Experts urge stakeholders to fix challenges facing financial inclusion

Lagos Business School in partnership with BusinessDay Media has called on key players, regulators and consumers to address the challenges facing the financial sector with the aim of achieving an inclusive digital financial ecosystem.

The overall financial inclusion target was 80 percent by 2020. According to Enhancing Financial Innovation and Access (EFInA), data shows that only 64 percent of Nigerian adults were financially included by the end of 2020. This means that 36 percent of Nigerian adults, or 38 million adults, remain financially excluded.

In emerging markets with positive financial inclusion outcomes, partnerships and strategic alliances contributed to their success, even as actors leveraged each other’s capabilities.

Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.

Partnerships and alliances can also enhance product innovation, optimise resources and improve delivery at the last mile. However, these partnerships and strategic allegiances have not emerged due to several challenges including limited capacity of the intending partners, inhibitive regulatory policies, and conflicting motivations and objectives of the partner institutions.

Speaking on the key enablers and inhibitors in achieving an inclusive digital financial ecosystem, Akinbulejo Onabolu, Senior Manager, Partnerships and Alliances, MTN Nigeria sees the challenges as an opportunity.

“How do we use functions within this organization, to approach third parties? Let’s start with the word third parties, do they look at them as vendors, do they look at them as partners, does your procurement team look at people as vendors or look at them as partners because they are treated differently. Whenever someone is trying to sell something to you as a vendor, as a partner you’re trying to build together. For me, I like to reflect it as the mindset of the people, most of the functions within your organization think in terms of delivering value to partnerships, are they just well, they’re just trying to do a lot of things with us and then we treat them as vendors,” Onabolu said.

Read also: e-Naira will deepen financial inclusion says CIBN

The experts also addressed disputes associated with unstructured supplementary service data (USSD) and experts say partnerships are not always hunky dory, sometimes particularly in the digital finance spaces, there will be some measure of arbitrage. And so people go into partnerships to quickly leverage on technology, neglecting the implementation of effective tools of partnership.

“Initially, when the USSD cost issues were raised, banks and telcos, especially relating to the end user, you know, especially charges that were the bone of contention in that period, as a regulator, we had to play a role to try and arbitrate and bring these two parties who are fundamentally sometimes within different regulatory space but basically offering a mutual financial service to an end user for financial inclusion purposes especially relating to the USSD,” Head, Financial Inclusion Delivery Unit, CBN, Paul Oluikpe said.

Hence to foster financial inclusion in Nigeria, the key regulator in the industry says the USSD system is a win-win for all. A very leveled playing ground as well as a mutually acceptable ground for everything about USSD will enable the system to thrive better.

“From a regulatory perspective, we will suggest that all the parties to the USSD, especially banks and telcos, are required to look at financial inclusion as the end of diva not necessarily you know the profit oriented aspects of it. This is because if you look at the initiative, a lot will cumulate into profit at the end of the day and the given million Nigerian adults who are minimally literate, who are very low income, who are not really high value individuals in terms of the resources that they can mobilize for banks, and they make transfers or transactions of N100 on USSD system, which the charges would dovetail to a huge volume for profit in terms of what the providers could really acquire in a day,” Oluikpe said.

Similarly, a large demography also plays a key role in achieving a stable financial inclusion ecosystem. The Central Bank of Nigeria (CBN) as a key regulator calls for protection to be the long terms of their considerations as they are able to really scale in financial services framework. Also, the CBN is to provide a leveled playing ground to ensure the consumers are protected at every level of the transactions they undertake as well as a regulated price mechanism being put into the consumer protection.

For sub-Saharan Africa, using the democratic republic of Congo (DRC) as a case study, the inhibitors and enablers of partnership are the cause of a thriving financial inclusion system. “We seem to have a great partnership because if I take the example of FINCA DRC, a micro finance bank, FINCA is able to offer mobile banking, wallet bank and the mobile application to customers because we’ve been able to help others and other partners on the core banking system that can allow us to deliver to the customer what is expected, also to give to the customer the product that they are looking for,” Head and Chief Executive Officer, FINCA, Mamie Kalonda said.

To ensure more beneficial partnership between operators and consumers in Nigeria as well as prevent inhibitions to more collaborations, financial service providers (FSPs) are asked to keep informing and educating transparency as well as ensure that data and services are of top quality that the consumers need, and consumers must ensure they listen to recommendations provided by FSPs.

“The better relationship of the consumer partnership is more around the responsibility of the parties being that everyone is doing what they promised to do. So from the service delivery perspective, you’re talking data projection, you’re doing everything that the consumers need to trust you would do everything you are committed to do, also transparency. On the side of the consumer, they take on every information that is necessary, being obedient to the rules around passwords, codes, etc to curb being victims of fraudulent activities,” Chief Executive Officer, Bankly, Tomilola Majekodunmi said.

BusinessDay Media, established in 2001, is Nigeria’s most influential business and financial daily newspaper and online publication firm. The company is in support of every initiative driven towards a higher level of financial inclusion to benefit a larger number of the adult populace in Nigeria.

“We are very delighted to partner with Lagos business school on this initiative and will continue to. Financial inclusion is very important and I believe that if we continue to improve in areas like infrastructure deficit, policy making, it will close the wide gap in our financial industries,” Frank Aigbogun, Publisher, BusinessDay Media, said.

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