COVID-19 may slow CBN’s 80% financial inclusion by 2020

Nigeria’s goal of ensuring 80 percent of Nigerian adults have access to financial services by the end of 2020 may no longer be visible as a result of the COVID-19 pandemic, which has adversely affected the revenue of many households and businesses.

However, stakeholders say collaboration may be the only opportunity the Central Bank of Nigeria (CBN) has to achieve the target, given the time left in 2020.

The stakeholders, who include the CBN, Mastercard, Carbon, MTN Nigeria, VerifyMe and Acumen, on Thursday, participated in BusinessDay Digital Dialogue Series with special focus on ‘Future of Payment and Financial Inclusion.’

As of July 23, Nigeria had 38,344 confirmed COVID-19 cases, 813 deaths and 15,815 people recovered. While the number continues to rise, the economic impact has been very devastating for many people and businesses. By April when the government began to enforce a nationwide lockdown, many online lenders said they were expecting massive defaults, a signal that all was not well with the majority of adults who had access to financial services.

But it was already predicted in a report by the Enhancing Financial Innovation and Access (EFInA), the organisation that conducts biennial reports on Nigeria’s financial inclusion industry. EFInA had noted at the beginning of the year that while more people became financially included between 2016 and 2018, it was not at the same pace with population growth rate. The COVID-19 has now exacerbated the situation, as experts note that much of the current 63.2 percent of the population with access to financial services have fallen behind.

Paul Oluikpe, associate head, Financial Inclusion Secretariat, CBN, says the current financial inclusion figures are being put together by EFInA and is likely to show that many people have fallen through the cracks in huge proportions as a result of the COVID-19 pandemic.

The bank also conducted a survey in which it found out that payment adoption was currently at 40 percent, savings at 24 percent, credit at 2 percent; pensions at 2 percent, insurance at 2 percent and financial exclusion at 36.8 percent, meaning that Nigeria is way behind other countries in financial inclusion.

“Hence, we have a -16 to -18 percent chance in reducing exclusion to 20 percent by 2025,” Oluikpe states. But the CBN says its agent programme, SANEF, is growing with about 350,000 agents added, with plans to increase the number to 500,000 already on.

The CBN however acknowledges that achieving the target is of great importance, as the cost of managing cash is very expensive and at the expense of the economy. Thus, in recent times it has increased its efforts to deepen its cashless policy.

In 2019, the apex bank granted Approval In Principle for Payment Service Bank licences to three organisations – Glomobile, 9Mobile and Unified Payments. MTN Nigeria on the other hand got a Super Agent Licence. The CBN has, however, withheld the PSB licence that would see telcos fully involved in offering financial services.

While many analysts have said the pace of financial inclusion could significantly improve with telcos’ full involvement in financial services, the CBN can also benefit from other collaborations. Elsa Muzzolini, general manager, commercials, Mobile Financial Services, MTN Nigeria, notes that there is more telcos can offer the sector.

“As part of the journey to achieving financial inclusion for all, I think we can do so much through collaboration and partnership with players in the fintech and the banking space, and as the number one telecommunications service provider in the country, that is core to our operations,” Muzzolini says.

Beyond telcos, the collaboration is starting to include non-bank financial services providers like Mastercard, which has a vast footprint of providing financial inclusion across the world.
“5 years ago, we committed to bringing 500 million financially excluded individuals into the digital economy,” Ebehijie Momoh, senior vice president, Mastercard West Africa, states, noting, “We achieved that goal and are focused on bringing in a total of 1 billion individuals by 2025.”

Mastercard developed and implemented solutions that make it easier and more convenient for people to use alternative means of payment instead of cash. Momoh says collaboration with the government is critical as it would enable innovation.

Financial inclusion is also attracting impact investors who are identifying innovative start-ups providing financial services to the grassroots.

Meghan Curran, West Africa director, Acumen, says impact investing can help identify innovative business models and ways to create access to financial services. Acumen has provided funding to Nigerian fintech start-up Paga twice.

“Identity management enables fintech and is a key pillar to financial inclusion,” Esigie Aguele, CEO of VerifyMe, saying, “We are committed to working with the government to digitise Nigerians.”