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Gbenga Adebayo
Financial inclusion is an essential element of inclusive economic growth. However, while there is a global consensus on the fact that access to financial services is a fundamental requirement for all, the badumption that we need to have access to a bank account is the only one we have. one of the main reasons for the decline in financial inclusion in Nigeria. This is particularly telling when one considers that despite the rhetoric, policies and efforts in favor of financial inclusion in Nigeria. The percentage of our population with access to financial services has been reduced to 40% in 2017 from 44% in 2014. This is of concern, especially when compared to the inclusion rates in other African countries. ; 84% in Kenya, 78% in Uganda and 58% in Ghana.
It is safe to say that Nigeria is catching up on inclusion and must look to learn from success stories like Ghana and Kenya if we want to reach our goal of an inclusion of 80 % by 2020. In Kenya, mobile money Ten years ago, Safaricom enabled Kenya to achieve financial inclusion of 84%, up from 27.9% in 2007. Almost all Kenyans having a bank account also have a mobile account and MPesa (mobile money transfer service in Kenya). ) is probably the most widely accepted form of payment in the country. Kenya's success can be attributed to the benefits inherent in a new industry – limited, unrestricted regulations, as well as rapid growth. Uganda has enjoyed similar success, where limited regulatory oversight has achieved an inclusion rate of 78%
in Ghana, mobile money was launched in 2009 , with important exclusions on the role of telecommunications companies. In 2014, recognizing that financial inclusion rates were not satisfactory, the Central Bank of Ghana decided to allow the telecom industry to play a greater role. This decision resulted in a 73% increase in registered mobile money customers in just one year. Another influential decision made by the Bank of Ghana in 2015 was the decision to authorize the accumulation of interest on mobile money deposits. Financial inclusion rates in Ghana have gone from 41% in 2014 to 58% in 2017, which is also reflected in the use of mobile money, which has gone from 13% to 39%. % during the same period.
In Nigeria and in much of North West and Northeast, the only way to make or receive payments is to use cash, thus limiting people to trade with those with whom they are close. Apart from the obvious limitations to wider trade, economic independence and growth in these regions, the daily use of cash-based transactions means that "access" to liquidity has become an industry in which itself. Anyone who has spent time in major cities, which usually have bank branches and / or ATMs, will know the industry that has developed around that. Long waits at ATMs in suburban areas have allowed stores to make cash withdrawals or make refunds from PDS terminals, representing a huge premium. This practice, which inevitably leads the entrepreneur to take a lot of time in an ATM to withdraw money in several transactions, has led banks to create ATMs dedicated to serving this market and to Emergence of service providers.
This process only works if the person who needs access to money has a bank account and, by extension, a BVN number. At last count, there were about 33 million BVN numbers in Nigeria, compared to the most recent estimate of the size of the bankable population, estimated at between 98 and 100 million. This process also has two other fundamental flaws; the first is that the transaction takes time (from the demand for money, to your hand may be a day or more) and the second is that it requires total trust in the service provider whose you need to give direct access to your bank account, creating without a doubt more problems than the solutions that it provides.
Clearly, there is still a long way to go before we can claim that every Nigerian has. Over the past decade, banks have recognized that the traditional approach of banks is not a commercially viable proposal outside cities of a certain size. of economic activity. If we badyze the number of bank branches in Nigeria using the World Bank's Financial Services Access Survey, we see a peak of 6.5 branches per 100,000 adults in 2010, falling to below of 5.5 branches per 100,000 adults in 2016. It is clear that the answer to the puzzle of financial inclusion, a fact now recognized by the banks themselves.
The commonly accepted solution to financial services for the poorest people in the most remote places is to find service providers who already serve the bottom of the pyramid, who already have a geographical proximity and allow them to do so. access to financial services. This is what has worked in Kenya, Uganda, Rwanda and Ghana.
Telecommunication service providers are unlikely to threaten banks, which can be a concern and a source of resistance. But if they are allowed to use the existing infrastructure to provide additional services to these people, they will benefit from economies of scale, which will significantly reduce the cost of acquiring customer and customer service. This is true if you are a beverage company like Coca-Cola or Pepsi whose distribution systems are generally recognized to touch every corner of the country, or a business as Airtel or MTN whose coverage is extensive. The solution is to provide a level playing field for these types of providers to provide limited financial services, such as making deposits (up to a fixed low limit) and payment services. If all potential suppliers have the opportunity to do so, those who are best placed to provide the best service to the greatest number will succeed in solving the problem and offer Nigeria the fastest route to an inclusive financial system.
financial system will transform the broader economic landscape and all players in the system, the excluded, who have access to financial services desperately needed, the banking system, which will recover large volumes of new deposits, the telecommunications sector who can offer a range of other service providers in rural areas, who suffer from a lack of payment infrastructure and the government, which has the ability to distribute benefits and collect the benefits. rights of its citizens is significantly improved.
The sooner we take steps that to implement the necessary changes that will see a reduction in the country's clusion rates the sooner we start to reap the benefits listed above, and much more.
- Adebayo is the President of the Association of Licensed Telecommunications Operators of Nigeria
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