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Tag: financial inclusion

  • Financial inclusion: Pension assets hit N9.33tr

    The Micro Pension Plan (MPP) driven by the National Pension Commission (PenCom) has grown pension assets and boosted the Central Bank of Nigeria’s plan to take financial services to the grassroots. Pension assets rose from N9.12 trillion in April to N9.33 trillion in June, indicating a N21 billion increase. The CBN’s financial inclusion plan is receiving a boost from the pension industry where contributors have to open bank accounts to be enrolled into the scheme. The ongoing public enlightenment on the MPP benefits to contributors and the economy is building confidence in the financial system and securing contributors’ future, writes COLLINS NWEZE.

    Adult population that has embraced financial services is expected to hit 80 per cent by 2020, from about 65 per cent, Central Bank of Nigeria (CBN) statistics has shown. But achieving this mandate requires the collaboration of key stakeholders.

    The Micro Pension Plan (MPP) driven by the National Pension Commission (PenCom) is one avenue of bringing more people into the financial system.

    PenCom has taken up the challenge of providing financial products and services to the low-income population, which represents a large business opportunity for the private sector with the Contributory Pension Scheme (CPS).

    The scheme uses MPP to reach farmers, teachers, hair dressing saloon owners, petty traders, musician, actors/actresses, shoe shiners, bricklayers, among others.

    This is because for many people, the future remains uncertain. But for those who have planned for it through the right investment and savings, it is bright.

    And securing one’s future requires taking advantage of the opportunities that abound in the pension industry, which many people have seen as the last hope for retirees.

    The pension industry, tipped as one of the largest investment sectors, is gaining the attention the self-employed.

    At the end of last year, the global pension industry reportedly had an estimated asset under management (AuM) of $41.4 trillion, which represents 53.9 per cent of global assets under management. This significant asset size reflects the growing institutionalisation of retirement planning across the world. For Nigeria, the pension industry has in the past few years been dominated by high- investment returns, a departure from previous trends where net inflows accounted for the majority of the industry’s growth.

    PenCom exists for the effective regulation and supervision of the pension industry to ensure that retirement benefits are paid promptly.

    How much have pension assets grown?

    In the first quarter of the year, the growth of Retirement Savings Accounts (RSAs) holders under the CPS led to a N29 billion increase in pension assets. This has been attributed to salient policies being implemented by the Acting Director-General of PenCom, Mrs. Aisha Dahir-Umar. For instance, data obtained from the Commission shows that AuM in the second quarter of the year increased by N21 billion.

    According to the monthly report on summary of pension fund assets and RSA registration published on its website, pension fund assets rose from N9.12 trillion in April, this year to N9.33 trillion in June, indicating a N21 billion inflow. A breakdown showed a rise of N18 billion in total RSA fund as it moved from N6.94 in April to N7.12 in June, while investment in Federal Government securities fell by N6 billion, from N6.55 trillion in April to N6.49 in June while RSA Fund 11, which has continued to attract more investments moved from N4.02 trillion to N4.10 trillion, an increase of N8 billion.

    PenCom regulates and supervises the licensed pension fund operators and Pension Fund Administrators (PFAs) manage and invest the fund for contributors and retirees under the CPS. Thus, the fund had grown to N8.74 trillion in January; N8.91 trillion in February; N9.03 trillion in March; N9.12 trillion in April, N9.22 trillion in May and N9.33 trillion in June, which translates to N686 billion growth in six months.The report further showed that a major chunk of N7.21 trillion out of the N9.33 trillion recorded in June is from RSA holders.

    A further breakdown of the June report under review showed that out of the RSAs’ fund of N7.21 trillion, retirees fund, categorised under Fund IV is N751.73 billion while contributors, categorised under Fund I, Fund II and Fund III, own N6.51 trillion.

    Other contributions to the fund include N958.2 billion from schemes and N1.24 trillion from Closed Pension Fund Administrators (CPFAs).

    The PFAs, the report added, invested a major chunk of the fund, totalling N6.48 trillion into Federal Government Securities out of the N9.33 trillion in the period under review. Of the N6.48 trillion invested by the PFAs, N4.43 trillion was invested in Federal Government Bonds; N1.93 trillion in Treasury Bills; N11 billion in Agency Bonds (NMRC and FMBN); N86 billion in Sukuk Bonds; N12 billion in Green Bonds and N129 billion in state government Securities.

    The PFAs, however, invested N505.82 billion in corporate debt; N1.04 trillion was invested in local money market securities and N23 billion in mutual funds.

    Mrs. Dahir-Umar attributed the accumulation successes achieved since the inception of implementation of the CPS to the Commission’s esteemed contributors. “The achievements recorded by the Commission in the last 15 years would not have been possible without the support and understanding of all stakeholders, especially you, our esteemed contributors, who are about to retiree. I, therefore, urge you to contribute positively towards the success of the Pension Reform Programme,” she said.

    Financial analysts expect the industry’s growth to exceed 14 per cent in the year supported by an improved macroeconomic environment that would drive increased contribution. Also, investment returns are likely to improve in the year, largely driven by higher interest rates, which we expect to spike in the second half of the year.

    Analysts also view positively the commencement of the MPS, expected to increase the industry coverage ratio and help ramp up AuM.

    PenCom sustains campaigns

    PenCom is carrying out massive campaigns to enlighten the people, even at the grassroots, to embrace CPS at all stages of their business growth. The campaigns are going on televisions, radio, social media, online publications and other media platforms to get more people into the pension scheme and bring them to the financial services net.

    The campaigns are ongoing in the markets, shopping malls, private and public sectors, motor parks to ensure that all Nigerians within pensionable age embrace the CPS and secure their future, financially.

    PenCom said once a person reaches 18, such person qualifies and can contribute based on his income. The contributions can be daily, weekly, monthly, and contributions can be made through the mobile phones. Besides, should anything happen to a contributor’s business, such a person can get 40 per cent of the total contributions back to begin a new life.

    Also, in case of death, the contributor’s next-of-kin will be paid the balance in the account of the contributor. The Commission also said Pension Fund Administrators (PFAs) are registering people that want to join the scheme at zero cost.

    CPS gains private-public sectors’ acceptance

    PenCom says it has enrolled more than 8.5 million people into the CPS since its inception 15 years ago. Head of Communication Department of PenCom, Peter Aghahowa, said the scheme introduced in 2004 by the Federal Government was a process where certain percentage of enrollees’ salaries was saved monthly in a pool with the employers also contributing.

