Nigeria: CeBIH, Stakeholders and Financial Inclusion's Digital Drive
OPINIONBy Chijioke Nelson
The quest to reduce the population of adult Nigerians outside the formal financial services requires alignment of digital payment strategies with the nation's financial inclusion goals. Although the nation has recorded some progress in this area through the National Financial Inclusion Strategy, in pursuit of 80 per cent inclusion rate by 2020, there are still no less than 39 million adult Nigerians to capture.
For experts, the key to solving this challenge is innovative digital payments solutions that offer convenient, affordable and reliable financial services, driven by collaboration among stakeholders, as well as enabling regulatory framework that encourages competition and innovation.
The Deputy Governor, Operations, Central Bank of Nigeria (CBN), Bayo Adelabu, at the just concluded yearly retreat of the Committee of E-Business Industry Heads (CeBIH) made the observations.
Besides, other experts like the Chairman of SecureID, Adedotun Sulaimon; Executive Director, Technical Services, Nigeria Interbank Settlement System (NIBSS), Niyi Ajao; Regional Managing Director, Africa, Microsave, Isaac Ondieki; Dr. Olayinka Davis of Lagos Business School; Managing Director, Cymantics, Ekechi Nwokah; and Managing Director, Venture Garden Group, Mrs. Bunmi Akinyemiju, spoke on the progress so far, the need for digital revolution and collaboration of all stakeholders.
The Chairman of CeBIH, Dele Adeyinka, explained that the theme of the retreat, "Repositioning Digital Payments to Achieve the Financial Inclusion Goals of FSS 2020", was informed by the recognition of the fact that 39 adult Nigerians are still without access to basic financial services.
According to him, the development is coming after 10 years of the inauguration of the payment systems vision 20:2020 as a driver for financial inclusion.
For him, ensuring that this huge number of people has access to financial services by 2020, is not only a challenge but also an opportunity for the industry.
"Meeting this demand and need is a huge challenge. But it also presents very big opportunities. It is with this back ground in mind that CEBIH decided to take a cursory look at this policy framework, particularly with only three years away from the 'magic' year 2020 referred to by the policy," he said.
Also emphasising the opportunities, Adelabu, said: "The National Financial Inclusion Strategy placed greater emphasis on availability of payments services for the operation of financial service. While this may appear daunting, it is not beyond your reach. In fact, it opens the industry up to opportunity of having more customers, diversifying its deposit base and increasing revenues."
One of the highlights of the retreat was a video presentation featuring interviews with fishermen, farmers, artisans and other informal sector operators, explaining their difficulty in accessing financial services vis-a-vis operating bank accounts and accessing loans from banks.
Adelabu affirmed that opportunities abound in drivimg financial inclusion, adding that the video only confirmed what is generally believed to be the solution to financial inclusion challenge.
"Digital or electronic channel is the only solution to the frustration expressed by the people interviewed in the video because it is cheaper and no need for distance. We have the solution in our hands, but how do we realise this?" he queried.
But Davis of the Lagos Business School, supported the belief that digital financial services will remove many of the barriers encountered by the financially excluded persons.
Digital Financial Service (DFS), she noted, "is affordable and eliminates barriers of distance and access, delivers lower transaction cost, ease of remittance, improved security and efficiency.
"It results to employment opportunities, enhances commerce and supports microfinance. The potential of DFS is enormous if well exploited. It is not about big value transactions, but low value transactions that happen frequently," she said.
She stressed the need for banks to build products and services based on understanding of who the people are and what really need.
Davis also noted that there is need for increased awareness and home grown mobile payment solution that incorporates use of local languages for payment transactions.
In his keynote address, Suleiman made a case for digital payment products based on customers' needs, stressing that it is one of the lessons the financial sector needs to learn from consumer goods and mobile services industries.
"Specifically, these insights lie in the following areas: Understanding consumer needs and staying connected as the needs evolve; designing products that adequately address those needs and create a customer pull; leveraging and riding on deep, broad, and resilient, third party distribution networks, which are not necessarily part of their owned infrastructure; and effective branding, marketing, promotion and active consumer engagement and education," he said.
Represented by the Divisional Chief Executive Officer, Interswitch, Financial Inclusion, Mike Ogbalu, Sulaiman said that tackling the nation's financial inclusion challenge also requires a framework of incentives and disincentives to promote financial inclusion in the country.
Mr. Emeka Okoye of Cymantics advised financial services operators to take advantage offered by the explosion of digital data in their quest to extend financial services to more people.
"The high mobile phone penetration across the nation offers financial inclusion a huge opportunity to offer the unbanked with a 'customer-centric' approach. Every time these individuals make a phone call, send a text, browse the internet, engage social media, or top up their prepaid cards, they deepen the digital footprints they are leaving behind.
"These digital footprints are helping to spark a new kind of revolution in lending. In the last few years, a cluster of fast-emerging and innovative firms, FINTECHs, has begun to use highly predictive technologies and algorithms to interrogate and generate insights from these footprints," he said.
Presenting Kwikmoney as evidence and importance of collaboration between banks and FinTechs in enhancing financial inclusion, Ekechi Nwokah said that Kwikmoney is a platform for banks, developed by Mines.IO, a financial inclusion company.
According to him, among other things, Kwikmoney provides "instant loans on your mobile phone, instant payment to any mobile number, and instant bank account from your mobile phone".
He noted that the strength of the platform is its partners, comprising telecommunications, technology providers and banks, adding that since May 2017, when it was launched, the platform has granted 180,000 loans to 60,000 customers, valued at N1.4 billion, while recording 9.8 per cent non-performing loans.
"Our philosophy is that financial inclusion can only be successful by collaboration, as 'chop alone dies alone'", Ekechi added.
Nigerians in London, United Kingdom, yesterday protested against the slow response of President Muhammadu Buhari's… Read more »