Don links economic growth to fintech, informal systems

A Professor of Banking and Finance, Wilfred Ugwuanyi, has said Nigeria’s path to sustainable economic growth depends on building a financial system that reflects the country’s cultural realities while remaining inclusive and effective.

Ugwuanyi made this known on Thursday while delivering the 39th inaugural lecture at the National Open University of Nigeria headquarters in Abuja.

According to a statement issued on Friday by the institution’s Director of Media and Publicity, Ibrahim Sheme, the lecture examined the intersection of technological advancements and enduring informal financial practices within Nigeria’s diverse social context.

Ugwuanyi noted that informal financial networks continue to support millions of Nigerians, particularly in rural communities where access to formal banking services remains limited.

He described these systems as the “backbone of financial survival,” underscoring their importance beyond mere transactions.

In his lecture titled, “Technological Innovations and Informal Financial Institutions: Implications for Economic Development Amidst Cultural Diversity in Nigeria,” Ugwuanyi traced the evolution from barter trade to modern financial systems, noting that early inefficiencies—such as the difficulty of matching needs between traders—led to the development of money and, eventually, formal banking structures introduced during the colonial era.

He pointed out that modern tools such as mobile money, ATMs and digital banking platforms have significantly improved access to financial services, expanding inclusion, particularly among previously underserved populations.

Despite these gains, he warned that access to such technologies remains uneven, citing poor infrastructure, low internet penetration in rural areas, digital illiteracy and cybersecurity risks as major constraints. He also noted a lingering distrust among many Nigerians toward formal and digital financial systems.

A major focus of the lecture was the continued relevance of informal financial institutions, including thrift collectors, cooperative societies and community-based savings groups, which he said are deeply rooted in trust and shared identity.

“These systems are not merely financial mechanisms but social institutions grounded in trust, mutual support and shared identity,” he said.

Ugwuanyi further highlighted the role of social capital, explaining that relationships and communal trust often serve as informal guarantees, providing resilience that formal institutions sometimes struggle to achieve in culturally diverse settings.

While acknowledging the transformative potential of financial technology, the don cautioned that poorly integrated fintech solutions could exclude the very populations they are meant to serve.

He called for policies that balance innovation with user protection and urged authorities to incorporate informal systems into the broader financial framework rather than replace them.

“Nigeria’s diversity should be seen as an asset, not a barrier,” he said, adding, “A one-size-fits-all approach will fail.”

He also advocated financial literacy initiatives tailored to Nigeria’s cultural and linguistic diversity, alongside stronger collaboration among stakeholders to build a more resilient financial system.

In his remarks, the Vice-Chancellor of the university, Uduma Uduma, described inaugural lectures as “a platform for intellectual engagement.”

Represented by the Deputy Vice-Chancellor (Administration), Shehu Adamu, he noted that many students of the institution rely on informal financial systems in their daily lives.

“Just as fintech is transforming financial inclusion, NOUN has leveraged technology to democratise education across geographical and cultural boundaries,” the Vice-Chancellor said.

Uduma added that universities must produce knowledge that shapes policy and bridges the gap between theory and practice, while commending the lecture’s contribution to discussions on financial inclusion and development.

Also speaking, the Deputy Vice-Chancellor (Technology, Innovation and Research), Christine Ofulue, reaffirmed the institution’s commitment to academic excellence and national development.

Nigeria’s financial landscape continues to reflect a dual system in which rapid fintech expansion exists alongside deeply rooted informal practices. While digital platforms and mobile money services have grown in urban centres over the past decade, a significant proportion of the population—particularly in rural and peri-urban areas—remains underbanked or unbanked.

In these settings, community-based savings arrangements such as ajo and esusu, alongside cooperative societies and local thrift collectors, continue to play a central role in everyday financial life.