    The scheme had PenCom as the regulatory body, with PFAs working at its behest. Aghahowa said the scheme had made the life of retirees much easier, unlike the defined benefits scheme, which it replaced. He said the commission will continue to protect contributors’ funds and drive compliance by private sector employers through public awareness campaigns and engagement.

    This initiative, he added, is aimed at educating employees/employers and expanding the coverage of the CPS. According to him, the commission also monitors compliance through onsite inspections to ensure that employees of private sector organisations open RSAs and pension contributions are remitted promptly.

     Drivers of pension assets growth

    PenCom led by Mrs. Dahir-Umar  has achieved  milestones in pension contribu-tions, which is projected to hit N10 trillion by year-end and N15.1 trillion by 2023.

    PenCom introduced an Enhanced Contributor Registration System (ECRS) to tackle the challenges faced with the Contributor Registration System (CRS).

    Aside helping to lift contributors confidence and bring in more people into the financial system, the enhanced application is expected to open up transfer window for RSA holders to switch PFAs.

    ”Electronic submission of employer code requests by Pension Fund Administrators (PFAs) on employers and the full automation of the process of issuing employer codes. Updates and edits of contributors’ information on the National Databank maintained by the National Pension Commission by the PFAs. The deployment of the ECRS is a major step towards the introduction of the transfer widow, which will enable contributors change to the PFAs of their choice, in line with Section 13 of the Pension Reform Act (PRA) 2014,” it said.

    Aside the ECRS, PenCom under Mrs. Dahir-Umar unveiled the Micro Pension Plan (MPP) that allows the informal sector contributors under the CPS to withdraw at least 40 per cent of the contributions in their RSA. The extension of the CPS to the informal sector and the flexibility of its operation is one of the incentives expected to encourage participation and growth of the   pension industry.

    According to her, Section 2(3) of the Pension Reform Act, 2014 (PRA 2014) provides that employees of organisations with less than three employees as well as the self-employed persons shall be entitled to participate in the CPS in accordance with guidelines issued by the Commission. Majority of these categories of persons are found in the informal sector and have generally low and irregular incomes. The MPP has enabled artisans, such as photographers, caterers, hairdressers, motorcycle service operators, tailors, fashion designers, carpenters, and painters to embrace CPS and protect their future and businesses.

    ”As you are aware, the informal sector workers constitute the larger percentage of the working population in the country, there is, therefore, no doubt that robust participation would result to exponential growth of the pension funds which would consequently, provide funding for allowable and relevant investments that would impact positively on the economy. The MPP would contribute immensely to achieving the Pension Industry’s strategic objective of covering 30 per cent of the working population in Nigeria under the CPS by the end of 2024,” the PenCom chief said.

  • Financial inclusion: Micro Pension Plan to the rescue

    Achieving the Central Bank of Nigeria’s (CBN’s) financial inclusion of getting 80 per cent of adults into the financial system by next year requires the backing of key stakeholders. The National Pension Commission’s (PenCom’s) Micro Pension Plan (MPP), which allows the informal sector contributors under the Contributory Pension Scheme (CPS) to withdraw at least 40 per cent of the contributions in their Retirement Savings Accounts, remains a boost to the financial inclusion project. The MPP has brought more informal sector operators into the financial system by ensuring that contributors provide functional bank accounts for their contributions and withdrawals, writes COLLINS NWEZE.

    Nigeria’s informal sector is a sleeping giant. The potential of the sector, estimated at $240 billion, is largely untapped.

    Unlike the formal economy, the informal economy has grown faster in size at a yearly average rate of about 8.5 per cent between 2015 and last year. This growth seen in the informal sector and an increase in employment it provides implies higher household income and lower poverty rate in the country.

    This underground economy is, particularly, large in Nigeria, with the International Monetary Fund (IMF) estimating it to constitute about 60 per cent of the entire Nigerian economy. This represents about $240 billion.

    The National Pension Commission (PenCom) identified with this informal sector with the launch of the Micro Pension Plan (MPP), which has enabled artisans,

    such as photographers, caterers, hairdressers, motorcycle service operators, tailors, fashion designers, carpenters, and painters to embrace Contributory Pension Scheme (CPS) and protect their future and businesses.

    The icing on the cake is that PenCom has designed the MPP to allow the informal sector contributors under the CPS to withdraw at least 40 per cent of the contributions in their Retirement Savings Accounts (RSA) three months after making the initial contribution.

    The Central Bank of Nigeria’s (CBN’s) policies on mobile money, agency banking, Know Your Customer (KYC), insurance, and recently, Payment Service Banks (PSBs) have helped to bring new customers to the financial system. The hope for Nigeria to achieve 80 per cent financial inclusion rate next year received a major boost with the promotion of MPP by PenCom.

    Speaking on the success and future of the MPP, Pencom Acting Director-General, Mrs. Aisha Dahir-Umar, explained the gains of understanding how this aspect of the MPP works and how it can deepen the CBN’s financial inclusion project.

    She said the introduction of the MPP by the Commission is a major step towards promoting financial inclusion at the grassroots.

    According to her, Section 2(3) of the Pension Reform Act, 2014 (PRA 2014) provides that workers of organisations with no fewer than three employees as well as self-employed persons shall be entitled to participate in the CPS in accordance with guidelines by the Commission. Majority of these categories of persons covered are in the informal sector and have low and irregular incomes.

    “Those participating in the MPP would require a functional bank account, which would be used for transactions such as contributions and withdrawals. It is, therefore, obvious that implementing MPP will definitely promote financial inclusion,” she said.

    Also Read: Nigeria’s financial sector fragmented, says NAICOM

    She said the MPP arrangement allows for every contribution to be split into two, comprising 40 per cent for contingent withdrawal and 60 per cent for retirement benefits.

    According to her, the micro pension contributor is eligible to access the 40 per cent portion three months after making the initial contribution. This flexibility is one of the incentives expected to encourage participation and consequently drive growth of the Pension Industry.

    “As you are aware, the informal sector workers constitute the larger percentage of the working population in the country, there is therefore no doubt that robust participation would result to exponential growth of the pension funds, which would, consequently, provide funding for allowable and relevant investments that would impact positively on the economy. The MPP would contribute immensely to archieving the pension industry’s strategic objective of covering 30 per cent of the working population in Nigeria under the CPS by the end of 2024. As at March 31, this year, the value of pension assets stood at N9.03 trillion and the number of employees 8.57 million,” she said.

