- CBN Deepening Financial Inclusion Through UP
The Central Bank of Nigeria and Nigerian banks have appointed UP, Nigeria’s premier financial technology company otherwise known as “Unified Payments” with a view to increasing access to finance for poorer communities in remote locations.
UP is a super-agent with a mandate of the CBN and Nigerian banks to take the services of banks and other auxiliary services to those who do not have access to such services today.
“UP is leveraging technology because as a Fintech, we are convinced that with the appropriate technology, people can have access to digital financial services even without walking out of their homes or where ever they are,” says the Chief Executive Officer and Managing Director of UP, Agada Apochi.
The apex bank had introduced the Shared Agent Network Expansion Facility initiative with a view to spurring quick growth in the level of financial inclusion through availability of financial access points, especially in the Northern part of the country.
“The banks and CBN have come together to say that if the desired objectives are to be achieved, there is the need to ensure that there is a structure and a framework that will lead to expansion of agency services or network,” Apochi says.
Financial Technology is fast becoming a tool for making financial services more accessible to people living in the rural areas. For instance, remittance through mobile has been growing at a fast pace in Africa due to the proliferation of mobile phones, with some countries taking the lead in mobile money service.
While the number of unbanked has reduced in recent years, the large chunk of people without access to any form of financial service are in developing countries. According to a recent report by World Bank’s Global Findex Database, 118 million Nigerians do not have bank accounts.
The report also states that there has been a decline in financial inclusion in the country, but it adds that there is room for improvement.
“Nigerian adults who are 25 years and above with bank accounts declined by five basis points from 49 per cent in 2014 to 44 per cent in 2017,” says the report.
The data shows that 51 per cent of Nigerian males had a bank account in 2017 compared to the 27 per cent recorded for females; this brings the gap between the male and female to 24 percentage points.
Apochi is optimistic that the country will move from where it is to a better place in terms of financial inclusion. He adds that the number of those who are currently excluded would reduce as policymakers are collaborating with telecommunications firms, banks and Fintechs to deepen financial inclusion.
“Between January and today, the numbers are changing positively because this is receiving the appropriate attention that it deserves from the Central Bank of Nigeria and Nigerian banks,” Apochi says.
The Managing Director of Lagos-based financial advisory, Afrinvest Limited, Ayodeji Ebo, says the CBN needs to manage the level of risks in financial inclusion and license the telcos to come up with more financial products that will widen the gap of financial inclusion, which they don’t currently have.
Experts say Nigeria has the potential of becoming a major player in the global Fintech market as it is endowed with young population and exponential mobile phones users.
The Nigerian Communications Commission says the number of active mobile phone lines in the country rose to 144 million in December 2017.
According to the World Bank report, mobile money drives financial inclusion in sub-Saharan Africa, as only eight countries in Africa – Burkina Faso, Côte d’Ivoire, Gabon, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe – recorded 20 per cent or more adults using only a mobile money account.
Kenya is using Mpesa, a mobile money application, to reduce the number of people without bank accounts as financial inclusion continues to grow and people excluded from any form of financial service dropped from over 40 per cent of adults to 17 per cent between 2006 and 2016.
And that growth is continuing as the number of Kenyans not using any form of financial service declined from 25.10 per cent in 2013 to only 17.40 per cent in 2016. The inclusion was driven largely by mobile services, used by 71 per cent of adults, as well as mobile banking services such as M-Shwari, Equitel and KCB-M-Pesa.
Apochi says a lot of entrepreneurs, start-ups, and Small and Medium-scale Enterprises have keyed into the UP model as the number of people or organisations that have been appointed as agents have risen.
“If you look at the entire value chain, there are different roles that people can play. There are those of us like UP that have been appointed as super agents, and working with agents. Different entrepreneurs can work with us and serve as agents or agent managers,” he says.
Nigerian firms are set to reduce financial exclusion by introducing more products that will make it easy for people to carry out bank transactions. eTranzact is set to deepen financial inclusion by expanding its PocketMoni service with 10,000 active mobile money agents, through the CBN-funded Shared Agent Network Expansion Facility initiative, within the next 24 months.
Apochi is of the view that the SANEF initiative is coming at the nick of time and there is no right time to make an inroad into the Nigerian market.
“The earliest of times is always the best for things desirable, but it is never too late. It should be appreciated because it is something done by Nigerian banks based on not-for-profit, but as a patriotic and Corporate Social Responsibility.
“The banks are trying to reach out to the poor, those who are disadvantaged, and those who are excluded and so it is not too late because it is being done now,” Apochi adds.
“UP is leveraging its indigenous payment solution, ‘PayAttitude digital’, to reach the length and breadth of Nigeria through the Shared Agent Network Expansion Facility of the CBN and money deposit banks. With an effective and efficient seamless operation, it offers account opening, deposit and withdrawal of cash, etc. at agent locations using just customer’s phone number” – Says Apochi.
Apochi further stated that to link a bank or prepaid account, or become agents or agent managers can be achieved through self-service by downloading the ‘PayAttitude Digital’ app or register by dialing *569# (USSD).
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