Ondieki: It Costs More to Visit a Bank Branch in Nigeria


The Regional Managing Director Africa, Nairobi, of MicroSave, an international financial inclusion consulting firm, Isaac Ondieki, in this interview, spoke on the need to replicate Kenya’s success story in Nigeria. Obinna Chima presents the excerpt:

What is your take on financial inclusion in Africa?

When I talk about financial inclusion in Africa, I mean a way by which the front-line banks work together to empower our citizens in Africa to be able to access banking and financial services that allow them to save their hard earn money, and thereby, putting their money in the financial ecosystem. The most relevant advance for the citizens of Africa is to enable them access banking services. For a long time, they have been left out of the banking sector.

For example, in Nigeria, 40 per cent of the adult population, which is about ninety million people, is not banked; that is the population of a country like Kenya, where I come from. You can imagine leaving out an entire country out of the banking sector. What they need is ease of access. If you look at the whole Nigeria, in some areas, the distance people cover to reach a bank is very long. It costs them more money to reach a bank than the services they are going to get in the bank.

So, if they are enabled to get access to the banking system in a cheap way, they would really appreciate it. Current advances in digital services have enabled customers to have banks in the palms of their hands through the mobile phone. I think that is going to be the key advancement for most of our other population that hasn’t been banked for a long time because a good number of them have access to phones. If they have access to phones we believe they have access to financial services from a bank or a related financial entity.

Looking at it from Kenya’s perspective, mobile money through the telephone has been a success, but we cannot say same about Nigeria. Why is the story different?

In Kenya, the mobile money addressed an existing need. There was a need to move money from Point A to Point B because of small businesses. Assuming you are doing fishing or growing tomatoes or pepper and you want that to reach a certain market, you don’t have to travel with the commodity to the market; you send a transport agent to deliver them and once they reach the destination, the person being supplied the commodity sends you money through the mobile phone. It is cheaper; it reduces risks, fraud or robbery along the way.

So, it is addressing a given need. The second need is the upper middle class that is educated wanting to send money to support businesses in the rural areas or to support their families in the rural areas. They have access to this digital platform and send money to their mothers or younger sisters to enable them have access to education. That gave us access to the need for that telephone service to be available. If you draw a parallel with Nigeria, there are people currently who have children in schools and they pay school fees in hard currencies.

If the school could give you a chance and the bank allows it, you would be able to pay that school fee from the comfort of your home; you don’t need to travel the entire distance as well as spend more money to access that service. If you are an elderly person, you get your pension from the government. Government should be able to borrow from what is happening in countries in east Africa, where pensioners are paid from what we call the G to P payment through digital platform, which is a sort of mobile wallet.

If someone is sick in the hospital and you want to pay for the medical bill or the doctor’s bill, you can do that from the comfort of your home. In US or China, while you are studying or carrying out your enterprise preparations, you don’t have to come back to Nigeria to pay for those services. If this is in place, it makes it easy for the population to spend and access financial services. Lastly, as you saw earlier today in the video declared by CB, most of the low-income populations say when they go to the banks they are mistreated.

According to them, the banks are so big and they are far from the banks. They also complained of queuing for two or more hours, which is a loss of time for small business operators. You don’t have to close your businesses to access financial services; it should just be part and parcel of our normal daily life. For example, when you listen to national news you do not leave the comfort of your house to where the news is occurring. The same is what we are appealing for that financial services should be brought closer to the citizens and that people should be able to access services in the areas where they do their operations.

How can we replicate Kenya’s success story in Nigeria?

Firstly, an attempt should be made to identify what is the true need of the Nigerian people. Their need might be like Kenya, it might be unique to Nigeria. Once it is understood that through client-centric services their real need would be addressed, they might not need to be talked to over their bank accounts. All they want to do is move money from Point A to Point B. So, if you address that need, they will embrace the service. The first thing is to identify it.

The second issue is to partner with firms from East Africa to harness their countries’ experiences, what works and what doesn’t, so that you learn from them and avoid repeating what they did not do right. Thirdly, there must be supportive regulations. There is need to sometimes allow experimentation and then regulate the experiment. If there is risk aversion a stop must be put to the experiment. Lastly, in Nigeria there is a chance of partnership and collaboration between the banking sector and the telecom sector.