Expanding Financial Inclusion


Hamid Ayodeji writes on efforts by the Shared Agents Network Expansion Facility to enhance financial inclusion in the country

The linkage between financial inclusion and economic development of developing countries has provided the impetus for countries to develop and implement improved strategies to financially include their unbanked citizens, according to the latest financial inclusion report of the Central Bank of Nigeria (CBN).

Also, a study by the World Bank in 2017, revealed that there is a strong positive correlation between account penetration of various countries and their Gross Domestic Product (GDP) per capita.

For instance, high income countries with approximately 100 per cent of account penetration posted GDP per capital ranging from $25,000 above, while Sub-saharan African countries with less than 65 per cent account penetration in most cases recorded GDP per capita less than $10,000. 

 As part of commitment to further enhance the level of financial inclusion in Nigeria and by implication sustain inclusive economic growth, the Governor, Central Bank of Nigeria and Chairman of the National Financial Inclusion Steering Committee, Mr. Godwin Emefiele, had in his 5-year strategy (2019—2024) has defined a target of 95 per cent financial inclusion rate by 2024. 

 The new target according to the Governor, calls for institutions to re-strategise and refocus initiatives, policies and schemes that would accelerate the pace of delivery of their respective financial inclusion efforts. 

Clearly, enhancing financial inclusion was one of the reasons why industry stakeholders established the Shared Agents Network Expansion Facility (SANEF).

SANEF, among other targets, intends to establish 500,000 agents across the country by 2020.

SANEF is a project powered by the CBN, banks, NIBSS, licenced mobile money operators and shared agents with the primary objective of accelerating financial inclusion in Nigeria.

The initiative also involves on-boarding 40 million low income and unserved Nigerians into the financial system and deepening access to mobile and digital financial products and services such as savings accounts, micro loans, insurance, pensions by Nigerians.

The project seeks to deepen financial inclusion in Nigeria through an integrated ecosystem with strong regulatory oversight, consumer protection and interoperable payment systems with limited concentration risk.

The Chief Executive Officer, SANEF, Ronke Kuye, recently reiterated the commitment of the body towards meeting the target.

Kuye, who said this during a financial inclusion stakeholders’ forum in Lagos recently, pointed out that the organisation was on track to achieving the target that was given to it by the Central Bank of Nigeria, as it currently has 156,000 agents.

According to her, the company would be working together with the super agents as well as the agents to drive and ensure financial inclusion in the country.

Kuye explained, “Banks are not usually sited in rural areas so it is important for us to have financial representatives in form of agents in all the areas banks cannot have their branches in order to achieve the financial inclusion rate of 80 percent by 2020.

“In addition to all of these efforts towards driving financial inclusion, we ensure there are training programmes for the agents, financial literacy and campaign awareness, technology platform that would enable everyone that wants to open an account with any agent bank outlet.

“Where ever the SANEF sign is, it is safe for customers to go there to open an account, do BVN enrolment, transfers, cash in and cash out transactions. We are collaborating with the Bank of Industry and other stakeholders to ensure that there are products for the agents to offer to the public; such as micro pension, micro insurance and micro credit.”

Furthermore, Kuye said SANEF was working on improving the standard of technology in the industry.

“For example, the new account we are launching soon would have the same standard as any other account. 

“Also the applications can be used to use various products such as, cash in cash out. We are going to make arrangements for basic products,” he added.

Also Speaking at the event, the Head, Financial Inclusion Secretariat, CBN, Joseph Attah, who was represented by the Assistant Director Finance Development, Central Bank of Nigeria, Dr Paul Oluikpe, said, “To spur all stakeholders to action and engineer a measurable path towards achievement, the financial inclusion Secretariat has outlined a number of workable assumptions around SANEF’s target of 500,000 agents by 2020.

“Considering the fact that SANEF currently has over 100,000 agents in 2019; if each of these agents signs on 6.9 accounts per month, that would translate to 83 accounts per year and then cumulating to 8.3 million accounts by the end of 2019, thus precisely fulfilling our 2019 target of including 8.3 million people for this year.

Agent Banking

Agent banking has been identified as one of the key influencers to drive mass markets to formal financial services as they enable customers to cash in, cash out, make payments or conduct other financial transactions without necessarily having to go through the traditional brick and mortar channels.  

The success of agent banking, according to a report by EFInA, is dependent on many factors, but significant among them is agent management.

 A well-managed agent network can help providers build brand awareness, educate customers, and meet system-wide liquidity demands, all of which build confidence among users in a service that has low awareness. 

On the other hand, a poorly managed agent network, by contrast, is characterised by widespread low quality customer experiences, which in turn erodes trust and drives away business. 

Even before the National Financial Inclusion Strategy (NFIS) was launched in 2012, where agent banking was identified as one of its drivers, the Central Bank of Nigeria led in promoting an effective system for the settlement of transactions, a key driver for financial inclusion in Nigeria. In addition, after the NFIS launch, there have been other activities that have continued to shape the Nigerian Agent banking space.

To the Chief Executive Officer, EFInA, Esaie Dier, while speaking at the stakeholders’ forum, noted that, “As an agent in this sector, in order for you to generate revenue you need to understand the customers, the business and how best to communicate with them. “Thus we are providing data for the agents to build their strategy around the number of people that are financially excluded, also their locations. In addition, we provide technical assistance.

“For instance, if someone has a good idea that can generate about ten million into the banking system, we would come up with a strategy to support such idea as we provide financial support. 

“This year, we gave out $2 million to six Nigerians to develop business ideas. Basically we help create awareness, data and grants that help develop businesses.

“We have been working with regulators to address some of the challenges out there and come up with efficient policies and regulations that help drive businesses and ideas.”

 Speaking on measures put in place by the CBN to protect the agents against harassment, an official of the Consumer Protection Department, CBN, Damola Ayanda, said: “The financial institution that the agent works with has the responsibility to ensure that all the right tools are in place for the products and services that you render.”

Ayanda, while speaking on point of sale dispensing errors which had been identified as a challenge in the industry, said the central bank was working on a solution whereby when a customer comes to the agents with such complaints, it would be resolved effectively. 

Some agents at the forum noted that technology has been used to save cost, drive capacity and enhance services with the aggressive drive for financial inclusion.

Ayanda stressed the need for capacity building for agents, to enable them understand the regulatory framework that guides the channels used to deliver services and products. 

“For every financial instrument or channel that is used in Nigeria there is a regulatory framework. The agents need to understand the framework guiding that channel in order to resolve issues quickly and effectively using the framework.

“If you know the guidelines of the POS transactions you will not have issues concerning POS dispensing errors.  Another thing is that before financial institutions register an individual as an agent they need to look into it that the person is licenced and capable of doing the work. 

“There are currently a lot of people becoming agents which has led to a lot of cash in cash out agent banking boots,” he added.

On his part, the Head of Agent Banking, Access Bank, Michael Ogba, pointed out that there are about 99 million adult Nigerians, and less than 20,000 ATMs and less than 500,000 PoS in the country. 

“Also banks are no longer building bank branches; neither are they buying more ATM machines. Our research shows that the highest numbers of PoS terminals that are being bought in the last one year are going to mobile money operators, which tells us that, the agent banking business is a good one, it is not going to reduce, rather it would increase. “Nigeria is still under banked which means there is still a large amount of customer base to be tapped into,” he explained.