PhD for Yusuf Adeojo: Focussing on Achieving Inclusive Economic Development in Nigeria by Redefining Indigenous Finance

Yusuf Adeojo, a TRANS4M Fellow and member of CISER NIGERIA (Center for Integral Social and Economic Research) developed a model and practice for financial inclusion, based on Nigeria’s indigenous finance model of Esusu. Here he shares a summary of his PhD, in his own words: 

“Through genetic tools like DNA sequencing, scientists and researchers can identify the cause of an infection, understand the origination of old and new viruses, diagnose the different sources, and develop cure/preventive vaccines to combat several viruses. What this tells us is that to find the solution to either a scientific or socio-economic problem/imbalance, one must journey back to the roots of its existence and piece together a story that explains the source of the problem to find a lasting solution.

Financial Inclusion in Nigeria today is a national problem that requires a lasting solution. The challenge of financial inclusion in Nigeria did not manifest overnight. Its root cause can be traced all the way back to the purpose of the first formal bank in Nigeria (African Banking Corporation) in 1982. The ABC and other financial institutions/banks that were incorporated pre and post amalgamation in Nigeria (between 1892 – 1912) were established to finance the trade export within West Africa and to issue a West African currency convertible to the British Pounds Sterling. This shows that cross border commerce and trade finance is the foundation that birthed what has become the Nigerian banking and finance sector today, which has resulted in the deep exclusion of retail and MSME customers within Nigeria, hence the evolution of the socio-economic issue of financial inclusion in Nigeria today. Suffice to mention here, that a lot has been done to address the issue of financial exclusion in Nigeria however, not much has been achieved. I root cause of this is due to the methodology that was implemented over the years to address this issue.

To address the issue of financial inclusion my innovative research, which traveled along the eastern research path of renewal of the unconventional Integral Research framework, decided to join the vibrant conversation of how best to integrate the financial activities in the informal economy with the formal financial space, with the aim to increase socio-economic development in Nigeria. To address this, the research to innovation journey asked the  question, “Why does the informal sector or rural population not bank with the formal financial sectors (banks)?”

To find an answer to the question, this research to socio-economic innovation journeys back to pre-colonial Nigeria to understand the indigenous financial systems that were employed in that time. Here, it was deciphered that one of the reasons the informal sector or rural dwellers do not bank with the formal financial sector is the lack of in-depth understanding between both parties, power relations tussle and transcultural, trans-disciplinary, transpersonal and transformational imbalances.

To offset these imbalances, this innovative socio-economic research believes that the entire foundation of Nigeria’s banking and finance sector must be transformed to speak to the concrete experience of the retail/MSME/informal sector which it seeks to serve. For this unconventional research thesis, I applied the narrative method to clarify the origination of my research thereby leading to my research questions, research objectives and hypothesis.

Hermeneutics was my research methodology; which is the foundation of this thesis, and conventionally my prior literature review. This was preceded by Critical theory as my research critique method also termed methodology and methods for investigation and analysis. My research process culminated in the Cooperative Inquiry process as my research findings and contribution to the Owode-ota community in Ogun State, western Nigeria.

The outcome of this integral research journey was the co-creation of an integral Esusu-led finance (IEF) model which evolved from the origination of of CISER’s Integral 5C’s of Credit and “New Left School of Thoughts on the Informal Sector”. The IEF model was implemented via the Esusu-led finance cooperative – a traditional rotating savings and credit association for the traders and artisans of rural Owode-ota community. Financial inclusion is more than migrating the financial activities in the informal sector to the formal financial space, it is also to blend the strength and structures of the formal financial sector with the informal financial systems that conveniently speaks to the concrete experience of the informal sector by redefining familiar indigenous financial systems such as the Esusu Rotational Savings and Loan System in light of modern structures. This is both parties meeting at a middle ground.