The CBN’s efforts towards providing millions of Nigerians with greater access to formal financial services have received an unexpected boost from COVID-19 and the mitigation measures introduced to curb the spread of the virus.
COVID-19 has changed the way billions of people live and work–and it has also impacted the way they spend and use their money. The World Health Organisation announced in early March 2020 that bank notes may be able to carry and spread the virus, and social distancing means people are more likely to shop online, avoid physical outlets and make use of online and mobile payment facilities. A recent Mastercard study shows that 79% of global consumers are using contact-less payments for reasons of safety and hygiene.
This shift away from cash towards digital channels, products and services is providing a boost to initiatives to drive greater financial inclusion. And in Nigeria, where an estimated 45 million adult population are unbanked—meaning they have no bank account and no access to financial services (like loans or start-up capital), and operate almost exclusively with cash—this represents a significant untapped opportunity both to boost GDP and to drive progress towards the country’s development goals.
Financial inclusion makes managing finances easier—it helps individuals to save money, make payments, get credit and obtain insurance, thereby reducing risks in business and to livelihoods. A World Bank study also links financial inclusion to improved development goals. Farmers with access to insurance have been shown to invest in riskier, higher-yielding crops, while families with savings opportunities may be able to save for school fees. The most noticeable economic and social benefits appear to be in digital payments and savings accounts.
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Ensuring that these benefits can accrue to more Nigerians is the driving force behind the CBN and Banks inspired SANEF, which was started as a project in February 2018 and formally launched in January 2019. Our vision is to bring financial services closer to every Nigerian and to collaborate with all stakeholders in the financial services ecosystem to increase financial access points and services across all geopolitical zones in the country.
SANEF is supporting the drive by the CBN and the financial institutions to ensure that up to 80% of the population is financially included by December 2020—as of December 2018, just ~63% percent of the population was banked. We are achieving this by rapidly driving the expansion of a network of registered agents or financial access points across the country. Agents are individuals or local businesses, effectively financial retail outlets contracted to financial institutions or mobile network operators, that are able to offer basic financial services including Bank Verification Number (BVN) enrolment, Account opening, Cash deposit, Cash withdrawal, Funds transfer, Bills payment and Airtime vending etc.
To date, SANEF, through its partners, (Super Agents and Mobile money operators) has grown this agent network by 313 percent from over 85,000 in December 2018 to about 345,000 as of June 2020 in all the 774 local government areas, and the number of transactions they process continues to climb. In 2019, SANEF agents processed over 180 million transactions worth N1.8 trillion in 2019, and between January and June 2020 alone, 76 million transactions valued at N1.3 trillion took place at agent locations.
Our aim is to have 500, 000 agents across the country in place by December 2020, and in this we have found an unexpected ally in the COVID-19 pandemic. Agent banking use rose significantly during the COVID-19 lockdown period in Nigeria, when bank branches were not available. Agent transactions grew by 859% between March and April 2020 with agents able to provide money—including government aid—and perform various transactions to tide consumers over during this difficult time.
With the easing of regulations, we need to take advantage of this momentum to further empower and support agents and to streamline processes to enable more citizens to tap into the benefits that financial inclusion brings. If nothing else, the pandemic has demonstrated that there is significant appetite amongst unbanked consumers to adopt digital technologies.
SANEF has a crucial role to play here. In helping agents to leverage on simple and effective technology platforms for the agent banking industry, we can continue to expand the availability of financial products and ensure the speedy resolution of all disputes at agent locations. By working closely with our partners: Banks, Super agents, Mobile money operators, regulators and other stakeholders both locally and globally, we can continue to enhance the sustainability of agent banking through products, favourable policies and pricing.
We also need to continue to run financial literacy and campaign awareness projects to educate communities and informal settlements on the benefits of being part of the formal financial services sector. Significant investments in financial literacy have been necessitated by COVID-19 and we can build on this and help people adjust to new financial norms.
It is clear that a significant shift has been made towards a cashless society in Nigeria—as well as around the world—as people consciously reduce their opportunities for virus transmission and it is likely that this will continue. Nigeria is showing the way for other emerging economies on how informal communities and markets can be incorporated into the financial sector—for the benefit of individuals and communities, as well as an economy struggling to contain the fall-out from the virus.
Ronke Kuye is CEO of the Shared Agent Network Expansion Facilities (SANEF), partners with the Central Bank of Nigeria (CBN) and is supported by Deposit Money Banks, Nigeria Inter-Bank Settlement Systems (NIBSS) and licensed Super Agents/Mobile Money Operators.
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