Introduction

Tribalism, or the strong loyalty to one’s ethnic group, has far reaching implications, not only in the social and political spheres but also in economic development. In many countries, particularly those with diverse ethnic communities like Nigeria, tribalism creates significant barriers to financial inclusion. Financial inclusion, the process of ensuring that individuals and businesses have access to affordable financial services, especially for individuals and groups who have historically been excluded from the formal financial system, is critical for reducing poverty and fostering economic development. Tribalism, with its deep-rooted discrimination, segregation, and unequal access to resources, can severely limit economic opportunities for marginalized groups. This leads to a disproportionate impact on the financial inclusion of these communities, ultimately stifling broader economic growth. However, tribalism undermines this objective in various ways, leading to significant economic costs. The above issues will be the bedrock of this article as we examine how tribal divisions hinder financial inclusion, restrict economic opportunities, and perpetuate inequality, with a particular focus on Nigeria and other ethnically diverse regions.

The Economic Cost of Tribalism on Financial Inclusion

Tribalism often fosters economic discrimination, excluding certain ethnic groups from opportunities such as financial inclusion. Discriminatory lending, unequal access to financial institutions, and the creation of economic silos along ethnic lines are common manifestations. In Nigeria, with over 250 ethnic groups, tribal divisions significantly affect access to education, employment, and financial services. The 2023 EfinA Access to Finance (A2F) survey revealed that 26% of Nigerians remain excluded from financial services. Ethnic identity, geographical location, and socioeconomic status often hinder access to banks, microfinance services, and digital platforms. Even in urban areas like Lagos and Abuja, banking services are often concentrated in regions serving dominant ethnic groups, leaving marginalized communities with limited access.

Ethnic Divisions Influencing Financial Exclusions

Tribalism also creates economic silos, dividing opportunities and resources along ethnic lines, which stifles economic growth. Ethnic-based political patronage concentrates resources within certain groups, allowing businesses from dominant ethnicities better access to government contracts, funding, and markets. Marginalized groups, meanwhile, face barriers that prevent their full economic participation. This exclusion leads to inefficiencies, as resources are not optimally utilized, limiting national economic productivity. Financial exclusion hinders investments in education, businesses, and job creation, reducing economic dynamism. The International Monetary Fund highlights financial inclusion as key to growth, enabling investments that drive overall economic advancement.

Solutions 

Key steps include promoting policies that encourage equal access to financial services for all ethnic groups, encouraging financial institutions to reduce ethnic bias in lending and recruitment practices, expanding digital financial services which can help overcome geographical and social barriers, and building trust across ethnic lines by fostering inclusive economic policies and practices that benefit everyone.

Conclusion

Tribalism poses significant challenges to financial inclusion, limiting access to critical services and stifling economic growth, particularly in diverse societies like Nigeria. Addressing these issues requires inclusive policies, unbiased lending practices, and expanded digital financial services to bridge divides. By fostering equity and trust across ethnic lines, nations can unlock economic potential and reduce poverty, promoting sustainable development.

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