The Biometric Verification Number (BVN) enrollment conducted and concluded by the Central Bank of Nigeria (CBN) in October 2015 had clearly revealed that out of the nation’s estimated 170million citizens only about 25 million have one form of bank account or the other.
This was even as statistics from the Nigeria Communication Commission (NCC) show that the the country has about 148 million mobile phone subscribers. The implication of this revelation was that between 90 million to 100 million Nigerians with mobile phones don’t have bank accounts and also do not have access to financial services unlike what obtains in other African countries like Kenya and South Africa?
This category of people are regarded as unbanked or financially excluded.
According to the 2014 Access to Financial Service Survey, 36.9million of Nigerian adults representing 39.5 percent out of 93.5 percent adult population surveyed were excluded from financial services as 57.9 percent of these were women.
According to the Committee of E-Banking Industry Heads (CeBIH) led by Tunde Kuponiyi, these unbanked Nigerians can be attracted to enjoy banking and other financial services through mobile payments, which involves the use of mobile phones to conduct financial transactions. The modalities on how this can be achieved formed the basis of the 2015 annual retreat of CeBIH held in Uyo, Akwa Ibom state. The theme of the retreat was “Mobile Payments for Financial Inclusion in Nigeria – Prospects & Challenges”.
The retreat was of course the fallout of the National Financial Inclusion Strategy crafted by financial experts led by the Central Bank of Nigeria (CBN),bin 2012 with the aim of reducing the percentage of adult Nigerians that do not have access to financial services from 46.3 per cent in 2010 to 20.0 percent in 2020.
While welcoming participants to the retreat in Uyo, Kuponiyi highlighted the potentials of mobile phones to enhancing financial inclusion. He said, “The good thing about the mobile phone and in fact any device that has internet connectivity is that it can be used as a payment device and this is what will significantly enhance inclusion not only as store of value but also as a payment platform.
Earlier, the CBN has as part of efforts to achieve the National Financial inclusion Strategy goal in 2011 licensed 21 companies to offer mobile payment services.
This was in addition to the introduction of agency banking, which allows banks and mobile payment operators (MPOs) to render services through third parties in various locations.
But the recent statistics on financial inclusion among Nigerians show that these measures are yet to bear the desired fruit in terms massive attraction of the unbanked population into the financial sector.
“By all accounts there are less than 5,000 active agents across the country while the 21 Mobile Money operators who have been unable to scale the hurdle and consequently only 47 percent of Nigerians have access to financial services within 5km”, noted Mr. Mike Ogbalu, Divisional Chief Executive Officer, Interswitch Financial Inclusion Services.
He added that this was because, “availability/visibility of mobile payment operators/agents and awareness of bottom-of-pyramid (BOP) financial services is still very low while Agent value proposition remains weak and unattractive. Another major constraint is that high cost of effective agent network rollout remains a challenge to most service providers while most providers have short term investment focus.
Ogbalu therefore noted that with 95 percent of financial services concentrated in the urban areas, the existing financial services infrastructure is grossly inadequate to change the Nigerian Financial Services Landscape.
Speaking on how to surmount these challenges, Governor of Akwa Ibom, Mr. Emmanuel Udom, stressed the need for sound policy framework, innovation and awareness. “Beyond a sound regulatory framework, we cannot drive the adoption of electronic banking without the right technology, the right standard, and above all, a sustained and robust awareness of the Nigerian public,” he said in his address to participants.
This however requires a lot of capital. To make significant impact in the area of attracting the unbanked, mobile payment operators need to invest more. This, according to Mr. Jimoh Musa, Deputy Director, Banking and Payment System Department, CBN, is why the apex bank has decided to increase the capital base of MPOs. “All mobile operators must raise capital base to N2 billion. We have realised that the key success factor to mobile money is agent network. However it takes money to build agent network. It takes N100,000 for an agent outlet to be properly set up”.
One of the highlights of the retreat was a presentation on “The Digital Financial Marathon: Kenya’s evolution towards a digital financial ecosystem”, by Eric Muriuki Njagi, General Manager, Commercial Bank of Africa (CBA). The presentation cited the experience of CBA in the use of mobile payment services to generate savings and extend loans to millions of Kenyans. It also cited the experience of Kenya in the use of mobile payment to drive financial inclusion. The success factors, according to Njagi are: Identity authentication; Distribution facilitating legislation, Interoperability, Alignment of need/ Opportunity to capability”.
“The discussion should shift to digital inclusion from financial inclusion,” he averred, adding, “Financial transaction should be a result of digital inclusion. Mpesa, Kenya’s globally acclaimed mobile payment product, led to the creation of agency banking model and business .Financial inclusion may not increase wealth, but influences how households responds to shocks”
He added that for mobile payment to succeed in enhancing financial inclusion in Nigerian, “The BVN should be promoted to all stakeholders, particularly government. The BVN should also be used as unique (secondary) identifier with the credit bureaus, and possibly a pre-condition to credit.
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