Digitising Humanitarian and Social Protection Transfers in Nigeria

To better understand the opportunities and barriers to digitising humanitarian and social protection transfers in Nigeria, Strategic Impact Advisors was commissioned by the UK-funded FSD Africa, Enhancing Financial Innovation and Access and the GSMA. Chiemelie Ezeobi writes the report was tailored to highlight how digitisation will among other things, ensure increased access to digital payments for poor and vulnerable recipients of assistance, thus paving way for improved financial inclusion

In March 2021, Strategic Impact Advisors (SIA) was commissioned by the UK funded FSD Africa, Enhancing Financial Innovation and Access (EFInA), and the GSMA to better understand the opportunities and barriers to digitising humanitarian and social protection transfers in Nigeria.

This was done through an analysis conducted via desk research, key informant interviews with mobile financial service (MFS) providers, humanitarian organisations and government stakeholders, as well as focus group discussions (FGDs) with both humanitarian and social protection unrestricted cash transfer payment recipients.

The reason is not far-fetched; digitisation of social protection and humanitarian payments will pave the way for improved financial inclusion in Nigeria.

According to Press & Public Affairs Officer | Comms Lead, Prosperity and Economic Development | Foreign Commonwealth and Development Office, Ndidiamaka Eze, new report charts pathways through which entities supporting the poor with cash transfers could work in partnership with the private sector to enable sustainable access to payments and steps towards financial inclusion.

She said: “Cash transfers are increasingly used by the Government of Nigeria, development and humanitarian agencies as a tool to support the poor and vulnerable and promote wellbeing.

“However, a large proportion of cash transfers delivered to the poor in Nigeria require recipients to “cash-out” immediately.

“The Central Bank of Nigeria (CBN) has been championing the government’s efforts by designing policies that could enhance the transition from physical cash transfers to digital. The CBN is committed to achieving their 95 per cent financial inclusion target set for 2024.”

Report

Quoting a joint report from FSD Africa, Enhancing Financial Innovation and Access (EFInA) and the GSMA, and conducted by Strategic Impact Advisors (SIA), she said it revealed that a gradual transition from physical cash transfers to digital would improve the recipients’ usage.

“Although this transition will not be immediately possible everywhere due to limited network connectivity, low mobile phone ownership levels, and low literacy rates among other barriers, the report outlines different opportunities for social protection and humanitarian actors, and the private sector, to work together to support increased access to digital payments for poor and vulnerable recipients of assistance,” she added.

The joint report, Opportunities and Barriers to Digitising Social Protection and Humanitarian Payments in Nigeria, highlighted the opportunities within digitisation of cash transfers and presented a roadmap for its actualisation.

The study reinforces the need to create an ecosystem in which recipients could eventually access cash transfers on a permanent digital wallet through their mobile phones, leading invariably to multi-choice usage, which they can then use to transact to meet all of their needs and help to reduce reliance on physical cash.

The report offers recommendations to improve Nigeria’s capacity to deliver digital payments to the poor. It points out the need for humanitarian and social protection organisations to work in partnership with the government and financial service providers to support an enabling environment to reach last mile recipients, the importance of coordination to promote a more cohesive use of cash transfers wherever appropriate, and efforts to better inform the development and extension of relevant services by payment providers wherever feasible.

The report recognises that there are pockets of digital transaction-ready recipients who could support the development of digital payment ecosystems and help to advance financial inclusion.

Although digital payments will not be enough to bridge the financial inclusion gap in Nigeria, she noted that access to digital payments is an integral component and “this report charts out practical next steps”.

Commenting on the report, Juliet Munro, Director – Digital Economy at FSD Africa said: “Cash transfers are a vital source of income for many underserved households.

“We are delighted about the ongoing conversations with our partners on the existing possibilities to digitise cash payments. Once the systems are in place, the targeted households will be able to access the much-needed aid faster and more efficiently.”

Ashley Immanuel, CEO at EFInA said: “Fintech Innovation is a key driver of financial inclusion and very useful in providing access to financial services, especially for the underserved. Digitising cash transfers will help reduce the burden for cash disbursement and support recipients’ application of healthy financial habits like saving.”

Chris Pycroft, Development Director at FCDO Nigeria said: “Really encouraged to see this report highlight principled and important opportunities for development actors to support increased access to payments among the poor, lay the foundations for financial inclusion, and harness Nigeria’s growing Fintech scene.”

FSD Africa

FSD Africa is a specialist development agency working to reduce poverty by strengthening financial markets across sub-Saharan Africa.

Based in Nairobi, FSD Africa’s team of financial sector experts work alongside governments, business leaders, regulators, and policymakers to design and build ambitious programs that make financial markets work better for everyone.

Established in 2012, FSD Africa is incorporated as a non-profit company limited by guarantee in Kenya. It is funded by UK aid from the UK government.

EFInA

Enhancing Financial Innovation & Access (EFInA) is a Financial Sector Deepening (FSD) organisation that promotes inclusive finance in Nigeria. Established in 2007, EFInA is renowned within Nigeria’s financial sector for providing thought leadership toward achieving financial inclusion and championing for the unbanked.

By funding and catalysing innovation, providing cutting-edge research, advocating for inclusive policies and building capacity, EFInA has gained a reputation as an honest broker among the private and public sectors in Nigeria.

Since its founding, EFInA has contributed to the increased focus of financial inclusion in Nigeria, convening and supporting stakeholders to develop and work toward the implementation of a National Financial Inclusion Strategy (NFIS).

GSMA

The GSMA is a global organisation unifying the mobile ecosystem to discover, develop and deliver innovation foundational to positive business environments and societal change. Their vision is to unlock the full power of connectivity so that people, industry, and society thrive.

Representing mobile operators and organisations across the mobile ecosystem and adjacent industries, the GSMA delivers for its members across three broad pillars: Industry Services and Solutions, Connectivity for Good, and Outreach.

Strategic Impact Advisors (SIA)

SIA provides insightful technical assistance to help people overcome barriers and improve their lives through technology and analysis.

A small, woman-owned business with a global footprint, SIA works with clients seeking strategic approaches, innovative business models, and deep insights for using digital technologies and cutting-edge data solutions to solve complex development challenges.

Its team members have provided boutique consulting services in emerging markets to donors, implementing partners, the private sector and governments in more than 25 countries over the past 25+ years.