NIGERIA:Boosting Financial Inclusion with Mobile Money, Electronic Cards

MARCH 13,2014.

Emmanuel Okonji.


Nigeria is bent on achieving financial inclusion through the ongoing cashless initiative, but the exercise is rather too slow, hence the need to increase awareness campaign on the use of mobile money and electronic cards as alternative channels, writes Emma Okonji.

With the introduction of cashless economy by the Central Bank of Nigeria since 2012, coupled with the efforts put in by the apex bank to drive financial inclusion in the country, the volume of cash transaction in the country would have been greatly reduced. This however has not been achieved, a situation which financial and technology experts have blamed on low awareness on the need to use electronic channels, especially the mobile money and electronic cards for transactions.

CBN’s Initiative
The Central Bank of Nigeria in 2010 introduced the cashless initiative and gave provisional licenses to 16 mobile money operators to carryout pilot scheme on mobile money across the country. In August 2011, CBN released the final list of 11 mobile money operators, but restricted all 11 from going commercial until they get commercial approval from CBN.

The CBN later gave commercial approval to the 11 operators, mandating them to go full blown into cities and remote parts of the country in sensitising Nigerians on the need to embrace mobile money transactions, which is an electronic means of using mobile phone or personal digital assistant for initiation or confirmation of payment transactions.

It supports Person to Person (P2P) transfers with immediate availability of funds for the beneficiary. Mobile payments are meant for low value transactions where speed of completion is key and it encourages cashless economy.

In 2012, CBN commenced cashless with Lagos as pilot state, and later spread it to other states, with plans to cover the entire 36 states of the federation, but the process is rather too slow as Nigerians still carry a lot of cash, two years after the introduction of the cashless initiative.

Experts View
Some financial and technology experts, who spoke with THISDAY, blamed the slow adoption of cashless on limited channels of transaction, as well as low awareness campaign on the available channels.

Divisional Head, E-Banking at UBA, Mr. Adeyinka Adedeji, said there was need for intensive campaign on available channels of transactions for financial inclusion. Adedeji who spoke so much on the use of mobile money and electronic cards in financial transactions, said the channels are affordable, easy and faster to drive the cashless initiative of the CBN.

According to him, every working-class Nigerian has a lot of dependants, directly or indirectly, and the use of cards would drive financial inclusion since money could be loaded into prepaid cards of dependants instead of giving them physical cash.

“Prepaid cards are also good for elite travellers who travel outside their countries and who need money to carry out some financial transactions. All they need do is to load money in the prepaid card and travel with it, which could be used anywhere outside the country for payments of goods and services,” Adedeji said, adding that it could be spend in dollar and naira, and that it also fits into students’ lifestyles since they do not need to open a dollar account.

Mobile is another area that will drive financial inclusion, according to Adedeji, adding that every adult has a mobile phone, which could be used to carry out financial transactions while on the go. For him, with mobile, Nigeria can easily achieve financial inclusion without stress.

Adedeji explained that UBA had been in the forefront of driving financial inclusion through mobile, prepaid cards and ATM cards. These are the best way to make people participate in financial inclusion without the stress of opening a bank account that requires the tendering of utility bills and other kinds of identification.

Since mobile is becoming more sophisticated and smarter, it can offer more applications that will give the customer more space to do a lot of financial transactions than before.

Nigerians are online without laptops, courtesy of mobile phones with internet connectivity, and this is driving a lot of financial inclusion in our country.
Chief Executive of NewHorizons ICT training institute, Mr. Tim Akano, who also spoke on the issue, said government must address the poor infrastructure situation in the country, if the country must have successful implementation of the exercise.

He raised the issue of hackers that easily break through security codes to defraud individuals and organisations, and warned that if the issue of Information Technology (IT) security was not addressed, it would likely affect the smooth implementation of migrating from a cash-based nation to a cashless-based nation.

Mobile Banking
Speaking on mobile banking as a fast way of achieving financial inclusion, Adedeji said most banks have introduced mobile banking to address financial inclusion. Giving example with UBA, he said the bank introduced the U-Mobile, which is the bank’s brand name for mobile banking. According to him, since the introduction of U-Mobile, the bank records N7.7 billion transactions monthly, insisting that as more Nigerians become aware of U-Mobile and mobile banking, it would further drive the cashless initiative.

He listed transaction types with U-Mobile to include account management, intra-bank transfers, inter-bank transfers, bill payments, airtime recharge, transfer from prepaid cards, and send money to phones, which he said is available for all phone types, among others, which he said, were sure ways of driving cashless initiative with ease.

Electronic Cards
The electronic card, which could be debit card or credit card, is one of the widely used channels in carrying out financial transactions. Corroborating this fact, Adedeji said UBA, like other banks, have several cards that make financial transactions easy. According to him, UBA has all types of cards such as Visa Card, MasterCard, China Union, Local Scheme, Local cards and International cards that enable all card related transactions, and advised customers to take advantage of the cards in going cashless.

Speaking on the benefits of using UBA cards, Adedeji said the cards come with intelligence features that can guide the customers on spending. The bank, he added, gives discounts to customers for using UBA cards in going cashless.
He explained that with Automated Teller Machine (ATM) cards, customers could pay bills and transfer money with the ATM machines. The only thing that is different is that the keyboards are not flexible enough to allow the customer do a lot of transactions.

Because of that, UBA is introducing kiosks, which will have more keypads and allow internet transaction and pay more bills, Adedeji added.

Challenges of ATM Machines
The challenges of ATM machines range from the inability to dispense quick cash as at when the customers needed it, seizing of ATM cards, under payment, and long queues on ATM machines.

Addressing some of the challenges, Adedeji said: “It is not in the interest of any bank to allow its ATM to go down, because the cost of customers going to other banks outside their banks to use the ATM, is transferred to the bank.
He said the inability of some ATMs to dispense cash, could be traced to ATM jam as a result of dirty notes.

In the instance where ATM short pays customers, Adedeji said: “This has to do with the intelligence of the ATM based on the configuration. It counts from cassettes of N1000, and N500, and when it finishes with one cassette, it goes to the next, and there is the probability of mixing the denominations of the naira notes, since the machine is programmed to count the exact numbers of naira notes, irrespective of the denomination.” That could be the reason why ATMs short pay customers, he said.

He however said the use of ATM card for financial transactions is on the increase and that UBA alone records N95 billion transactions on ATM card monthly.

Since government is determined to drive cashless Nigeria, the need for awareness creation on available transaction channels should be encouraged, despite the challenges.