By Olutimi Ayeni
The coronavirus a.k.a COVID-19 pandemic has changed our lives completely.
Organizations have been forced to implement remote working models while some who are unable to adjust due to the complexities of their operations have had to totally shutdown.
Who would have thought a time will come when banks will not be opened for operations or be forced to operate skeletal services; opening from 10am to 2pm only to key customers.
The nature of the pandemic requires that people keep physical distance while maintaining social interaction via other forms of communication e.g. telecommunications, social media, video conferencing etc. but discouraging a congregation of large crowd at a particular point.
This has definitely taught Nigeria a lesson and has revealed the need to go digital across all sectors and industries.
The idea of licensing about eleven companies in 2011 by the Central Bank of Nigeria to provide mobile money services in Nigeria was to kick start a digital economy that will complement the activities of the typical brick and mortar financial institutions.
The main focus of the Federal government was to drive financial inclusion and deepen penetration of financial services in places that are underbanked and unbanked.
The idea was to mirror the most successful model in the world; Safaricom’s Mpesa in Kenya that currently processes over 60% of financial transactions (Cook and McKay, Banking in the MPESA Age-Lessons from Kenya, 2017). This means that the traditional banks offer us only a fraction of what is possible within the financial space. When the Nigeria digital financial services reach full maturity, it has the capacity to become one of the biggest in the world.
This for obvious reasons: we have higher numbers of unbanked and underbanked population. Kenya’s total population is around 50m while Nigeria’s unbanked figure is in the range of a 100m. The possibilities are endless if half of the unbanked population is brought into the financial system.
The critical point of our journey to reaching full maturity is distribution and the strength of the agent network (currently estimated to be about a hundred thousand in Nigeria with a projection to hit five hundred thousand in four years).
To be candid, the end goal is to enable each individual user or customer to have a wallet or bank account and can perform their transactions from the tip of their fingers.
However, achieving that significant milestone is not without a robust network of agent. Just like the debit card acceptance journey in the Nigeria’s financial system, agency banking, mobile money or whatever name we call it has its own journey.
First, at introduction in 2011, people had no idea of what it was. Hence, adoption was really low until about four years ago when the agency business has increasingly gained prominence. Almost every corner in the South and some part of the North (of Nigeria), you’ll see a banner that carries “POS for withdrawal here.”
And of course other transactions like airtime purchase, tv subscription, transfers and utility payment also happen there. That spot becomes a mini bank within that little community.
This power of distribution has reduced the necessity to frequently visit the banking hall to perform basic transactions. Irrespective of the bank customer you are, you can perform your transactions e.g. bank account opening, withdrawal, deposit among others, at the nearest grocery store or agent location in your vicinity.
So much work has been done in this regard by the existing licensed mobile money operators, agent aggregators and a few banks. fetswallet for instance, has grown its agent network to over twelve thousand across Nigeria within two years of focusing on retail distribution with plans to grow to its network to over thirty thousand by year end 2021.
The growth in the distribution network has been largely driven by a high demand for financial transactions in locations with little or no bank presence; competitive pricing and quality service delivery. All of which are strong and unique selling points for fetswallet.
This year, Nigeria Inter-bank Settlement System (NIBSS) reports that about 18 mobile money companies have processed (through their channel alone) over N450bn worth of transfers with over 20m transactions most of which are done through agent locations. fetswallet across its business portfolio processes over N50bn monthly transaction value. This points to the ability of agent points to complement the activities of the banks for basic transactions especially in times like this.
In addition, fetswallet and other payment providers like Teasymobile, Fortis are some of the companies working with the federal government to support the conditional cash transfer which disburses safety nets of five thousand naira monthly to extremely poor Nigerians.
The reason is not farfetched- the beneficiaries are located in areas without bank presence. Even as most part of the country is on a lockdown, disbursement is currently ongoing with strict supervision by the Minister of Humanitarian Affairs, Disaster Management and Social Development, Hajiya Sadiya Farouq. This will further provide cover to the vulnerable from the hardship that COVID-19 will present.
The pandemic may have caused banks to close down their branches but that should not halt basic transaction activities. Focus has shifted to agent locations who have flexible opening hours (available when you need them); close proximity to people’s place of residence; good interpersonal relationship and cheaper cost of transactions. With strong support from Central Bank of Nigeria and Shared Agent Network Expansion Facilities (SANEF), fetswallet and other players in the industry are bound to achieve their target of five hundred thousand agent locations by end of 2020. This will significantly transform the financial landscape and drive extensive financial inclusion.
Ayeni, head of Marketing and Business Development, fetswallet, writes from Lagos.
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