At over 45%, the number of financial excluded adult Nigerians is high and this has negative impact on economic growth. However, bank authorities in collaboration with digital payment companies and agent banks such as Capricorn Digital Limited, CDL are pushing with introduction of products to reduce exclusion figure to 20% this year. Daniel Obi writes on the efforts towards achieving higher financial inclusion.
In 2012, Nigeria introduced certain policies to fast-track its economy which was growing then at an average of 6% against 2.1% today. One of the policies was the National Financial Inclusion Strategy launched by CBN in October 2012.
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Prior to the policy, it was discovered that about 53.0% of adults were in 2008 excluded from financial services. The exclusion rate was high and its economic impact was negative.
Basically, financial inclusion, according to economists “is the provision of a broad range of high-quality financial products, such as savings, credit, insurance, payments and pensions, which are relevant, appropriate and affordable for the entire adult population, especially the low-income segment”
According to analysts, the importance of Financial Inclusion derives from the promise it holds as a tool for economic development, particularly in the areas of poverty reduction, employment generation, wealth creation and improving welfare and general standard of living.
For instance, many Nigerians, 53% save at home and much money running into billions of Naira circulates through the informal sector which has negative impact on the country’s growth and development as the money is not accessed by the wider populace for investment.
In a report, Enhancing Financial Innovation & Access (EFInA), a financial sector development organization that promotes financial inclusion amongst poor families says “If 50.0% of these adults were to save N1,000 per month with a bank, then up to N138 billion could be incorporated into the formal financial sector every year” which will be accessed as credit by entrepreneurs for development.
The target of the CBN policy, therefore, was to reduce the exclusion rate to 20% this year to achieve economic growth, wealth creation and tackle poverty through access to financial service by higher percentage of Nigeria’s adult population.
The goal was specifically to increase adult Nigerians with access to payment services from 21.6% in 2010 to 70% in 2020, while those with access to savings should increase from 24.0% to 60%; and Credit from 2% to 40%, Insurance from1% to 40% and Pensions from 5% to 40%, within the same period.
The major tools for driving the Strategy include Agent Banking, Know-Your-Customer Requirements, Financial Literacy and Credit Enhancement Programmes among others.
Degbola Abudu, Managing Director of Capricorn Digital Limited, a technology-focused digital distribution and payments company explained to BusinessDay that the CBN Strategy articulated the demand-side, supply-side and regulatory barriers to financial inclusion, identified areas of focus, set targets, determined key performance indicators (KPIs) and established the implementation structure.
“The Strategy defined a set of targets for products, channels and enablers of financial inclusion. The KPIs were defined, based on the various dimensions of financial inclusion, including access, usage, affordability, appropriateness, financial literacy, consumer protection and gender”.
To further enhance the prospects of financial inclusion in the years ahead, CBN in 2018 signed MoU with the Nigerian Communications Commission on digital payment systems.
There were also collaborative efforts between the CBN and Nigeria Inter-Bank Settlement System (NIBSS) to create a regulatory sandbox for innovative financial services and there was a partnership between the Committee of Bank CEOs and the private sector to roll out 500,000-agent networks nationwide.
Agent Banking
Among the breadth of routes to achieve financial inclusion, it appears emphasis has drastically shifted in favour of mobile money / Bank Agents in view of the fact that this brings financial services closer to the people and provides platform for offering simple diversified low-cost financial services across the broad spectrum of excluded population in Nigeria, says Omotayo Oyetayo, COO of Capricorn Digital Limited.
What makes agent banking where Capricorn as Super-Agent plays interesting and attractive to the low income to drive Financial Inclusion in Nigeria is that all CBN licensed agent banks in remote corners including every CDL Agent and Merchant is effectively a cashpoint that will be able to do the following:- Cash-In: Customers can transfer money to their loved ones, anywhere in the country, by bringing cash to agent locations. They do not need to go to a bank branch anymore. Cash-Out: Customers can collect cash at any agent location as if they were going to collect cash from a bank branch or ATM
Account Opening: Customers can open new accounts at agent locations within minutes. Purchase/POS Services: Customers can use devices as a normal POS to sell their goods and services and receive money directly to their accounts. POS Withdrawals: Customers that have bank cards can use the devices to withdraw money at agent locations as they would from an ATM.
Capricorn Digital Limited which has been in existence for over 4 years said it is creating a unique and stress-free digital payments and distribution platform targeted at the mass market through the Baxi platforms. “As a business, we are dedicated to consistently delivering value to our clients through the use of our technology which is a safe, secure and easy way to complete transactions”, says Omotayo.
We aim at simplifying the buying experience for the end consumer, providing speed, convenience, and confidence for the users. An important part of our value proposition is our technology platform, which can aggregate and integrate into a wide range of digital products and services and also serves as a means to empower the immediate community to access financial services (Financial Inclusion)
As a digital company, the company has also introduced products ranging from Baxibox/POS, BaxiPay, B2B channels, and BaxiRIMS which essentially aligns its objectives and vision which is to have a retail presence on every street and a digital presence in every household in Nigeria.
BaxiBox and BaxiPos are multifunctional android based devices, powered by Baxi’s payment solution with one-stop-shop software built with custom capabilities that enables an end-user to pay for a multitude of digital products and services including electronic airtime, data bundles, utility bills, pay-TV bills, money transfers, withdrawals and more.
BaxiMpos is a pocket-sized point of sale device that performs the function of a cash register or a point of sale terminal when connected to Baxi’s mobile app.
Baxi Pay is an online payment platform that is accessible through a website or mobile app. BaxiPay is one-stop-shop payment portal that enables the customer pay for a multitude of digital products and services including electronic airtime, data bundles, utility bills, pay-TV bills, money transfers and more.
Baxi mobile app is a technology platform on mobile device, compatible with android and IOS and with the aid of Mpos, customer can carry out ATM card transactions. The mobile App and Mpos work hand in hand.
A B2B (Business-2-Business) service where through a relatively simple integration, clients, who have their own distribution channels (be it an agent network, a web portal and/or mobile app), can now distribute CDL’s full bouquet of digital products and services. It is expected that these products will assist to deepen financial inclusion mandate.
Baxi Hero Campaign
Basking on the successes of the existing Baxi platforms, Capricorn last week introduced the Baxi Hero campaign designed not only to create awareness about Agent Banking and the products in Nigeria but give merchants and customers a state of the art technology in mobile money experience.
Oyetayo who said Baxi Hero Campaign will run across Nigeria said the company has created a one-stop-shop payment ecosystem aimed at providing everyday financial access and solutions to its agents and customers while creating core services that directly impact their daily lives.
The adoption of a multi-channel distribution approach that includes these devices is tailored to meet the needs of a wide variety of stakeholders including agents, customers and corporate clients.
Oyetayo said Capricorn Digital Limited (CDL) is a Super Agent licensed by Central Bank of Nigeria (CBN) and it is a member of the SANEF (Shared Agent Network Expansion Facility) program, a project powered by the CBN, Deposit Money Banks, Nigeria Inter-Bank Settlement Systems, Chartered Institute of Bankers of Nigeria, licensed Mobile Money Operators and Shared Agents with the primary objective of accelerating financial inclusion in Nigeria.
Nigeria may not achieve the reduction in financial exclusion to 20% this year as mandated by CBN but it is appreciable that digital payment agents such as Capricorn and agent banks have made significant progress and impact in financial inclusion and creating awareness among the populace. What is important now is sustaining this push for necessary effect in the economy.
