Committee of e-Business Industry Heads (CeBIH) is concerned about financial exclusion in Nigeria. This necessitated the theme of its 7th Annual Retreat, “Repositioning digital payments to achieve the Financial Inclusion goals of Financial System Strategy (FSS) 2020” held in Ogun State recently. The body discussed the challenges of financial exclusion and how to address them through digital solutions. After the forum, BusinessDay engaged Isaac Ondieki, Regional Managing Director, MicrSave Nairobi Kenya. He highlighted the level of digital penetration and adoption in Kenya and lessons for Nigeria. Excerpts:
How would you describe financial inclusion in African economy?
When you talk about financial inclusion in Africa, it means a way that the front-line banks, financial institutions, working together to enable our citizens in Africa to be able to access banking services, finances, or to save their hard earned currency, and to be able to put their money in the financial eco-system.
Could you explain further how this works?
The most relevant is to enable African citizens access banking services. For a long time they have been left out of the banking sector. For example, in Nigeria, equivalent of Kenya’s population of about 40 million people are unbanked. You can imagine leaving out an entire country out of the banking sector. What they need is ease of access. If you look at Nigeria, some people cover long distance to access a bank. It costs them more to reach a bank than the service they are going to get in the bank. If you can therefore enable them get access to the banking system in a cheap way they really will appreciate it. Current advances in digital services have enabled customers to have a bank at the palm through the mobile phone. I think that is going to be the key advancement for most of our other population that hasn’t been banked for a long time because a good number of them have access to phones, and if they have access to phones we believe they have an access to financial services from a bank or a related financial entity.
Nigeria is still struggling with adoption of mobile money unlike Kenya, what do you think is the challenge in Nigeria?
In Kenya, the mobile money addressed an existing need. There was a need to move money from point A to point B because of small businesses. Assuming you are doing fishing or growing tomatoes or pepper. In the process you want to reach a certain market but you don’t want to travel with the commodity to the market. You therefore send a transport agent to deliver them and once they reach, the person being supplied the commodity send you money through the mobile phone, it made it cheaper, it reduces risk of facing traffic incidences, fraud or robbery along the way; so it was addressing a given need. The second need is the middle class that is educated and who want to send some money to support a business or to support families in the rural area. They also have access to this digital platform through which they send money to the mother or a younger sister to enable them have access to education. That gave us access to the need for that telephone service to be available. If you draw it parallel with Nigeria, there are people currently who have children in schools. If schools and the banks adopt the model, they would be able to pay for school fees from the comfort of your home without travelling. Also if you are pensioner, government can pay you through mobile money.
If someone is sick in the hospital and you want to pay for the medical bill or the doctor’s bill, you can do that from the comfort of the US or China while you are currently studying or carrying out your enterprise preparations, you don’t have to come back to Nigeria to pay for those services. If this is enabled it makes it easy for the population to spend and access financial services. Again, most of the low-income population say when they go to banks they are mistreated, the banks are so big, they are far from where they are, they go to the bank and queue for hours, that is loss of time for a small business. You don’t want to close your businesses to access financial services; it should just be part and parcel of your normal daily life. For example, when you listen to national news you never leave the comfort of your house to where the news is occurring, the same is what we are appealing for, that financial services should be brought closer to the citizens; people should be able to access them in their area.
If we look at the Kenyan example and the success rate achieved with the adoption, how can we replicate that in Nigeria?
It is to identify what are the true needs of the Nigerian people; their need might be similar to Kenya, it might be unique to Nigeria. Once you understand that through client centric services, that goes far in identifying the problem to be addressed. The second thing is to partner with firms from East Africa who bring their own experiences, what works and what doesn’t, so that you learn from them and avoid repeating what they did not do right. Thirdly is to have supportive regulations where the new technologies are adopted on a trial basis before being regulated. Lastly in Nigeria there is a chance of partnership and collaboration between the banking sector and the telecom sector.