does not have a bank account and does not know anyone in her area who does. According to her, accessing financial services can be cumbersome and lengthy, hence her nonchalant attitude towards financial inclusion.

Several interviews with women at markets in Iwo and neighboring villages like Papa showed that many of the traders save their money with thrift collectors and others who operate side-contribution schemes. Others who handle less cash, including those with relatively light daily turnovers, often resort to keeping their money at home.

According to a report by Rockefeller Philanthropy Advisor Gender Center of ExcellenceAbout 98 percent of Nigerian women are excluded from formal credit markets as they cannot obtain credit from formal financial institutions such as banks.

The centre, set up as a knowledge hub to advance women’s financial inclusion in Nigeria, added that only about 45 percent of adult Nigerians borrow from the formal sector at all.

data privacy

Regardless of the challenges, the digital financial services market is changing at an exponential rate and has helped achieve financial inclusion goals and promote poverty alleviation and economic growth. But there were also concerns about privacy issues, particularly in relation to vulnerable groups such as women, youth, older people, people with disabilities and displaced people.

Folasade Badmus, a trader at Iwo’s Oja Ale market, told PREMIUM TIMES that she once tried to open an account with a microfinance bank but shelved the idea after company officials showed up unannounced at her store.

“They said they came to ‘inspect’ and ‘mobilize’ and then they wanted to photograph my kiosk,” she said, half amused. “Just as?”

“They didn’t even inform me beforehand. When they came, everyone’s attention was drawn to my shop; I didn’t like that at all. So I signed out.”

According to a guideline created by the Alliance for Financial Inclusion (AFI), cultural norms in some societies can make women particularly concerned about privacy of their privacy, as well as other household members (such as their partners) and their communities are affected.

Mama Glory, a fruit seller at Oluwo Market, said she chose to stay away from financial services companies because of her “peace of mind” and “integrity” in the market. According to her, no matter how bad her daily sales are, she’s not worried about being humiliated.

“Women in our community value their self-esteem, but many of them are just helpless; That’s why, despite the shame, they’re taking up these loans and services,” she said.

A study by the Digital Financial Services Working Group (DFS) found that low-income customers value privacy, are willing to invest time in a loan that offers privacy, and are unwilling to share personal information with third parties.

But a loan officer at LAPO Microfinance Bank, who declined to put her name in print because she was not authorized to speak to the press, told PREMIUM TIMES these financial institutions also value privacy issues. However, she said officials are sometimes forced to adopt certain “overt” strategies due to the “unruly attitude” of some of the female beneficiaries.

“We conduct inspections and go unannounced because most women can be smart,” she said.

“They can arrange goods that don’t belong to them in their stores once they know you’re coming for inspection. We also take photos so that we can document your valuables. These things are inevitable.”

Because of poor access to financial services, women struggle to generate income and save, grow their businesses and lift their families out of poverty.

The Rockefeller Philanthropy Advisor’s Gender Center of Excellence report states that poor education, limited decision-making powers and being in a rural area exacerbate these problems. It also subjects women to financial constraints and consequently increases poverty.

Tunde Bamishe, a financial analyst, told this newspaper that there could be moderation in the behavior of credit servicers in relation to data protection. In his opinion, the due diligence could be done discreetly so that other women are not discouraged from being part of the financial ecosystem.

“The goal is to support their businesses and deepen financial inclusion,” he said.

“Stakeholders, particularly in rural areas, need to be sensitive to cultural dynamics and ensure privacy policies are adhered to to encourage financial services adoption.”