    On its assessment of the MPP take-off after the Federal Government extended it to the informal sector in March, the PenCom boss disclosed that the Micro Pension Plan was launched by the President Muhammadu Buhari on  March 28, this year to make life better for grassroots’contributors by bringing the into the pension net.

    “The very successful launch by the President is an indication that the Federal Government is committed to ensuring that informal sector workers are also covered under the CPS. Effectively, we are just about two months into implementation after the launch. Sequel to the launch, registration of Contributors by Pension Fund Administrators (PFA) has commenced and is on going. Public enlightenment and engagement with relevant unions and associations is also on going,” she said.

    Mrs. Dahir-Umar explained that to sustain the tempo and momentum achieved from the launch, the Commission is planning to embark on sensitisation events in the six geo-political zones of the country. Overall, I would say we are off to a good start and the gains of the scheme would manifest in due course.

    On the efforts that PenCom is making to ensure that more artisans and other operators at the grassroots key into the scheme, she said that in implementing the MPP initiative, the informal sector has been segmented into three broad categories.

    “There are the low-income earners, the high-income earners and the SMEs. Each of these categories is going to be targeted with appropriate MPP products and sensitisation programmes that meet their peculiarities. As earlier mentioned, the Commission is engaging relevant unions and associations in its enlightenment drive. Some of these unions and associations cover the artisans and grassroots’operators. The commission is aware that public enlightenment and pension education are key success factors and, as such, is working assiduously with the Pension Operators Association (PENOP) to ensure effective coverage,” she added.

    On steps PenCom is taking to ensure development of the micro pension plan to enable the artisans and other self-employed to plan for their financial future, Mrs. Dahir-Umar explained that prior to the implementation of the MPP, the Commission had issued guidelines and framework for MPP. These documents are expected to guide the pension operators in administering the MPP.

    She said the commission shall carry out adequate supervision and periodic reviews to monitor and ensure the efficient and effective implementation of the MPP. Adequate implementation would therefore ensure that artisans and other self-employed plan for their financial future.

    Mrs. Dahir-Umar said the micro pension plan targeted the significant majority of workers who, incidentally, operated in the informal sector.

    She said: “Thus, a prospective micro pension contributor is required to open a retirement savings account by completing a physical or electronic registration form with a Pension Funds Administrator of his/her choice. The contributors may make contributions daily, weekly, monthly or as may be convenient to them.

    “Every contribution shall be split into two, comprising 40 per cent for contingent withdrawal and 60 per cent for retirement benefits. The contributor may, based on his/her needs, periodically withdraw the total or part of the balance of the contingent portion of his/her RSA, including all accrued investment income thereto.

    “The contributor may also choose to convert the contingent portion of the contributions to the retirement benefits portion. The remaining balance in the RSA shall be available to the contributor upon retirement or attaining the age of 50 years.”

    PenCom said it has established a department for the MPP, including enforcement of compliance with the guidelines and customer complaint handling and resolution.

    Head of Communication Department of PenCom, Peter Aghahowa, said the CPS has made things easier for retirees, unlike the former defined benefits scheme.

    He said PenCom has deployed the RSA Multi-Fund Structure conceived by the commission to align with contributors’risk appetite with their investment horizon, at each stage of their life cycle.

    The RSA Multi-Fund Structure is to achieve optimum returns for contributors by aligning their pension savings with their individual risk/return profiles, provide investment portfolio choices to Contributors, and enhance safety of pension assets through adequate portfolio diversification, through increased investment in equities and alternative assets, such as infrastructure and private equity. ‘’We have recorded some successes so far,’’ Aghahowa said.

    ‘’PenCom has developed a framework for recovery of outstanding pension contributions with penalty for defaulting employers. Based on the framework, the commission has engaged recovery agents for continuous enrolment into the CPS and recovery of un-remitted pension contributions plus penalty from defaulting employers.

    ‘’The recovery, which has been largely successful, has boosted the confidence of contributors and by extension encouraged non-participating employees and employers to embrace the scheme,’’ PenCom said in a statement.

    Financial pundits said Nigeria might need to tilt towards an informal driven economy to create more employment and significantly reduce poverty. The growth in the formal sector of the economy fell to 2.01 per cent in the first quarter of the year from 2.38 per cent in the fourth quarter of last year.

    Analysts said this weak growth in the formal sector might not be enough to reduce poverty levels in the country, hence exploring the informal sector could present a brighter hope for the people and economy.

     

  • ‘Digital finance key to achieving financial inclusion’

    Mrs Ololade Adesola is the Country Representative of the United Kingdom based The Microfinance Association (MA), a global professional body that caters to the needs of microfinance operators. The MA is also dedicated to the development and promotion of the microfinance sector. She speaks to DANIEL ESSIET on digital finance, financial inclusion and poverty alleviation.

    Do you agree that over the last decade, Africa has witnessed more poverty than any other part of the world?

    Sadly, it is true. Economic growth has not affected the ordinary African. Population is growing faster than GDP in many countries so the effect of economic growth is wiped out. Besides, issues like healthcare, basic education and food sufficiency, which are the main drivers of poverty reduction, have sadly been neglected by many national and sub-national governments.

    Do you think the best way to solve problems of poverty in Africa is by throwing money at it by financial institutions?

    I am not sure it is the financial institutions that make this assertion. More like African governments and some international NGOs. My interactions have shown that if people are not taught how to correctly to utilise the funds given to them, they mismanage the monies and soon return to their initial levels. Financial literacy is the foundation upon which grants disbursements should be built.

    Large infrastructure projects are considered by experts as prerequisite for poverty reduction. How correct is this?

    Certainly. Firstly, during construction, the sites become sources of income for various types of micro-entrepreneurs (e.g. food vendors) and casual workers. Upon completion, they enhance the ease of doing business, which in turn empowers existing businesses to expand, and new ones to spring up; leading to additional employment opportunities for the poor.

    Would you say the economy has fared well compared to last year – in terms of capital importation, whether as equity investment and portfolio investment?

    We are grateful that the economy was able to grow in 2018, but we all know that a lot still needs to be done to bring it to where it ought to be among its peers

     As a key player and stakeholder in the economy, what are you doing to raise investors’confidence and what, in your opinion, should be done to attract investors?

    What individual business people can do is advocacy within our networks. Another thing is to demonstrate high standards of professionalism, integrity and excellence so as to erode the myths about Nigeria and Nigerians.

