Deepening Financial Inclusion

Obinna Chima examines efforts by stakeholders in the payment system to accelerate financial inclusion in the country

Financial inclusion is on the rise globally and has been accelerated by mobile phones and the internet, a recent World Bank report has shown.

According to the report, gains have been uneven across countries.
The new report on the use of financial services also found that men remain more likely than women to have a bank account.

Globally, 69 per cent of adults -3.8 billion people – now have an account at a bank or mobile money provider, a crucial step in escaping poverty. This was up from 62 per cent in 2014 and 51 percent in 2011. Between 2014 and 2017, 515 million adults obtained bank accounts, while 1.2 billion have done so since 2011, according to the Global Findex database.

While in some economies account ownership has surged, progress has been slower elsewhere, often held back by large disparities between men and women and between the rich and poor, it revealed.
The gap between men and women in developing economies remains unchanged at 9 per cent since 2011.

In the past few years, we have seen great strides around the world in connecting people to formal financial services, World Bank Group President, Jim Yong Kim had explained.
He added: Financial inclusion allows people to save for family needs, borrow to support a business, or build a cushion against an emergency.

Having access to financial services is a critical step towards reducing both poverty and inequality, and new data on mobile phone ownership and internet access show unprecedented opportunities to use technology to achieve universal financial inclusion.

There have also been a significant increase in the use of mobile phones and the internet to conduct financial transactions. Between 2014 and 2017, this has contributed to a rise in the share of account owners sending or receiving payments digitally from 67 per cent to 76 per cent globally, and in the developing world from 57 percent to 70 per cent.
Digital technology could take advantage of existing cash transactions to bring people into the financial system.

That is why in Nigeria, the central bank and other stakeholders in the payment system have continued to implement measures aimed at ensuring the inclusion of additional 7.6 million Nigerians in the financial system in 2018.

In line with this, industry stakeholders which include the Nigeria Interbank Settlement System Plc (NIBSS), the Central Bank of Nigeria (CBN), Chartered Institute of Bankers of Nigeria (CIBN), commercial banks and other operators in the payment system, developed an initiative to aggressively roll-out 500,000 agent networks to offer basic financial services across the country.

To achieve this target, the Shared Agent Network Expansion Facility (SANEF) was created.
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 involves on-boarding 40 million low income and unserved Nigerians into the financial system, increasing financial access points from the current 50,000 to 500,000 by 2020 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.
It intends to create a platform for Nigerian owned financial services companies to grow, whilst empowering and creating jobs for Nigerians.

SANEF’s Findings
The north-eastern and south-east regions have the least access to banking, a report on financial access touch-points released by SANEF showed. With five per cent financial access touch-points for the north-east and seven per cent for the south-east, both regions remain disadvantaged in access to financial services.

South-west leads on financial access touch-points with 54 per cent; south-south with 12 per cent; north-central 11 per cent and north-west 10 per cent.
It said Nigeria has 5,600 bank branches, 17,600 Automated Teller Machines (ATMs); 15,000 point of sale (PoS) terminals and 51,754 agents as at December last year.

A member of Technical Committee of SANEF, Bolaji Lawal, said the SANEF initiative involves on-boarding 40 million low income and un-served Nigerians into the financial system, increasing financial access points from the current 50,000 to 500,000 by 2020 and deepening access to mobile and digital financial products and services such as savings accounts, microloans, insurance, pensions by Nigerians.
He explained that the project seeks to deepen financial inclusion through an integrated ecosystem with strong regulatory oversight, consumer protection and interoperable payment systems with limited concentration risk.

“It will create a platform for Nigerian owned financial services companies to grow, whilst empowering and creating jobs for Nigerians,” he said.
He said the project was expected to reduce transaction costs, bring about convenience, create job opportunities, and increased adoption of financial services.
The platform is also expected to handle government’s social disbursements initiatives. It will also lead to reduced cash dependency, better tax collections and reduction in crime rates.

Progress Report
In line with this initiative, the promoters are currently working on modalities to take the Bank Verification Number (BVN) enrolment to the head offices of the 774 Local Government Areas (LGAs) in the country. This is expected to capture the large number of the unbanked population and encourage bring them into the financial system. Also, over 70,000 new financial access points have been created in the country since SANEF was created in March this year.

Lawal, pointed out that at 33 million BVN enrolment presently, the group plan to achieve 70 million registration by 2020.
Furthermore, he said 10,000 remote BVN devices ordered by NIBSS are currently being deployed to banks, mobile money operators and the super agents.

“We are committed to enrol 40 million new unique BVNs between now and year 2020: 10 million in 2018, 15 million in 2019 and 15 million in 2020. NIBSS will pay agents N100 for every unique BVN enrolled,” he said.
Lawal also said nine operators currently party to project have been empowered with N4.5 billion.

In addition, he also revealed that three mobile money operators: Paga, Cellulant, eTranzact, had been engaged, while six super agents: Interswitch, Capricorn, Innovectives, Inlaks, Unified Payments and Xpress Payment, are part of the project.
He said a savings account product with an array of features (insurance, pension, micro credit) would be created to be a pull factor to attract the financially excluded into the system

“We are liaising with regulators (CBN, NAICOM) to secure approval and launch product by October 1, 2018. Other products planned include: micro retail loans; micro retail savings; retail insurance and micro pensions,” he added.
“So, wherever you see the SANEF sign, you can perform basic financial services such as account opening, cash deposits, cash withdrawals, funds transfers and bills payments,” he said.

Also, under SANEF, a savings account initiative that is bundled with an array of features -insurance, pension, micro credit – is being designed to create a pull factor to attract the financially excluded into the system.
Presently, stakeholders are liaising with regulators that include the CBN and the National Insurance Commission (NAICOM), to secure approval and launch of the product by October 1. Other products under this plan include micro retail loans, micro retail savings, retail insurance and micro pensions.

In addition, there is also an ongoing financial literacy and customer education campaign.
Phase one of the campaign covers general awareness through print and electronic media and also involves customer engagement, town hall meetings and influencer endorsement.
There is also radio campaigns on 33 network stations ongoing, while phase two of the project would be to launch and promote the government savings account, remote BVN as eKYC.

“BVN roll-out is aggressive and immediate. NIBSS is already partnering with agent managers appointed by banks, other financial institutions, mobile money, mobile money operators, super agents and other licenced Nigerian companies for remote BVN enrolments.
“NIBSS will ensure training of agent managers/agents to ensure proper hand-holding as may be required for the BVN enrolment process.

“NIBSS is ready to provide the BVN enrolment devices for the agents. Remote capture devices will be made available to agents across Nigeria particularly rural areas with priority for north-east, north-central and north-west.

“NIBSS will pay N100 to agents for every unique BVN enrolled. NIBSS has a strong commitment to enrol 40 million unique BVN’s between now and the year 2020; 10 million in 2018; 15 million in 2019 and 15 million in 2020,” the SANEF report stated.
These initiatives, according to Lawal, are expected to reduce transaction costs, convenience, create job opportunities and increased adoption of digital financial services across the country.

It is also expected to enhance the integration of the formal and informal economy, stimulate inclusive growth, improve tax collections, reduce crime and make social disbursements more efficient.