Nigeria’s financial inclusion story is that in 2008 as much as 53.5 per cent of us were financially excluded. Government and the various stakeholders, especially the banks and regulators of the financial system worked very hard and by 2010 it had been brought down to about 42 per cent. The current target is to drive it down to a maximum of 20 per cent by 2020. That figure cannot be said to be very low or overly ambitious, especially given the myriads of innovative payment systems coming up in the financial sector, although we are slow in adopting many of them.
The question is why are we making very slow progress with financial inclusion? I believe the answer is not farfetched. To start with, the country has a large population of digitally illiterate people. Many university graduates are still not conversant with the use of computers. They have not received any computer training. And many of those who have such training cannot afford computers. Before long they lose their skills. Besides, many people still distrust the electronic banking systems because of their experiences with fraudsters and armed robbers. With armed robbers going about with POS machines and clearing victims’ accounts at gunpoint, many have distanced themselves from debit cards – a minus for financial inclusion. One would have thought that the machines and the merchants that have them are uniquely identified by the regulators to enable transactions to be traced.
The financial infrastructure in the country is, like any other form of infrastructure in the country, very poor. Although progress has been made generally in the financial sector, to adapt technologies and innovations, the levers that will drive inclusion are not sufficiently emphasized. For instance, even with all the efforts made on the deployment of POS around the country, the adoption of that payment platform is still very low; again no thanks to the poor power supply and internet services. And the banks can help by not only ensuring that people have debit cards but can easily renew them, when expired. How many banks remind their customers when these debit cards are about to expire and make it easy for them to get new ones? These should be part of the frills that come with the accounts maintained by individuals; after all they are not issued for free. It might help to justify some of those unwarranted picking of customers’ pockets we see all around. Some banks are however a head of others. I was pleasantly surprised when my bank was able to reissue mine within 48 hours. I am not sure this is universal among the banks. People can only patronize the POS if they have these cards that are current and functional.
Again, the use of the POS is still limited to a few urban centres with advantages in the spatial distribution of bank branches and power supply. Data available on the use of POS shows that apart from Lagos, the FCT and Rivers, other states recorded less than N2million transactions in 2016. Worse still, over 50 per cent of the POS transactions took place in Lagos. And this number is even after the use of the POS had recorded a 123 per cent cumulative average growth rate between 2012 and 2016.
Without doubt we need to work more seriously on a number of things including the power sector, the charges on bank services and the deployment of equipment. Perhaps a new form of rural baking programme focusing on the deployment of the POS and ATM machines and their use might be considered and if necessary compelled.
In the good old days of the analog world we used to circulate our call cards with one feature prominently displayed – our post office boxes. This was to make sure that our mails were safely dropped into the right boxes. Post office boxes were the vogue and even seen as a sign of success, which conferred some prestige on those who had it, especially if they were individuals. We would walk majestically through the array of boxes to haul the many papers in our boxes to the admiration of some post office staff. Some even showed off with the volume of mails they extracted from their boxes. It indicated how active and important they and their businesses were. And because many companies did not have mail boxes, these (mail boxes) were at times seen as a mark of distinction and indicative of company status.
In some cases, the mail bags (they began as bags and then transmuted to boxes) were more famous than the companies that owned them. For instance, once you heard PMB 1022 everyone knew it was WAEC. But the world has changed. Nobody talks of mail bags now, even if they still use them. The world has gone over to emails. The same way we left our mail bag is the way we have to leave our old ways of moving money. It is now a digital world.
Microfinance institutions have been in the forefront of the drive towards economic democratization and financial empowerment of the many less privileged but active citizens of our country. The sector has grown considerably over the past decade when commercial microfinancing was brought into focus. It has since transformed into an economic sector that serves both investors and the active poor. We currently have over a thousand microfinance banks working to get financial services across to less privileged citizens who are engaged in meaningful economic activity.The time for traditional banking services is over, even among the active poor. MFBs must embrace digital financing strategies, especially money transfer technologies. The regulations must by now be mauling the idea of recapitalization, especially among the N20million Unit MFBs. They cannot give what they do not have – money.