    The governments, both at national and sub-national levels, need to ensure effective and efficient implementations of policies. We all know that we are never short of good policies, but somehow seem to trip when it comes to implementation and obtaining good results. Governments at all levels need to enhance the productivity of their implementation machinery

    How significant would you say  the World Bank report on Ease  Doing Business Index is in terms of how investors view the country?

    For newcomers, it is very important because they have no experience of anything else. Investors, who are already in Nigeria, may be able to overlook such reports because they have learnt to adapt to the environment but new investors consider such reports as one of their major due diligence tools

    In your view, what are the main drivers of economic growth in Nigeria?

    Sadly, the main driver continues to be the improved price of crude oil. It seems nothing has changed in that regard. Other less important drivers are the CBN interventions that make cheap funds available to MSMEs, stable value of the Naira, availability of Foreign Exchange and political spending.

    How does government’s huge infrastructure projects and budget commitments fit into the growth scenario?

    These are laudable programmes, but since they would be mostly funded by more borrowing, the government must ensure that the finances are well structured so that their repayments do not stifle economic growth in future years. In addition, the projects must be brought to full completion within the stipulated periods so that the economy can begin to harness the growth ripple effects that such projects were designed to deliver.

    How would you characterise the nation’s banking industry? Do you expect the sector to undergo any consolidation in the future?

    The banking sector seems to have recovered from the recent issues that affected it as a result of the last currency devaluation. Consolidation is a decision of individual management as we do not expect the CBN to induce any consolidation. However, many banks need additional capital to continue to play relevant roles in an economy of this size. They would raise the capital via equity, debt or a combination of both.

    Microfinance has been around  since the 70s. But often, it is not well understood. Could you explain what it means and how it has evolved over the years?

    Microfinance has been around for centuries, but the formally structured version was introduced in Bangladesh in 1976. Microfinance started as providing micro-loans to the commercially active poor. But it has since evolved to the provision of different types of financial services; hence the evolution of micro-insurance, micro-pension etc. Microfinance is the major tool for the achievement of financial inclusion. Financial inclusion, though not one of the SDGs, is a catalyst for the achievement of about eight of the 17 SDGs. So, financial inclusion and microfinance services are extremely important.

    How big is the market now and which parts of the market are evolving the faster?

    According to the latest EFINA Financial Inclusion Report, Nigeria has 36.8million entrepreneurs and only two per cent of Nigerians have access to credit. So, we can see that the size of the market is enormous. Financial inclusion is improving, but 79 per cent of the financially excluded live in rural areas. The growth seems to be side-stepping our rural communities and measures must be taken to change this narrative if we want to meet the 2030 SDGs.

    How would you characterise the last 12 months in terms of how the microfinance sector has developed?

    The CBN has introduced new minimum capital requirements, so those who would have been categorised as doing well now have the bar raised and would need to strategise and synergise with other industry players to meet the CBN requirements. The major risk in the industry at large had always been capital inadequacy. Hopefully, the MFBs that emerge from the recapitalisation process would be much better empowered to deliver microfinance.

    However, we know that in Nigeria we have the MFBs and the MFIs. The MFIs are not controlled by the CBN because they are not supposed to be deposit-taking institutions. The MFIs have no recapitalisation requirements. This uneven playing field continues to be a major source of concern to industry watchers.

    How developed is the microfinance sector in Nigeria, and what unique offerings do you believe they can give borrowers?

    In my view, the microfinance industry in Nigeria is not yet mature. Corporate governance is lacking in many MFBs and MFis. There are some that are professionally run and we can be proud of, but those are a tiny minority.

    How are the political and regulatory disruptions impacting the market?

    Microfinance is one of the most highly favoured and protected sectors in Nigeria. Every government introduces different schemes to provide funding to the commercially active poor. Our problem, like with every other sector, has been in the implementation of these schemes so that they can deliver the desired results.

    With the number of microfinance banks in the country, do you think there is enough to serve the whole country or there is a need for more?

    At the last count, we have about 900 MFBs. We have three different categories National MFB with a licence to operate nationally. There are about 20 of such. State MFBs with licences to operate within a state; there are about 100 of such, and unit MFBs, which can only operate in one location. The 18 national MFBs control almost half of the microfinance business. Meanwhile the total assets of all the 900 MFBs is less than the total assets of a commercial bank like Zenith Bank.

    From this, we see that we do not need more MFBs what we need are stronger MFBs. The MFIs on the other hand are also playing their part. They control about one third of the micro-credit business, but that is still a far cry from what our 36.8m entrepreneurs need.

    What is the role of technology in developing the microfinance banks and making their services more acceptable?

    Technology is helping MFBs manage their banks better through the use of bespoke software that have been created to meet their peculiar needs. Financial planning, forecasting and reporting, performance management, delinquency management and many more are now better managed.

    What are the trends and  technologies driving the sector?

    In Nigeria, the National Association for Microfinance Banks( NAMB) and the Association for Non-Bank Microfinance Institutions of Nigeria have each set up digital platforms that their members can upload their information on and carry on their financial services. NAMB has NAMB-UIT and ANMFIN has ANMFIN Cloud Express.

    Another trend in the industry is professionalisation. Microfinance is fast becoming a stand-alone subsector in the financial sector and the practitioners are now obtaining professional certification just like insurance, accounting, banking and other financial subsectors. The Chartered Institute of Bankers have a certification programme, while The UK Microfinance Association has its own.

    What impact has financial technology had on microfinance?

    FINTECH is the future of Banking; whether commercial banking or microfinance. A digitalised financial product enables the roll-out of on a large scale, at lower costs per unit. It also simplifies monitoring and control. For the customers, it delivers convenience, accessibility and immediacy. M-Pesa and M-Shwari in Kenya are excellent examples of the undeniable successes that digital finance can deliver.

    What emerging technologies do you think will help enable unbanked consumers to use digital financial services (DFS)?

    The main thing is for our Mobile Network Operators (MNOs) to provide the robust and reliable infrastructure on which DFS would run. Nationwide roll-outs must be achieved. Down times must be eliminated.  Once these are in place FINTECH companies would collaborate with banks to ensure that all types of products for our unbanked in all the various categories of financial services.

    Micro insurance is expected to grow in Africa, what are the contributing factors to this and why should customers consider it?

    The growth of micro-insurance would be driven by customers’ demand. There is a need for index-based insurance for smallholder farmers. Poor people need access to good medical services and this can only be provided by effective health insurance products. Other forms of micro-insurance are also desperately required by micro-entrepreneurs.

