• Sunday, May 19, 2024
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Lack of trust, operational issues hold back agent banking implementation



There are indications that lack of trust by the public and operational issues have slowed down the pace of implementation of agent banking in the country.

The issues, according to analysts, border on identification and recruitment of agents; training of agents; agent management and risk mitigation.

Agent banking is the provision of financial services to customers by a third party (agent) on behalf of a licensed deposit taking financial institution and/or mobile money operator (principal), according to the Central Bank of Nigeria (CBN). The third party or banking agents can be post offices, retail shops, pharmaceuticals, lottery outlets, among others.

One of the objectives of the agent banking guidelines, according to the CBN, is to enhance financial inclusion and provide for agent banking as a delivery channel for offering banking services in a cost effective manner.

The CBN guidelines for the regulation of agent banking and agent banking relationship did not make provision for ‘agent bank’ rather financial institutions such as commercial and microfinance banks are to appoint banking agents to act on their behalf in communities and locations where they do not have branches.

Investigation by BusinessDay revealed that most deposit money banks and microfinance banks have not or are thinking less of recruiting agent banks.

For instance, Olufemi Babajide, chief executive officer of Unicredit Microfinance Bank Limited, Lagos, said his bank is not looking at recruiting agent bankers at the moment. Rather they want to first of all be adequately capitalised before they can engage the services of agent banks.

Babajide, who also is the chairman of National Association of Microfinance Banks (NAMB), South West zone, sees the concept as good policy that requires time to implement.

“It is a good policy of CBN but let us give ourselves sometime. The policy would take time because the public will need to understand how it works”, he said.

Godwin Ehigiamusoe, managing director, Lift Above Poverty Organisation (LAPO) Microfinance Bank Limited, told BusinessDay that challenges of agent banking in any operating environment relates to regulatory framework, perception and capacity/skills.