Blind Spots and Empty Wallets: How Financial Illiteracy Fuels Fraud Epidemic

The increase in digital transactions has resulted in a notable rise in fraud cases, with numerous Nigerians becoming victims of scams largely due to a lack of financial literacy. Experts caution that although cybercriminals have advanced their methods, a considerable number of fraud incidents arise from avoidable errors. Edidiong Uwemakpan, the vice president of corporate affairs at Moniepoint, underscores the necessity of financial education, highlighting that many individuals inadvertently compromise their personal information.

Financial illiteracy remains a widespread challenge in Nigeria, as many people do not possess fundamental knowledge of personal finance and money management. This deficiency renders them susceptible to fraudsters who employ social engineering techniques to deceive individuals into revealing sensitive information or making security errors.

Social engineering scams are particularly common in Nigeria, with data from the Nigeria Inter-Bank Settlement System (NIBSS) indicating that these scams have cost Nigerians over N8 billion, with 62,901 cases reported in 2023. Additionally, phishing incidents have surged, showing a 167.37 percent increase in reported cases, leading to losses amounting to N551.2 million.

A recent publication by the Nigeria Inter-Bank Settlement System (NIBSS) has underscored the growing menace of scams within the nation. According to the 2023 annual fraud landscape report, there has been an alarming 112% rise in fraud incidents, escalating from 44,947 cases in 2019 to 95,620 in 2023.

Additionally, the report indicates a concerning 496% increase in financial losses attributed to fraud, with the total amount lost surging from N2.9 billion in 2019 to N17.67 billion in 2023.

Combating financial illiteracy

To effectively address financial illiteracy, experts advocate for a multifaceted approach that integrates various initiatives and strategies. A fundamental component of this approach is the inclusion of financial literacy in school curricula, which is essential for equipping students with the necessary knowledge and skills to manage their finances proficiently. This education can encompass subjects such as budgeting, saving, investing, and debt management. By implementing financial literacy programs in educational institutions, students can cultivate sound financial habits from an early age.

Another critical element in the fight against financial illiteracy is the provision of educational resources and programs. Workshops, seminars, and online courses can significantly enhance individuals’ understanding of personal finance and money management. These resources can be made available through community centers, libraries, and digital platforms. Furthermore, financial institutions and service providers have a vital role in fostering transparency and understanding among consumers. This can be accomplished by delivering clear and straightforward information regarding financial products and services, as well as offering guidance and support to empower consumers in making informed choices.

In Nigeria, the Central Bank has undertaken proactive measures to enhance financial inclusion and mitigate financial illiteracy. A primary focus of this strategy is to improve access to financial services, especially for marginalized populations. The Central Bank has enacted

policies designed to broaden access to financial services, including initiatives such as agent banking, mobile banking, and digital payment systems. These efforts have facilitated the expansion of financial services to remote and underserved regions, thereby promoting financial inclusion and alleviating poverty.

Additionally, the Central Bank has endorsed digital financial services as a strategy to enhance financial inclusion and combat financial illiteracy. Services such as digital wallets, online banking, and mobile payment systems have simplified access to financial services for individuals.