    What is the nexus between microfinance and sustainable development?

    Like I said earlier, microfinance is the major tool for financial inclusion, while financial inclusion is the facilitator of sustainable human and economic development. SDGs like eradicating poverty, achieving food security, promoting health, promoting employment, and empowering woman would only be achieved through the provision of various microfinance products like micro-credits, micro-insurance, mocro-pension etc.

    How can today’s digital revolution help reach the 2030 Sustainable Development Goals (SDGs)?

    Digitalisation is an enabler. Development initiatives and processes can be digitalised so that they can reach a wider population quicker and cheaper.

    What are the opportunities for trade finance in the country?

    Trade finance still continues to be elusive to many entrepreneurs. Those who can access it are traders because the tenors are very short; usually 90 days or less

    What are the risk factors associated with international trade finance and what is the best way to counter them?

    The major risks have always been product quality. How to ascertain that products imported and exported meet the expected standards. If goods do not meet required minimum standards, payment may not be made. For Nigerian exporters, the solution is to understand the markets they are exporting to and prepare the products to meet all the standards established for such products, not just by their business partners, but also by the regulatory agencies.

    What are the opportunities available to domestic producers win terms of export financing and how do microfinance banks support them?

    The CBN does not permit MFBs to be involved in FX transactions. However, micro-entrepreneurs could borrow from MFBs in Naira to prepare their products for export. The export processing would then be done by a commercial bank.

    How easy is it to get loans from the microfinance banks?

    It is actually easy to obtain microcredits. However many of our MFBs are cash strapped and cannot expand their loan portfolios due to capital constraints, hence the the CBN recapitalisation agenda. However, MFIs have not such constraints and are usually able to meet the needs of their members.

    Many people relate with Deposit Money Banks; only a few patronise microfinance banks. Why is this so?

    The first reason is inadequate knowledge of what MFBs are doing. Secondly MFBs need to improve their collective reputation and rebuild public trust. The current trend of recapitalisation and professionalisation are geared towards improving the reputations of MFbs and MFIs.

    SMEs constitute a large percentage of  businesses in Nigeria. Do you think microfi-nance institutions are satisfying the needs of this sector?

    Certainly not. Hopefully with the recapitalisation exercise, our MFBs would be better empowered to meet the needs of our MSMEs.

    Can you tell us about some of the unique partnerships you have with others to support entrepreneurs?

    Working with the Microfinance Association, we have raised millions of dollars for MFBs to lend to their customers, and so contributed to the loanable funds available to Nigerian micro-entrepreneurs. We have provided training for boards, managements and members of staff of MFBs and MFIs and so helped to improve the quality of the people who manage Nigeria’s microfinance subsector.

    Is financial inclusion making great strides?

    I would not call the strides great. We are falling short of targets we ourselves set. More creative solutions need to be developed and implemented speedily.

    Give five reasons to be optimistic that full financial inclusion is possible through digital payments?

    It reaches a wider spectrum of customers faster. Unit deployment price/ customer is very low. DFS are easily scalable, so the expansion of outreach is easier and faster. They promise convenience and ease of use, once available in the rural areas (where 78per cent of excluded Nigerians live), uptake by customers would be almost total. The largest age groups financially excluded in Nigeria are those between 18 -25 years; digital payment systems are the surest way to attract them into the formal system and this will immediately improve our financial inclusion performance.

    How can Lagos and other cities win digital payments?

    It would require careful planning, identifying who the key players would be, allocating resources and implementing the plan religiously. There would be co-operation across ministries and MDAs, public-private partnership would be the main driver of the plan.

    Do you see digital payments as a game-changer for farmers?

    Indeed, it worked with fertiliser and input allocation in the past. But for me, the best thing our farmers need is working Commodity Exchange where they can confirm produce prices and get value for their labour. A functioning commodity exchange would also serve financiers as it would facilitate price stability and ultimately reduce loan defaults that arise from price fluctuations.

    How are farmers benefiting from making and receiving digital payments?

    This is not yet widespread in Nigeria as the mobile networks are unreliable in the rural areas where our farmers live.

    Where do you see the impact of digital payments in the sector in the next 10years?

    Not just in agriculture, in all sectors, digital payments would change the way we conduct payments unidentifiably. Let me quote Bill Gates here – “We would not always have banks, but we would always have banking”.

    Your association’s mandate requires helping to fight poverty on the continent. How much of this has been achieved over the years?

    Our influence is indirect. We empower those who empower the poor. We are careful to monitor our partners, especially those we facilitate funding for, to ensure that the funds produce the required outcomes. We must say that we are largely pleased with our results in Africa and in particular in Nigeria. An MFI would received $3m to provide funding for women micro-entrepreneurs.

    What are the main objectives of the association and how will it support the long-term goal of promoting sustainable growth in Africa’s agriculture sector?

    Our main objectives are centred on the development of the microfinance subsector. We do this by firstly, developing the practitioners through capacity development, certifications and advocacy for professionalism. Then we support the capacities of the institutions by helping them to institutionalise global best practices.

    Following the group’s efforts to reduce poverty on the continent through financial inclusion, what policy advice would you provide to the government to enhance these efforts?

    Financial literacy and entrepreneurship should be part of our schools’ curricula at all levels. Our people need to know how money works and be taught how to develop good money habits that would lead them out of poverty.

  • Bumpy road to financial inclusion

    The Federal Government’s plan to narrow the 80 per cent gap of those financially excluded by next year may remain wishful thinking if challenges such as data privacy, security, lack of transparency as well as limited financial education and literacy, are not tackled, reports LUCAS AJANAKU.

    During  the first quarter (Q1) of last year, the Central Bank of Nigeria (CBN) identified that, to reach the goal of 80 per cent inclusion by 2020, an additional 7.6 million adult Nigerians would need to be financially included.

    Factors such as illiteracy, security challenges and slow penetration of financial services in rural areas had slowed the pace of inclusion.

    General Manager of Mobile Financial Services at MTN Nigeria, Usoro Usoro, said by the end of the year, Enhancing Financial Innovation and Access’s (EFInA) biennial results illustrated that the progress made towards this goal had been modest, with only an additional 3.5 million individuals included between 2016 and last year.

    As the nation draws closer to the 2020 target for financial inclusion, he said it was imperative to look at the developments that brought about some progress – albeit limited and provided a strong indication of what to expect from the various industry players, as well as the most suitable next steps to help realise the goal.

