• Friday, June 21, 2024
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Nigeria needs multifaceted approach to achieve 95% financial inclusion target

Nigeria needs multifaceted approach to achieve 95% financial inclusion target

Ebehijie Momoh, country manager and area business head of West Africa at Mastercard, a global technology company in the payments industry, in this interview with BUNMI BAILEY, discusses how the company is promoting financial inclusion and driving economic growth in Nigeria and Africa.

Excerpts:

What products or solutions has Mastercard developed so far to drive the adoption of digital payments across the continent?

Africa is a significant region for Mastercard, and we are committed to the digital transformation of the continent. We are ramping up investments and expanding our reach. Since 2010, the company has expanded its operations to dozens of new markets across the continent including Chad, Liberia and Sierra Leone.

Together with our partners, we brought digital payments – including QR codes, Automated Teller Machines and Point-of-Sale terminals – to over 3.5 million locations across Africa.

The company’s commitment to driving the adoption of digital payments across the continent has been instrumental in helping to modernize payment systems and expand access to financial services.

By leveraging advanced technology and strategic partnerships, Mastercard is helping to drive the evolution of digital payments and create new opportunities for businesses, consumers, and governments alike.

Small and Medium-sized Enterprises (SMEs) account for more than 90 percent of businesses. How is Mastercard driving financial inclusion and empowering SMEs in Nigeria, and Africa as a whole?

SMEs are the lifeblood of the economy and account for 60 percent of jobs in Africa. Yet they operate in a cash-based economy, and face a $330 billion financing gap, according to the World Bank. Access to training, digital tools, credit and resources are key to their survival.

That is why we are leveraging our innovation and solutions beyond payments to help small and medium enterprises get paid, get capital and get digital – safely and securely – wherever they are. We’re dedicated to enabling businesses to survive and thrive, stronger than before. And that is empowering every business everywhere.

Last year, it signed a Memorandum of Understanding with the Lagos State Employment Trust Fund to provide Micro, Small and Medium Enterprises with access to digital, payment and training tools.

The partnership provides SME-in-a-Box – a new low-cost payments solution that enables small business owners to move their businesses online and accept a range of digital payments from their customers, moving beyond person-to-person payments.

Mastercard also partnered with NowNow Digital Systems, to provide greater financial inclusion for small and medium enterprises by enabling them to benefit from the convenience of digital payments.

How is Mastercard contributing to bridge Nigeria’s financial inclusion gap?

Mastercard is committed to promoting financial inclusion in Nigeria through a range of programs and initiatives that aim to increase access to financial services, promote financial literacy, and support the growth of small businesses and entrepreneurs.

Some of the ways in which it is contributing to financial inclusion in Nigeria include expanding access to digital payments, supporting small businesses and entrepreneurs, promoting financial literacy and investing in technology.

Overall, Mastercard recognises that financial inclusion is critical to promoting economic growth and building more equitable societies in Nigeria.

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Tell us about the Mastercard Start Path Global programme, the inspiration behind it and the impact it has created so far?

The program is a unique and highly selective program designed to support innovative early-stage startups that are redefining the future of commerce.

It was launched in 2014 with the aim of identifying and partnering with the most promising startups around the world and providing them with the resources, mentorship, and tools they need to scale their businesses and accelerate their growth.

The inspiration behind the program was to foster innovation and collaboration within the fintech ecosystem and to help drive positive change in the global economy.

Since its launch, Start Path Global has made a significant impact on the startup ecosystem, supporting over 300 startups across a wide range of industries and geographies. Startups that have participated in the program have gone on to raise more than $5 billion in funding, and many have gone on to become industry leaders in their respective fields.

In addition to supporting individual startups, it has also helped to foster collaboration and innovation within the wider fintech ecosystem.

By bringing together startups, investors, and industry experts from around the world, the program has helped to spark new ideas, drive innovation, and accelerate the growth of the global economy.

How is Mastercard using digital solutions to promote financial inclusion, reduce poverty, and support economic growth in Nigeria?

Mastercard is working towards improving financial inclusion for Africans by developing and supporting digital payment solutions that can help people who are unbanked or underbanked.

