At a time of when the economic recession in Nigeria is constraining efforts of banks and the Central Bank of Nigeria from pushing ahead with their strategies of bringing in more people into the financial system, the adoption of digital mobile services has been identified as the fastest way Nigeria can achieve financial inclusion of all her citizens.
This is contained in a McKinsey Global Institute report titled: “Digital Finance for all: Powering Inclusive Growth in Emerging Economies”. The report was emphatic that digital finance “has an opportunity to flourish in emerging economies because network coverage is near ubiquitous and rapidly increasing in quality.”
Meanwhile access to physical financial services continue to be hampered by various barriers to access such as long distances people, especially those in rural areas must travel, to get to a bank branch, bureaucratic bottlenecks and the sometimes prohibitive costs of banking services in a country like Nigeria where the banks charge exorbitant fees they charge for routine and normal services like email and SMS alerts, account maintenance fees and the huge interests charged on loans.
This has kept many people in Nigeria out of the banking system. For instance, the McKinsey report reported that “…56 percent of adults (in Nigeria) do not have a bank account, and 80 percent of cash in the economy is not deposited in a bank. Trust in banks is low, and many citizens, particularly those living in rural areas, are not familiar with financial services.”
However, in Nigeria, virtually everyone has a mobile phone with a tele-density of over 100 percent. And the beauty of digital financial services is that even people with no bank account can access financial services like everyone else.
However, despite having over 21 licensed mobile money operators, Nigeria has been unable to replicate the digital financial services revolution that took place in Kenya, East Africa and other emerging markets.
Digital mobile services in Kenya are widespread with over 17 million active users conducting more than $50 billion in cashless transactions yearly. This is nothing short of phenomenal and demonstrates the benefits of bringing digital financial services to all regardless of status, education or income as well as the power of technology to provide solutions to hitherto intractable problems.
However, in Nigeria, the Central Bank, the regulator for mobile money, has chosen to sanction the banks to drive it instead of the telecom companies who are more suited to driving digital financial services like the Kenyan and other areas where mobile money has been successful. This is seen as the main hindrance to the take-off of digital financial services.
Christopher Akor
