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For the poor to survive the coronavirus pandemic, keep money circulating

The Covid-19 pandemic has sent shockwaves across the globe since emerging in late 2019.

Countries have responded with drastic measures to contain the virus, some of which have had a devastating impact on individual livelihoods, businesses and whole economies.

Alongside fiscal responses and social protection schemes, countries have also imposed lockdowns forcing people to stay at home and practice social (physical) distancing.

In Nigeria, what could be the first wave of such lockdowns is underway, and it is essential that we keep cash in circulation through financial service channels, particularly ATMs and agents (banking and mobile money) to serve the poor.

Financial services play an important role in this season of uncertainty for Nigeria’s poor (about 93.7 million people), who already face hunger and malnutrition, unemployment, insecurity and ongoing public health concerns such as Malaria and Lassa Fever.

If the current lockdown is extended or even more states, particularly the more rural ones, enact lockdowns of their own, the poor may be stretched beyond their capacity to survive via the inability to earn daily income.

As the country imposes lockdowns and curfews prohibiting citizens from going out to work, Nigerians need functional access to cash. Though the government has included financial services as essential services, what is not clear is whether this permission extends to financial service agents (for banks and mobile money). ATMs and agents are the primary financial service points in peri-urban and rural areas where access to traditional banking halls is limited or non-existent, and citizens in these regions will look to them to meet their liquidity needs during the lockdown.

The coronavirus pandemic is in many ways a stress test for financial inclusion in Nigeria.

With experts discouraging the use of cash in this season, highlighting the potential role of cash as a vector for the coronavirus, the financially excluded remain at risk. Hence we cannot relent in the pursuit of financial inclusion for all.

We need to seize this moment to further drive digital and financial literacy, encouraging the adoption of digital banking. Providers and Super Agents can continue onboarding new customers into the formal financial service ecosystem at agent points, provided social distancing guidelines are duly followed. Eligible micro-enterprises can also be onboarded with business accounts while educating them about the opportunities for government cash interventions.

To meet up with increased cash demand, FSPs will need to strengthen agent banking in remote and rural areas, enhance availability and functionality of their ATM machines (keeping them stocked with cash round the clock) and encourage and educate users on mobile banking.

Helping Nigerians weather the storm of this pandemic by ensuring ready access to cash through various means will shore up their trust in banks and formal financial institutions, a key ingredient for advancing sustainable financial inclusion. It could also lead to modest gains in digital and financial literacy.

As COVID-19 rages across Nigeria, the financial service ecosystem can help mitigate the impact of the pandemic on livelihoods by ensuring citizens stay liquid. Indeed, there is also an opportunity in this crisis to deepen financial inclusion while supporting Nigerians in their quest to survive its impact.


Ijeoma Nwagwu & Tobechukwu Njideaka

Ijeoma Nwagwu and Tobechukwu Njideaka are members of the Sustainable and Inclusive Digital Financial Services initiative of the Lagos Business School.

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