The British Deputy High Commissioner (DHC) to Nigeria, Ben Llewellyn-Jones, has described initiatives introduced by the Central Bank of Nigeria (CBN), especially the Payment Service Banks (PSBs) as game changer for financial inclusion in the country.
Llewellyn-Jones said this in a keynote address he delivered at the second edition of the Lagos Fintech Week with the theme: "Setting Agenda for Cashless Lagos".
Speaking on the benefits of a cashless system, Ben explained that electronic transactions could save time, increase business productivity, safety and tax revenue, reduce corruption and facilitate work against money laundering and terrorism.
He lauded the key role played by Lagos State in developing solutions that are helping to drive broader financial inclusion nationwide, noting that the rate of financial access and inclusion is much higher in Lagos than the rest of the country, but said more remains to be done.
"If there is a game changer for financial inclusion, but also cashless Lagos, it is mobile money. The new payment service banks will serve people who the traditional banks regard as too poor to be of interest. Mobile money transfers are also suitable for small payments.
"Among our neighbours in West Africa mobile money is gaining traction In Burkina Faso, Cote D'Ivoire, Senegal and Ghana, the proportion of people with mobile money accounts ranges from 33 to 45 per cent (Ghana). In Kenya more than 80 per cent of the population has mobile money whereas it is only just starting in Nigeria.
"Based on some recent modelling for UKAid the proper roll out of mobile money could add about 46 million people to the Nigerian financial system, boost GDP by 12 per cent and create three million jobs in Nigeria," a statement quoted him to have said.
According to him, mobile money accounts would represent the first step for many towards accessing other financial services - the transaction data would enable them get savings accounts and loans.
People can also use mobile money to pay in instalments for their solar home systems - helping the five million solar energy connections project, he added.
"Given this, the UK is pleased to see the issuance of the first Payment Service Bank licences (officially launched in August 2020) in Nigeria and hopes with regulator support to see services starting soon in Lagos. The expectation is that Nigeria could catch up fast with the support of the regulator, which is a key participant needed to keep consumers and the financial system safe.
"We continue to encourage the Federal Government of Nigeria to lead the way with facilitating electronic payments for government to consumer services, for the CBN to approve applications for PSBs licences, and to set up the "Know Your Customer" arrangements, for example, bank verification number, etc., in ways that are easier for low-income Nigerians to access.
"Removing the caps on digital agent fees is also an important step to ensure that agents who are in remote areas can make money while ensuring that the needs of the underserved are met. Increased demand e.g. from mobile money will lead more agents to enter the market and spur competition that would then drive prices down," he added.
According to Ben Llewellyn-Jones, EFInA (the UK financial inclusion entity in Nigeria) could support the regulator and provide examples of KYC for low-income earners, as well as provide best practice regulation for Fintechs.
"With some more reforms building on the exciting Payment Service Bank licence issuance, there are some real strides to be made towards not just a cashless Lagos but also a connected and cashless Nigeria," he said.