As the digital economy increasingly becomes the economy, it is both our business strategy and our social responsibility to ensure that people and organizations have access to the networks, tools and solutions that can help them reach their potential and achieve financial security.

Through Mastercard’s Center for Inclusive Growth, we are supporting several initiatives that benefit the most vulnerable. In Nigeria, Mastercard is helping raise awareness and drive usage of low-cost digital acceptance solutions – such as Contactless payment through Tap-on-Phone, Mastercard QR pay by link and so on.

In Nigeria, Accion Microfinance Bank (AMfB) provides loans and savings products to low-income microentrepreneurs. The Mastercard Impact Fund’s $12 million grant and partnership with Accion has the goal of transforming services for 10 million people, including four million merchants, globally over four years.

A large segment of Nigeria’s unbanked population is in rural and semi-rural communities. What role/roles have Mastercards played in providing access to digital financial services in these communities?

As a thought leader in the financial services industry, Mastercard understands the importance of financial inclusion in driving economic growth and development. Nigeria’s unbanked population, particularly those in rural and semi-rural areas, face significant challenges in accessing formal financial services, which can hinder their ability to save, invest, and access credit.

Mastercard recognises that addressing these challenges requires a multi-pronged approach that focuses on partnerships, technology, and education.

We’ve developed community pass, a shared interoperable digital platform that supports the company’s commitment to connecting one billion people to the digital economy by 2025.

The platform addresses the infrastructure challenges that arise in digitizing rural communities, such as unreliable connectivity, low smartphone ownership, and lack of consistent identification or credentials.

We are also helping smallholder farmers across Sub-Saharan Africa gain access to digital access to markets, financial services, and real-time pricing information, through the platform

We are committed to registering 30 million people to our Community Pass platform by 2027, with a focus on registering 15 million people across Africa, including women in underserved and remote communities, increasing their access to digital commerce, agricultural markets, healthcare services, and humanitarian benefits, by providing digital identities and a digital acceptance network.

To date, we have enabled 2.4 million individuals in Africa – mostly smallholder farmers – to participate in the digital economy.

One of the key roles that Mastercard has played in this regard is through partnerships with various stakeholders such as financial institutions, governments, and non-governmental organisations (NGOs). For example, the company has partnered with financial institutions to provide mobile banking services that allow users to make transactions using their mobile phones, without the need for a physical bank branch.

According to a recent McKinsey report, only five to seven percent of all payment transactions are made via electronic or digital channels. This is a challenge as it affects the gains of adopting digital channels. What can be done to increase the penetration rate?

Mastercard recognises that investing in digital payment infrastructure is crucial to increasing the adoption of digital payments. Building a network of agents, developing mobile apps, and implementing secure digital payment systems will all contribute to increasing access to digital payment channels.

In addition to infrastructure, Mastercard also recognises the importance of increasing financial literacy to promote the benefits of digital payments. To address this challenge, the company has partnered with NGOs and other organisations to provide financial literacy programs that educate people about the advantages of digital payments, including increased security and convenience.

Partnering with governments and financial institutions is another key strategy that Mastercard believes will increase the adoption of digital payment channels. By working with these partners, Mastercard is leveraging its existing networks to reach a wider audience and build trust in digital payment channels.

Mastercard is also committed to addressing security concerns around digital payments by investing in the development of secure systems. These systems utilize advanced encryption and authentication technologies to safeguard users’ data.

Nigeria aims to increase its financial inclusion rate to 95 percent in 2024 from 64 percent in 2020. What recommendations would you suggest to help Nigeria achieve this target?

Mastercard recognises the importance of increasing financial inclusion in Nigeria, and we have been working with various stakeholders to help the country achieve its financial inclusion targets. While Nigeria’s financial inclusion rate increased to 64.1 percent in 2020 from 63.2 percent in 2018, it fell short of the Central Bank of Nigeria’s target. There is still a lot of work to be done to achieve the target by 2024.

To help Nigeria achieve its financial inclusion target, Mastercard believes that a multi-faceted approach is necessary. This approach includes increasing awareness and education, expanding digital payment infrastructure, encouraging the use of digital IDs, encouraging collaboration between financial institutions and fintech companies, and developing innovative solutions that can help Nigeria achieve its financial inclusion targets.