This post originally appeared on the SPINNAKER Network
A recent article in the newspaper Daily Trust highlights a successful Nigerian savings initiative being implemented by Diamond Bank. According to the commercial bank, the institution's SavingsXtra product attracts 30,000 new accounts each month. With a 2010 population of over 158 million, 30,000 accounts per month is a significant accomplishment.
As of 2004, the poverty rate at the national poverty line (PPP) was 54.7%, which begs the question as to how many of these new accounts are opened by lower-income Nigerians. According to Diamond Bank’s website, SavingsXtra accounts can be opened with a minimum deposit of N5,000 (USD 32.00), which is about 2.7% of the 2010 GNI per capita income. By comparison, 50 percent of regular savings products targeting low-income clients surveyed in SPINNAKER’s Philippines Country Study had minimum opening deposits of PHP200 (USD 4.54) or below, or just 0.23% of 2010 GNI per capita income. While this comparison can't prove much, it's still unclear as to whether Diamond Bank’s SavingsXtra account is accessible to the poorest segment of the Nigerian population. Keep in mind, Diamond Bank does not claim its products are focused on financial inclusion nor do the poor play any role in its mission statement.
According to the article however, 70 percent of the Nigerian population is unbanked, making Diamond Bank a significant player in bringing a large portion of Nigerians into the formal banking system. Even if the poorest are initially excluded, bringing that 70 percent statistic down is a significant step towards expanding a formal savings culture in the country and eventually making it sustainable, even profitable, for commercial banks to offer products to the poor in the future. The question is, once low to middle income clients have been absorbed, will competition allow commercial institutions such as Diamond Bank to look to the base of the pyramid as a viable and attractive market? Or should financial services for the poor be left in the hands of those with a specific mandate to serve them such as certain MFIs and government entities?