Financial inclusion, which is the sustainable provision of affordable financial services that bring the poor into the formal economy, is key to reducing poverty and inequality.
Sadly, as of April 2022, the financial inclusion rate in Nigeria was 64 per cent. This means about 34 per cent of adult Nigerians do not have access to financial services like payments, savings, credit, and insurance.
To get this number up to 95 per cent by next year, the Central Bank of Nigeria (CBN) rolled out policies, especially in the Fintech space to deepen financial inclusion.
While stakeholders are optimistic that Fintech will close the financial inclusion gap, as it is causing disruption in the traditional banking system, they however affirmed that it would require collective efforts to achieve that target.
The executive vice chairman/CEO, Nigerian Communications Commission (NCC), Dr. Aminu Maida averred that there is no doubt that Fintech is gradually revolutionizing Nigeria‘s financial ecosystem as it poses a great disruption to the conventional financial system.
As an emerging industry that leverages on technology to support several financial services such as mobile banking, borrowing, investment, cryptocurrency among others, Fintech comes with a lot of business opportunities in terms of innovation, job creation and investment. Therefore, Fintech has the potential to deepen the existing payment and financial system infrastructure to reach unserved and underserved areas and further stimulate economic growth,“ Maida posited.
The EVC further alluded that Fintech applications such as robo-advisors, payment apps, peer-to-peer (P2P) lending apps, investment apps, and crypto apps, among others, is creating business opportunities for individuals.
All these are possible due to the modalities put in place by the CBN, the head of partnerships at Moniepoint Inc., Efemena Ogie affirmed, even as he disclosed that the Fintech ecosystem has the enabling digital public infrastructure that has boosted the sector.
“For instance, interswitch has developed APIs that Moniepoint for instance can leverage on to provide payment services to the man on the street, and these payment services cut across various channels like mobile, web, USSD and POS. We, at Moniepoint had to think outside the box to make life easy for our customers. For example, with Moniepoint POS, when you do a transfer to a marchant account number, the merchant POS gives you an alert in seconds,“ Ogie explained.”
In a couple of months, Ogie revealed that Nigeria is going to see some massive innovation in the payment space, through CBN‘s Payment System Vision 2025, adding that the document addresses issues like Artificial Intelligence (AI), contactless payment and open banking.
He said, BN has released guidelines for open banking and circular on contactless payment. If open banking goes live, you will be surprised the kind of innovation that will be rolled out in the Fintech ecosystem. For us at Moniepoint, we are already thinking outside the box, to see how we can leverage on these new policies to better the lives of our customers.
“With these innovations, we are going to be seeing a lot of collaboration, because there is no entity that can operate alone. We need to collaborate. For instance, once the open banking goes live, Moniepoint is going t leverage on customers‘ data based of a bank to render services to its customers. Meanwhile, there is going to be massive competition, which is okay, because competition drives efficiency and innovation.”
Leveraging on telecoms infrastructure
From all indications, Fintech companies heavily rely on infrastructure provided by the NCC, hence the need for collaboration between the NCC, Fintech and traditional banking system to further deepen financial inclusion, Maida said, even as he has tasked Nigerian Fintech Companies to leverage on the 220.7 million mobile subscribers in the telecom sector.
The EVC, who made the call at the 2023 edition of the annual Nigeria Information Technology Reporters Association (NITRA) FinTech Forum which focused on, “Harnessing Nigeria’s Fintech Potential: Challenges and Opportunities,“ said with the youth population accounting for an estimated 70 per cent of Nigeria‘s population, coupled with the large telecom subscriber base, the fintech ecosystem has a large market to which they can offer an array of financial services.
Recall that recent industry statistics have shown that active subscriptions across mobile networks in Nigeria rose to 220.7 million in August 2023.
“Similarly, the increasing rate of smartphone penetration, internet access, and focused regulatory drive have continued to create a favourable atmosphere for Fintech to thrive. Furthermore, greater accessibility to customer, convenience, and low-cost access to short-term loans will further deepen the acceptability of Fintech products and services, Maida who was represented at the event by the controller of NCC Lagos Zonal Office, Mr Henry Ojiokpota, affirmed.”
He averred that though telecoms infrastructure, which is an enabler for Fintech services, remains an issue of concern, (as statistics indicate that Broadband penetration stood at 45.57 per cent as of August 2023), the Commission has begun implementing new strategies to meet the new target of 70 per cent Broadband penetration by year 2025 as contained in the Nigerian National Broadband Plan 2020 — 2025 which will equally explore the potentials in the Fintech sector.
While disclosing that the Commission has executed a Memorandum of Understanding with the Central Bank of Nigeria (CBN) to enhance payment systems and financial inclusion, in line with the Nigeria Payments System Vision 2025, as part of its efforts to fulfil its vision in this area, Maida assured that NCC will continue to play a significant role in maximising support for Fintech policies, enforcing regulations, and fortifying collaborations with pertinent authorities.
“The NCC, as the apex regulatory agency of the communications industry, will continue to support the Fintech sector in harnessing its enormous potentials as well as overcoming the challenges identified. This can be achieved through adequate provision of secure infrastructure and USSD channels that enable delivery of Digital Financial Services delivery in efficient ways. The NCC is also keen on maintaining minimum standards Quality of Service (QOS), for an uninterrupted network that will boost the sector. ”
“In support of this objective, the Commission has executed the Memorandum of Understanding with CBN on driving payment systems and financial inclusion, which is in line with the Nigeria Payments System Vision 2025. Furthermore, by providing the highest level of support for Fintech policies, enforcing laws, and bolstering partnerships with pertinent authorities like the CBN and other stakeholders, the Commission is significantly contributing to the realisation of Fintech‘s promise.
“Beyond this, in order to further improve the growth of the Fintech ecosystem and the digital economy in general, the NCC is also supporting the incubation, ethical business practises, and highly secured platforms of Fintech companies. In the end, these steps would make it possible to achieve the goals of the Nigerian Startup Bill, especially in the financial services industry, and they would optimise Fintech‘s advantages while lowering its associated risks,“ he further disclosed.
To deepen broadband penetration, which is an enabler for financial inclusion in Nigeria, the controller of NCC, Lagos Zonal Office, Mr Henry Ojiokpota, disclosed that the Commission has set aside Funds, under the Universal Service Provision Fund (USPF), to encourage operators to take telecoms services to the unserved and underserved communities in Nigeria.
“The Commission has also recently given licenses to over 30 Mobile Virtual Network Operators (MVNOs) to provide telecom services to people living in rural areas. The MVNOs will leverage on existing network infrastructure to rollout their services. It is expected that the MVNOs will do business with the fintech industry, due to the opportunities around access to telephone,“ Ojiokpota affirmed.
Since most of the unbanked are situated in the rural areas, the editor of Tech Economy, Mr Peter Oluka therefore urged the Fintech companies to move to rural areas, as majority of them are situated in the urban areas. „As telecoms services/infrastructure move to more rural areas, Fintech companies should move along. In that way, we will achieve the 90 per cent financial inclusion target of the CBN,“ he averred.