    According to Usoro, the establishment of agent networks served as proxy channels for banks, to enhance their reach of marginalised communities. Yet, despite having up to 10,000 agents in 2017, the impact of this reach was yet to be felt, as most of these agents delivered their services in semi-urban or urban areas. The slow growth of this initiative led to the launch of the Shared Agent Network Expansion Fund (SANEF) Initiative – it was designed to introduce an extra 500,000 agents by 2020, to cater to an additional 60 million Nigerians in rural and underdeveloped areas.

    According to him, with the limited time, there was some skepticism about how quickly the agents could be trained, on-boarded, licensed and begin to operate, especially as the process of establishing 10,000 agents had taken up to seven years. This initiative, while capable of enhancing access for the financially excluded, lacks the required trajectory that will enable Nigeria to meet the 2020 target.

    KYC

    On the matter of Know-Your-Customer (KYC) Requirements, the 2015 rollout of the Bank Verification Number (BVN) had provided a way to achieve the primary objective of creating a unified national financial database; enhancing e-payments and reducing fraud risks.

    However, even in 2018, the effective implementation of the Tiered KYC Requirements still required an additional review – the challenges remain for customers based in rural areas, who have limited access to physical bank branches, and the capital intensive nature of BVN registration also reduces the ability for banks to ease this challenge. The enforcement of BVN registration for these groups of customers (usually Tier 1 account holders with the lowest verification requirements and account limits) potentially reduces the rate at which financial inclusion is achieved.

    ALTON intervenes

    He said with banks dominating the activities of the financial inclusion agenda, key stakeholders in other industries identified the need for collaboration to accelerate efforts. In this vein, Nigeria’s largest telecoms operators – MTN, Globacom, 9mobile and Airtel – formed a coalition under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) and collectively, resolved to leverage their vast reach and resources to deliver access to financial services to 90 million customers by 2020, and deepen financial literacy across the country. This readiness for participation by non-financial stakeholders was timely, as it coincided with the CBN’s launch of the Payment Service Banking (PSB) licence months after.

    This development was significant, considering that the licence would enable non-banks – including telecommunications companies, retail chains, postal and courier service companies, mobile money operators, and FinTechs – to obtain a licence to operate in the financial sector.

    Banks kick

    Guaranty Trust Bank (GTBank)  has said the decision of the apex bank to license telcos for payment services is a threat to banks’operation.

    In a report, Nigeria Macro-Economic and Banking Sector Themes for the year, the banks PSBs will compete with commercial banks for earnings.

    “A more compelling threat, however, relates to the recent decision by the CBN to license PSBs to facilitate transactions in remittance services, micro-savings and withdrawal services in rural areas,” it said in the report.

    Though it’s a positive move for customers, the report said it would improve customer service and digitalisation of banking services while enhancing financial inclusion.

    Last year, MTN Nigeria and Airtel  announced plans to delve into mobile money services with the former expressing hopes that it would get the CBN’s approval and launch in Q2 of this year.

    The PSB license will, however, not allow the telcos to offer lending services and participate in the foreign exchange market.

    In the report, the tier 1 lender said the capacity of FinTech firms to gain a significant market share would be limited in the absence of collaborations.

    But Usoro said these developments set the pace for the years ahead. While optimistic about the progress made so far, there should be an increased alignment between the need and the delivery of the required services. By ensuring that more seamless approaches to BVN registration and account opening processes are established expediently using agents, industry partners, and other available networks; and providing an enabling structure and environment for the participation of payment service banking licensees.

    “As we approach the 2020 deadline for achieving the financial inclusion targets, our current position is prime for making significant headway towards 80 per cent financial inclusion.

    ‘’The CBN recently launched a revised National Financial Inclusion Strategy, which will tackle the challenges that have thus far hindered a quicker pace of inclusion – data privacy and security; a lack of transparency; and limited financial education and literacy. There might be need for additional policies to support these new entrants that are mobilised to address these challenges and bridge the gap in financial inclusion.

    “The feasibility of a 20 per cent financial exclusion rate over the next 11 to 20 months may appear doubtful; but if the participating stakeholders are able and encouraged to effectively leverage their positions in the national financial inclusion agenda for the ultimate good of the Nigeria populace. We just might be closer to seeing the needed changes that would enhance our economy and society,” Usoro said.

  • Financial inclusion: 2.6m more embrace financial services

    The Central Bank of Nigeria’s (CBN’s) policies on financial inclusion is yeilding results. A report released by Enhancing Financial Innovation & Access (EFInA) shows that 2.6 million more have embraced financial services. COLLINS NWEZE writes on policies and processes that led to improved financial access in various states.

    Nigeria’s journey to  bringing more people into the financial system is yielding positive results. The Central Bank of Nigeria (CBN’s) policies on mobile money, agency banking, Know Your Customer (KYC),  insurance, and recently, Payment Service Banks (PSBs) expected to takeoff this year have helped to bring 2.6 million new customers to the financial system.

    CBN Governor, Godwin Emefiele has continued to take steps meant to deepen banking services in the economy. The hope for Nigeria to achieve 80 per cent financial inclusion rate come the year 2020 received a major boost, when the Enhancing Financial Innovation & Access (EFInA), released the result of its 2018 survey figures. The survey showed that 63.6 per cent of Nigeria’s adult population now has access to financial services and only 36.6 per cent are now financially excluded.

    EFInA is a non-governmental organization and a financial sector development organization funded by the Department for International Development (DFID) and Bill & Melinda Gates Foundation towards promoting financial inclusion in Nigeria. The firm conducts surveys every two years in order to determine the situation of things regarding financial inclusion in the courtly.

    EFInA’s 2018 report came after a painstaking research carried out across the country, with 750 respondents in each of the 36 states and the Federal Capital Territory (FCT), and 27,470 interviews, which represents 97 per cent of the target samples of 28,380.

    The survey was anchored on several indicators including banked population, remittances, savings with a bank, payments, received income, loan with a bank, and banking agents, among others.

    An increase of 1.4 per cent in the banked population from the 2016 to 2018 was found, a decrease of 2.2 per cent in remittances between in two years, and another decrease of 6.7 per cent in saving with a bank within the period. The indicators of payments, received income and banking agents all recorded increases of 3.4 per cent, 1.3 per cent and 0.6 per cent respectably, while loan with a lank remained static at 1.3 per cent.

