The study was carried out by the Research Department of the Nigeria Deposit Insurance Corporation (NDIC).
2.0 Objectives of the Study
The study was aimed at assessing the knowledge of Nigerians with respect to financial literacy in areas such as money management, financial planning and personal financial behavior. The study identified areas of inadequacies and proposed recommendations to improve the financial literacy level.
3.0 Methodology and Data
The study was based on primary data generated from the use of questionnaire. The survey covered individual adult population aged 18 and above, with no upper age limit. A total sample population of 10,500 was taken, made up of 1,000 each from four geo-political zones of the country, 1,500 from the Federal Capital Territory and 3,000 and 2,000 each from Lagos and Kano respectively. All of the respondents were randomly selected.
The following methods were employed in analysing and reporting the survey.
- · Descriptive statistics (including Cross-tabulations to determine relationships);
- · Regression analysis; and
- · Factor analysis.
The use of factor analysis was justified on the ground that the survey questions were largely based on patterns of behavior and attitudes, with no ostensibly right or wrong answers.
4.0 Major Findings
The major findings of the study are summarised as follows:
- · The existence of considerable gaps in the literacy levels of average Nigerian adults.
- · Literacy was lowest among single respondents
- · Literacy increased with income
- · Literacy appeared lowest among students and unemployed
- · The literacy gap was identified to be more prominent in the domains of money management and financial exposure and experience.
- · The possession of educational qualifications greatly influenced financial literacy in all the domains.
- · The female gender under- performed the male gender in all domains of financial literacy.
- · The willingness of most Nigerians (83% of survey sample) to participate in literacy programmes if given the opportunity.
Five domains of financial literacy were identified and they included:
- · Money Management– Responses showed only about 46.8% of respondents tracked their expenses and 38.6% reconciled their accounts books. Majority of the respondents would fall on their savings while 26.7% would have to borrow if they run out of money.
- · Financial Behaviour– 47.4% shopped around before buying financial products and marketability of a product was the major feature considered by the respondents when making such purchases
- · Financial Planning– 69% engaged in budgeting for their expenditures whilst only about 55.4% engaged in long-term financial plan
- · Financial Knowledge- 85.7% of the respondents considered financial knowledge as being important in their day-to-day activities. Except for 4.6% of the respondents who admitted to having poor knowledge, all other claimed to have varying degree of knowledge.
- · Financial Experience- Evidence showed that most of the respondents operated bank accounts with savings representing the largest of these accounts whilst mortgage accounts were the least. With respect to investments, 68.2% had undiversified investment portfolio while 32.2% had investments in the stock market.
- · Promoting of financial literacy in schools as evidence shows that possession of educational qualifications greatly influenced financial literacy.
- · Designing financial literacy programme for women as they underperformed the male gender in all domains of financial literacy.
- · Given the size of the self-employed persons in Nigeria, financial literacy programme should be provided to them as they also tended to perform less than the employed group and were not significantly different in most domains except for financial experience.
- · Improving financial literacy of older worker/ retired workers;
- · General education on financial planning.
- · Involvement of all tiers of government and the private sector in the design and implementation of financial literacy programmes.
NOTE: FOR FULL REPORT CONTACT RESEARCH, POLICY AND INTERNATIONAL RELATIONS DEPARTMENT, NDIC ABUJA