The new strategy by the Central Bank of Nigeria (CBN) to ensure greater participation of more Nigerians in the nation’s financial sector and reduce the unbanked population by 20 percent by the year 2020 is a welcome development. The financial inclusion measure became evident recently following the agreement reached by the apex bank, Deposit Money Banks (DMBs), licensed mobile money operators and super agents to fund the financial inclusion initiative in the country.
The move which has been in the works for about five years with the overall aim of deepening financial inclusion in the country, will entail a massive roll out of 500,000 agent network that will offer a wide range of basic financial services, such as cash-in, cash-out, fund transfer, bill payments, airtime purchase, government disbursements, as well as remote enrollment of Bank Verification Numbers (BVN) to an estimated 50 million Nigerians that are currently “under-banked or unbanked.” We commend the government for coming up with the initiative to reach the unbanked Nigerians, many of who live in rural communities and some even in the urban centres.
Recent statistics reveal high percentage of unbanked Nigerians. There are an estimated 46.9 million unbanked Nigerians. Only 21 per cent of the adult population in Nigeria have access to banks, while 74 per cent have not banked. The remaining 5 per cent was said to have previously banked, but have now closed their accounts.
This high figure of ‘financially excluded’ Nigerians does not bode well for the economic development of the country. It is therefore time for banks and private financial institutions to take advantage of the unbanked and underbanked market, by changing their present operating model and customer offerings, to effectively serve this fast-growing lucrative market. The plan is expected to generate about 500,000 new jobs over the next two years.
The prequalified licensed operators include Capricorn Digital Ltd, Cellulant Nigeria Ltd, e-Tranzact Ltd, Innovectives Ltd, Inlaks Ltd, Interswitch Financial Inclusion Services Ltd, Paga Technology Ltd and Unified Payments (Nig) Plc.
Under the agreement, ten licensed mobile operators and super agents, already appointed, are expected to soon deploy financial services agents’ outlets in the underserved urban and rural areas in the country. In this regard, priority has been given to the Northern geopolitical zones where financial exclusion is reported to be predominant. According to the approval by the Bankers Committee, the roll out ratio gives the North-East 30 per cent, North-West 30 per cent, North-Central 20 per cent, South-South 7.5 per cent, South-East 7.5 per cent and South-West 5.0 per cent. The CBN and DMBs will in the coming months roll out new initiatives, products and services to accelerate and deepen financial inclusion all over the country. Their target is to bring onboard the financial net 60 million people, an average of 20m each year for the next three years, as well as enroll 40m Nigerians for BVN.
To that end, the Bankers Committee has stated that “renewed focus will be given to driving low cost digital access, broadening financial literacy campaigns and creating micro investment products for the benefit of excluded, underserved and low-income Nigerians.”
We believe that this plan could rapidly scale up financial inclusion if handled properly. The banks have a lot to gain from it. A recent survey by Accenture, a renowned financial services provider, showed that bringing unbanked adults and businesses into the formal banking sector could generate about $380bn in new revenues for banks. The majority of this population, the survey also noted, are found in low and middle-income emerging markets. And even in high-income countries, large numbers of people don’t use banks to help meet their daily financial needs.
With this initiative, our banks can improve their annual revenues, especially now that banks’ profits are declining. For the project to succeed, it requires the support and commitment of all stakeholders.