    The report however found a decrease of 1.6 per cent (from 30.1 per cent in 2016 to 28.5 per cent to 2018) in the non-bank indicators of Pension; Savings through other Formal Institutions; Mobile Money; Mobile Money Agents; Insurance; Remittances; and Loans with other Formal Institutions.

    Shared Agent Network Expansion Facility

    Before the release of the EFInA report, financial inclusion report on Nigeria showed that NorthEast and Southeast regions have the least access to banking, a report on financial access touch-points released yesterday has shown. With five per cent financial access touch-points for the Northeast and seven per cent for the Southeast, both regions remain disadvantaged in access to financial services despite efforts by the CBN, Bankers’ Committee and commercial banks to take banking to the grassroots, the Shared Agent Network Expansion Facility (SANEF) report has shown.

    The CBN voted N20 billion for banks, Nigeria Inter-Bank Settlement Systems (NIBSS), licensed Mobile Money Operators and Shared Agents to accelerate financial inclusion and take banking to more Nigerians.

    A member of Technical Committee of SANEF, Bolaji Lawal, said the SANEF initiative involves on-boarding 40 million low income and un-served Nigerians into the financial system, increasing financial access points from the current 50,000 to 500,000 by 2020 and deepening access to mobile and digital financial products and services such as savings accounts, micro-loans, insurance, pensions by Nigerians.

    EFInA survey lists challenges to financial inclusion

    The EFInA survey report concluded that three factors of affordability, institutional exclusion and lack of awareness were the biggest obstacles to financial inclusion. According to EFInA, 60.1 million Nigerians do not have/use a bank account, 96.3 million do not have/use mobile money and 97.9 million do not have insurance.

    On the digital usage in the country, it revealed that mobile money, which was thought to be useful in the financial inclusion drive, was found to only deepen rather than expand financial inclusion. The report therefore revealed that while 35.5 million Nigerians (36.6 per cent of the adult population) use bank accounts only 3.0 million adults have both mobile money and bank accounts, whereas 59.4 million (60 per cent) neither have mobile money nor bank account.

    Similarly, the study showed that while 82 per cent of Nigerian adults, comprising of subsistence farmers and small business owners, receive their income in cash, 10 per cent of those adults receive their own income via mobile money or bank account, while another eight per cent did not receive any income at all.

    Savings in the country dropped by 13.3 per cent according to the report, while savings in assets, property, and livestock had risen from 47.4 million to 54.7 million since 2016. Other decrease in respect of this indicator was that of borrowing, which went down by 2.0per cent and remittances to one per cent.

    On financial access by gender, the report indicated that out of 99.6 million adults in the country, 33.5 million male adult Nigerians were financially included compared with 29.4 million female adults. This represents a decrease in the exclusion rate of 4.3 per cent and 5.7 per cent in the male and female gender respectively, and a decrease of 4.8 per cent for both gender compared with the 2016 figures.

    On financial access by age groups, the report revealed that Nigerians in the age bracket of 36 to 45 (19.5 million and 30.6 per cent exclusion) have more access to finance than all others. This group was followed by those in the age bracket of 26 to 35 (30.3 million and 31.5 per cent exclusion) and 46 to 55 (10.9 million and 32.4 per cent exclusion).

    Regionally, the South West and South-East, two zones with the least financial exclusion rate in the past, had underperformed in the last two years. The zones recorded exclusion rate of 18per cent and 28per cent respectively in 2016, compared with 19 per cent and 29 per cent exclusion rate, respectively in 2018.

    All the other zones however recorded significant decrease in exclusion rate in the last two years with the South-South zone improving from 31per cent in 2016 to 23per cent in 2018, and the North-Central achieving 31per cent in 2018 from 39per cent in 2016. North-East and North-West scored 55per cent in 2018 from 62per cent in 2016 and 62per cent in 2018 from 70per cent in 216, respectively.

    The regional breakdown shows that Kano, Jigawa and Katsina States in the North-West Zone failed to achieve the region’s average of 62.4per cent, with Kano having the highest exclusion rate of 75.2per cent. Gombe, Bauchi and Yobe States fell below the average in the North-East region (54.5per cent). Gombe for example, had the highest exclusion rate of 76.1per cent, Bauchi 60.8per cent and Yobe 60.0per cent. Taraba had the least exclusion rate of 30.9per cent in the region.

    In the South-East zone, Ebonyi emerged the only state that failed to achieve an exclusion rate below the average of 29.3 per cent. The state recorded a financial exclusion rate of 43.6per cent. In the South-South zone, Bayelsa, Akwa Ibom and Edo State were the states that had an exclusion rate more than the average in that zone (22.7 per cent). The states had 35.3per cent, 29.1per cent and 25.4per cent, respectively.

    In summary, the 2018 EFInA report revealed that 36.6 million (63 million have access to finance) Nigerians are now financially excluded against 56.3 million in the 2016 report. Of this number, the exclusion by gender shows 55.9per cent for female and 44.1per cent for male. The exclusion rate of 34 per cent among Nigerians aged between 18 and 25 is the highest, whereas the exclusion rate in the rural and urban areas stood at 78.5 per cent and 21.5per cent respectively.

    The report indicated N15,000 as the median income of the 99.6 million adult Nigerians, whereas 71.3per cent of that number did not have access to mobile money accounts, and a mere 17.5 per cent as the borrowing rate among Nigerians.

    Some of the observations the report made were that the labor market in the country was not absorbing enough graduates while reduction in the formal employment often led to reduced disposable income and reduced savings. It also noted that adult Nigerians now resort to small businesses for survival even as it observed that day-to-day expenses was the most important financial need of Nigerians while planning for unexpected shocks as well as planning for the future goals become second and third priorities respectively.

    The tiered Know-Your-Customer (KYC) framework was also introduced by the Central Bank of Nigeria (CBN) in 2013 to simplify the requirements for opening and operating bank and mobile money accounts for the low income people.

    Furthermore, in collaboration with its stakeholders, the Securities and Exchange Commission (SEC) kick-started the process of increasing distribution channels to increase access to capital market products by promoting collective investment schemes, Capital Market Financial Literacy and a Capital Market Financial Inclusion Strategy.

    On its part, the National Insurance Commission (NAIC) had been implementing non-interest based products to reach out to more people even as it released the micro insurance guidelines to provide explicit licensing of micro insurance companies and penetration of micro insurance to micro clients.

    The Bancassurance Framework was another effort towards boosting inclusion. It was released by the CBN and NAICOM in order to be used as a platform for extending insurance courage to existing customers of banks.

