Pocket Banks: Nigeria's Mobile Money Journey to Financial Inclusion

“Do you accept transfers?” Not too long ago, that was a rare question. Today, you hear it everywhere in Nigeria: in markets, at bus parks, when buying street food. It’s become normal for market traders to request that you make payments into their mobile money accounts. Cab drivers would also rather receive mobile payments than use traditional bank accounts, due to the fast transfer receipt rates.

Mobile money apps have turned phones into pocket banks. With simple user interfaces, instant transfers, and easily accessible POS agents, mobile money is making it easier for more Nigerians to send money, save and pay on the go. Usage has skyrocketed because it works. And it’s moving the needle for financial inclusion.

Mobile money is driving financial inclusion in Nigeria

According to EFinA’s 2023 Access to Finance report, formal financial inclusion (represented by the percentage of adults who had or used a financial service provided by a bank or non-bank financial institution) in Nigeria rose from 57% in 2020 to 64% in 2023. This growth was driven largely by non-bank financial services like mobile money apps, which grew from being used by 32% of adults to 57% over the same period. Notably, the percentage of adults with traditional bank accounts has remained relatively flat, signaling an increasing diversion from traditional bank account usage.

Source: 2023 EFInA Survey Report

During this same period, the number of mobile money users in Nigeria more than doubled from 5.2 million to 12.8 million, and financial agent numbers surged from 29.2 million to 60 million. These trends underscore the growing importance of mobile money in expanding access to financial services.

A shift catalyzed by crisis and accelerated by policy

The mobile money boom in Nigeria is a story of both progress in technological adoption and the adaptability of its people. The shift from cash to digital payments was catalyzed by crisis. While the COVID-19 lockdown nudged Nigerians towards the cashless (contactless) options, the real tipping point came in early 2023 during the cash crunch triggered by the Central Bank of Nigeria’s naira redesign decision.

In late 2022, the Central Bank of Nigeria (CBN) announced a redesign of the 200, 500 and 1000 Naira notes and began withdrawing old notes from circulation. However, the roll-out of the new notes was slow, leading to a severe cash shortage. The amount of currency in circulation plummeted from 3.29 trillion Naira in December 2022 to 1.38 trillion Naira by the end of January 2023 – a staggering 1.91 trillion drop in just one month.

Source: CBN Database

This sudden scarcity of cash disrupted daily life. Long queues formed at ATMs and banks. Many Nigerians, especially those in the informal sector, struggled to access cash for basic needs. In response, mobile money apps, USSD codes and contactless POS terminals became lifelines. Even the most cash-reliant individuals – market vendors, artisans and public transport drivers – were forced to adapt, embracing digital payment out of necessity.

Although the crises of COVID-19 and the naira redesign have passed, mobile money usage in Nigeria continues to rise. In December 2024, the CBN introduced cash withdrawal limits to promote a cashless economy and reduce fraud. This policy directly boosted the use of mobile money and agent banking. POS agents found at kiosks, roadside stalls and market corners have become vital access points, especially in areas underserved by traditional banks. 

Even in the areas surrounding banks, POS agents can also be found for those who have met their withdrawal limit for the day but still need more cash. This near omnipresence of POS agents has become the norm, serving as a key feature of the current financial economy in Nigeria.

Addressing the remaining barriers to mobile money adoption

The speed, safety and simplicity of digital payments have made them the go-to option for many Nigerians. However, significant barriers to mobile money adoption persist, and further intervention will be needed to expand financial inclusion to currently excluded groups. Recommendations for addressing these barriers include:

• Targeted financial literacy and inclusion programs for vulnerable groups: Insights from the 2023 EFInA survey report show that Nigerians who avoid using mobile money apps do so mainly because they don’t understand how it works (13%), don’t know much about it (20%), or don’t trust it (27%). Tailored financial education and inclusive product design can help address these issues to close the mobile money gap.

Source: 2023 EFInA Survey Report

• Harmonized know-your-customer (KYC) requirements and expanded identity coverage: According to the Global Findex Database 2025, 18% of adults in Nigeria said the reason they didn’t have a mobile money account was because they lacked the necessary documentation. The government can integrate national ID systems and help streamline KYC processes to significantly reduce barriers to entry, especially for rural and low-income populations.
• Expanded access to digital enablers: 38% of adults in Nigeria have no SIM card and 16% have no mobile phone, according to the latest Global Findex data. Public-private partnerships can help subsidize device costs and expand digital infrastructure in underserved areas. Financial service providers can also increase awareness of USSD solutions that are available for individuals with basic phones.
• Incentives for mobile money agents to open accounts: While agents have expanded access, many users still lack transactional accounts. Mobile money operators can incentivize agents to facilitate account opening, instead of just cash-in/cash-out services, further improving financial inclusion outcomes.

As the pocket banks created by mobile money proliferate, millions more will be brought into the formal financial system in Nigeria. However, to ensure that no one is left behind, stakeholders must address persistent barriers, especially those related to education, identity and digital access. If these obstacles are overcome, mobile money can become a true catalyst for opportunity and resilience – moving the needle on financial inclusion all the way to universal access. Then, the question “Do you accept transfers?” will no longer be necessary.