By Emmanuel Afonne
The National Open University of Nigeria (NOUN) has called for the integration of esusu (informal group savings/thrift) into the country’s formal financial frameworks while preserving its cultural integrity.
Prof. Wilfred Ugwuanyi made the call while delivering the institution’s 39th inaugural lecture with the theme “Technological Innovations and Informal Financial Institutions: Implications for Economic Development Amidst Cultural Diversity in Nigeria.”
Ugwuanyi, Professor of Banking and Finance at NOUN, underscored the enduring value of informal financial institutions as vital channels of financial services in Nigeria’s diverse economy.
He said policies should be formulated for their integration into the financial system.
He highlighted esusu and similar systems as indispensable tools for savings, credit access, and community-based financial management.
“Esusu is a trusted, people-driven financial mechanism that thrives on mutual confidence, cultural identity, and shared responsibility among members,” he said.
The professor recommended support for cooperative societies as structured extensions of traditional informal finance.
Ugwuanyi explained that esusu enabled participants to mobilise funds collectively and provide access to lump sums that individuals may struggle to accumulate independently.
According to him, such systems promote financial discipline by requiring regular contributions, thereby instilling a culture of savings among members.
The professor noted that esusu remained widely used among traders, artisans, and rural dwellers who rely on it for business capital and household financial stability.
“Informal financial institutions are often more accessible than formal banks, especially for individuals excluded from conventional financial systems.
“These systems operate with minimal bureaucracy, allowing quick access to funds without the stringent requirements typical of formal institutions.
“Esusu strengthens social cohesion, as members are bound by trust, reputation, and communal accountability.
“Defaulting in such systems carries social consequences, reinforcing commitment and ensuring sustainability of the arrangement.
“Informal financial institutions remain powerful instruments for economic development, inclusion, and social stability in Nigeria,” Ugwuanyi said.
He explained that beyond savings, informal systems provide credit facilities that support micro-enterprises and small-scale investments.
He noted that many small businesses in Nigeria owe their survival and growth to funds sourced from informal financial networks.
Ugwuanyi highlighted that these institutions also served as informal insurance mechanisms during emergencies and social obligations.
He said contributions during weddings, funerals, and illness reflect a culture of shared financial responsibility embedded in Nigerian society.
The don stressed that such practices reduce individual financial burdens while strengthening communal bonds and mutual support systems.
“Informal financial institutions adapt easily to local realities, making them highly resilient in the face of economic challenges.
“Their flexibility allows members to negotiate terms that suit their unique financial circumstances.
“These systems are deeply rooted in cultural practices, making them more relatable and widely accepted among Nigerians.
“Informal finance complements rather than competes with formal financial institutions, as both systems can coexist to provide a more inclusive financial ecosystem that meets diverse needs.”
Ugwuanyi, however, acknowledged that technological innovations are reshaping financial practices, including informal systems.
He noted that digital tools have enhanced record-keeping and transparency within some esusu groups.
The don warned that technology must not be allowed to erode the cultural essence and trust that underpin the informal financial systems.
“Efficiency should not replace the human connections that define informal financial institutions,” he said.
The Vice-Chancellor of NOUN, Prof. Uduma Uduma, while acknowledging the importance of Informal financial institutions in the country said that efforts were on to revive the institution’s Staff Cooperative Microfinance Bank.
Uduma who was represented by the Deputy Vice-Chancellor, Administration, Prof. Shehu Adamu, commended the inaugural lecturer for x-raying the importance of the informal financial institutions in the country’s financial system.
“NOUN has a Microfinance Bank and the management of the institution under the leadership of Prof. Uduma is working to restructure it.
“The process is on while cooperative members will have the opportunity to participate in so many contributory and activities that are beneficial to them.
“So, we are working to have a solid Microfinance Bank that will be befitting for our amiable institution,” Uduma said.(NAN)(www.nannews.ng)
Edited by Chinyere Joel-Nwokeoma
