According to Emeka Onwuka, CEO, Parkway Project, a Lagos-based Fintech company known for its popular Readycash product, the Central Bank of Nigeria (CBN) should include the non- regulated roadside agents providing agency banking services into the formal cycle to increase the network and spur inclusion.
“When it comes to financial inclusion, we believe that the distribution is really where we have the problem,” Onwuka told Businessday adding that it is not about wallet rather it is “about the touch point where people can actually go and have access.”
In January 2019, the central bank unveiled a revised version of the National Financial Inclusion Strategy (NFIS) in which it projected that it will enrol about 500,000 mobile money/bank agents available to serve about 105 million adult Nigerians by the year 2020. The figure translates to about 476 agents per 100,000 adults.
Less than five months to the projected deadline, Nigeria’s financial institutions have however enrolled a joint 65,753 mobile agents, data obtained from the Nigeria Interbank Settlement System (NIBSS) showed.
This is 86.85 percent less than the 500,000 mobile agents which are going to serve about 105 million adult Nigerians. If the industry regulator is to meet the target by 2020, it would have to enrol about 434,247 agents in five months.
“What I also know is that you have a lot of this mobile money agents out there but not necessarily regulated and are providing similar agency banking services, one thing that I will advise is for CBN to make sure that everyone who is operating one form of agency banking or the other is properly identified either by issuing them some ID number,” Onwuka said.
The Cofounder added that if the apex bank implements the idea, he “will not be surprised that the number of agents already operating maybe up to 50percent of the target projected.”
The apex bank also has a target to ensure it drive the current 36.8 percent exclusion rate to 20 percent by 2020, a projection many have argued is too ambitious especially as the country is now referred as the poverty capital of the world.
“We do have poverty problem, first and foremost people need to have finances before they can be included into the financial services net,” Onwuka said.
The CEO also linked the country’s exclusion rate to CBN’S policy flip-flop.
“We’ve had a lot of policy flip-flop from the CBN; we started with mobile money and for years we were not sure whether Telcos were going to play in the financial service industry.”
As at the time Nigeria was considering the optimal approach needed to leverage new, innovative technology to deliver financial services to its people, the Central Bank analysed in some detail how to structure the guidelines and the regulatory environment to deliver the benefits on offer, without compromising the integrity of the financial system.
Africa’s largest economy needed to see how the regulation of mobile money could evolve owning to significant volumes of currency that could be circulating in mobile wallets, and may not be visible to the regulatory authorities.
As such it was clear that a better balance between the market and the regulatory structures was required.
Since then there has been an explosion in mobile money wallet usage in Kenya and other Africa peers, the Nigeria’s CBN was rather focused on an independent bank led model that would supplement and support the existing banking system.
“When loans and credits are given to individuals who have basic bank accounts especially those in the informal sector, (as they contribute to the larger population of the country), they will be encouraged to operate formally in the financial circle other than their normal traditional way of carrying out financial transactions,” Wale Okunrinboye, head of Research at Lagos-based Sigma Pensions said.
According to the World Bank report, mobile money drove financial inclusion in Sub-saharan Africa, as only eight countries in Africa which included Burkina faso, Côte d’ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe recorded 20 percent or more adult using only a mobile money account.
Although the World Bank also noted there are immense opportunities in the region as about 95 million unbanked adults in the region receive cash payments for agricultural products, and roughly 65 million save using semiformal methods.
Between 2014 and 2017, the World Bank noted that there has been significant increase in the use of mobile phones and the Internet to conduct financial transactions which contributed to a rise in the share of account owners sending or receiving payments digitally from 67 per cent to 76 per cent globally, while developing countries recorded 57 percent to 70 per cent.