Kudos to the novel idea by the federal government, led by the CBN to affect a policy of accommodating all Nigerians in the financial services of the country by way of a fresh initiative to roll out a 500,000 shared Agent Networks that would further aid financial inclusion in the country.
The agreement, according to CBN entails an aggressive rollout of agent network to offer basic financial services, such as Cash-in, Cash-out, Funds Transfer, Bill Payments, Airtime purchase, Government disbursements, as well as, remote enrollment on BMS Infrastructure (BVN) to an estimated 50 million Nigerians that are currently under-banked or unbanked.
According to the plan, the CBN and deposit money banks and supper agents over the next few months are expected to roll out new initiatives, products and services to accelerate and deepen financial inclusion in Nigeria; as the government aims to on-board and formally bank 60 million additional Nigerians, an average of 20 million yearly, as well as, enroll 40 million Nigerians for BVN.
However, for the nation to achieve this laudable goal, renewed focus need to be given by the money market operators to driving the low cost digital access, broadening financial literacy campaigns, and creating micro loans, micro insurance, and micro investment products for benefit of the excluded, under-served and low income Nigerians.
Moreover, to significantly grow financial inclusion in Nigeria, the newly licensed operators need to offer truly effective digital financial services that operate on all mobile telecom networks and a robust nationwide network of agents for convenient access.
Nonetheless, as brilliant as this idea may sound, there will be challenges. This paper therefore warn the general public on patronizing wonder banks that offer extra-ordinary interest rates on deposits or investment only to disappear after they have made collection of such deposits. On this, we call on the CBN to put in place a 24 hour help desk with a toll-free telephone line for immediate response to distress call from customers.
Furthermore, the success of mobile money is largely determined by the quality of its complementary agent network. That is, mobile money delivery at the last mile, especially in rural and remote areas, cannot succeed without the proper financial and technical investment in the network.
It is well known that the nation’s agent network is pretty underdeveloped. In fact, according to the Central Bank, the nation’s agent network is less than 11,000 strong, which by any standard is a big deal.
In December 2017, at the International Financial Inclusion Conference hosted by Lagos Business School, the number of agents required to effectively serve Nigeria was estimated to be at least 180,000. This requirement reveals a shortfall of over 160,000 agent network.
Again, rolling out new agents, training and managing them is expensive, not to mention the liquidity requirements if the agent is to remain in business. Also, the agent business is a low profit business, meaning agents must have other sources of income.
In the midst of all this talk of extending financial services to the excluded, regulators should also be concerned about security and stability of the eco-system itself; which is why the BVN was introduced some years ago.
The BVN helped to streamline account ownership, allowing regulators to determine the exact number of individual account holders. This is vital information. Compare this to what obtains in the telco industry where we have a hard time determining the accurate level of mobile phone penetration. The NCC reports 146 million subscribers, but we have many subscribers with 2-3 lines.
But unfortunately, the necessity of having a BVN complicate the financial inclusion problem due to the inability of some citizens to satisfy the ‘Know Your Customers’ (KYC) requirements. Believe it or not, some people are identity poor. CBN developed a workaround last year in September, when they removed BVN from the list of requirements for tier-1 mobile money wallets.
Another interesting question posed is even if the telecommunications companies managed to sign up every subscriber on their network, it still doesn’t translate to true financial inclusion. After all has been said and done, we still have to present digital money as a better alternative to cash. People will not automatically move to digital money once it’s available. They have to be given incentives.
For example, India had to execute a demonetization exercise in 2016 where the use of high currency notes (500-rupee notes and 1,000-rupee notes) were banned. The infamous decision which wiped out four-fifths of India’s paper currency, though considered too drastic, triggered an uptake in the number of mobile money users in the following months.
The bottom line is, financial inclusion is a monster facing us as a country and requires all hands on deck. Telecommunications companies, Agents network and Banks all need to participate if we’re going to successfully reduce exclusion and bring financial services to the poor and unbanked which they need to improve their lives.