    Also, the CBN recently released the guidelines for the regulation of Payment Service Banks (PSB) in Nigeria. When this comes in effect early next year, it will provide a level playing field for the provision of payment services to the bottom of the pyramid. These interventions contributed in large parts to some of the positive results in the EFInA report.  The revised National Financial Inclusion Strategy was released in November, 2018. Stakeholders have been mapping out interventions to address access to finance by women, youth, rural dwellers, MSMEs as well as those vulnerable and excluded groups in the Northern parts of the country.  This is to create level playing field for service delivery and adoption of agency comparative advantage implementation agency activities.

  • Financial inclusion will aid economic growth, says SEC

    Securities and Exchange Commission (SEC) has reiterated its commitment to pursuing initiatives that would aid financial inclusion of Nigerians as this is capable of growing the nation’s economy.

    Acting Director General, Securities and Exchange Commission (SEC,) Ms. Mary Uduk stated this in her remarks at the 2018 PEARL Awards Night held in Lagos.

    She said that SEC will continue to highlight and promote developments and trends in the Nigerian capital market and drive financial inclusion aimed at reducing adult exclusion from financial services.

    According to her, innovations in financial technology has made possible the potential of using digital tools to make financial services available to a wider range of consumers and enterprises, promoting financial inclusion and the affordability of financial services.

    “A financially inclusive society will provide increased access to finance, especially for women, help support sustainable growth—and will create million more jobs. The gains of having a more inclusive financial system are enormous, as it helps broaden financial markets and make policies more effective,” Uduk said.

    While commending the efforts of the Board of Governors and management of PEARL Awards Nigeria, for giving consideration to companies with good corporate governance practice in the award nomination process, Uduk also enjoined them that in future editions, emphasis should also be given to companies with technological innovation in the capital market, in the advent of the convergence of finance and technology (fintech).

    Uduk also disclosed that the SEC is implementing various initiatives which are aimed at making our market deeper, vibrant and more effective.

    She noted that the forbearance window for shareholders with multiple subscriptions has been extended by another year from the previous deadline of December 31, 2018 to December 31, 2019, urging those who have not come forward for the regularization of shares purchased with multiple identities to do so.

    “We have also developed a two-pronged approach to addressing the intractable challenges associated with transmission of shares related to the estate of deceased investors. The first step would involve engagement with and enlightenment of the Probate Registry with a view to providing solutions to the cumbersome process of transmitting shares. Secondly, Rules would be developed around the time frame for transmission shares and the fee structure,” Uduk said.

     

  • Jaiz Bank deepens financial inclusion at Kano fair

    Jaiz Bank Plc, the first non-interest bank in Nigeria, plans to deepen financial inclusion at 39th Kano International Trade Fair with its bespoke products and services.

    The bank promised to delight visitors as well as existing customers with value adding products such as agriculture financing, MSMEs financing, home finance in an ethically conforming standard.

    The bank will also present to the public the JaizMobile and also its unique USSD Code (*389*301#) for SMS banking that enables customers do banking transactions without coming to the banking hall.

    Other service that Jaiz Bank will display at the fair is Agency Banking which has the capability of bringing banking services to thousands of individuals seamlessly through our agent network.

     

  • Diamond Bank leads national drive for financial inclusion

    The Central Bank of Nigeria (CBN), under its National Financial Inclusion Strategy (NFIS), in 2012 set a target of financial inclusion rate of 80 per cent for Nigeria’s adult population by 2020. The CBN initiated the move, actively pushing for more citizens to enjoy access to formal financial services and thereby increase their chances of financial empowerment. The initiative by the apex bank perfectly fitted the banking philosophy of Diamond Bank, which focuses on financial accessibility and availability.

    Diamond Bank, since its inception in 1990, has always been about retail banking, financial inclusion, and catering to the finances of ordinary people. Currently, the bank leads others in financial inclusion by wide margin due to its innovative efforts, growing the market share by offering financial services to 10 million previously unbanked individuals. In recognition of its efforts, the bank was voted “Best Bank for Financial Inclusion” in Nigeria in 2017.

    Diamond Bank has targeted campaigns for Nigerians living in remote parts of the country. One of the campaigns, exclusively targeted at financially-excluded people, helps to put the unbanked population in perspective. While so much has been said about financial inclusion, many people often don’t know what people who need to be banked look like. Diamond Bank partnered African telecommunications giant- MTN Nigeria to roll out its hybrid savings account, Diamond Yello account. This service combines both financial and telecommunications functions.

    Diamond Bank was one of the first Nigerian banks to employ the use of the Unstructured Supplementary Service Data (USSD) for its Yello account, allowing users to open Diamond Bank’s accounts and carry out financial transactions on their mobile phones, without data or credit. Since its launch in 2014, before commercial banks were forced into retail banking, the Yello account has been able to register more than nine million bank accounts, consisting mostly of young people, and women-the demographic most hindered from financial inclusion.

    The Diamond Yello account has solved that conundrum in Nigeria in Northern Nigeria by bringing on board many who have never owned a bank account. Presently, Diamond Bank controls a large share of USSD transaction volume in Nigeria with 40 per cent.

     

     

  • EFInA boosts financial inclusion with $2m FinTech Challenge Fund

    Enhancing Financial Innovation & Access (EFInA) has launched a $2 million Financial Technology (FinTech) challenge fund for FinTech firms.

    The fund is expected to boost the  usage of financial services by the low-income population in Nigeria.

    EFInA used the opportunity offered by the recent visit of the British Prime Minister Theresa May to Nigeria to introduce the fund.

    At a business networking event hosted by the British High Commissioner to Nigeria, Paul Arkwright, last Wednesday, EFInA’s Chair, Segun Akerele, introduced EFInA as a financial sector development organisation that promotes financial inclusion in Nigeria.

    The company’s mission is to make the financial sector work better for the poor. He explained further that EFInA is funded by the UK’s Department for International Development (DFID) and the Bill and Melinda Gates Foundation. DFID is a United Kingdom government department responsible for administering overseas aid.

    In launching the fund Mrs Bunmi Lawson, EFInA Board member, said: “Following our recent request for information at our FinTech Outreach Forum, it gives me great pleasure to announce the launch of a new $2 million fund for start-up and growth stage FinTech firms looking to increase access to financial products and services for the poor as well as reduce the rate of financial exclusion in the country”.

    Mrs. Lawson continued: “The aim of the fund is to stimulate and catalyse the financial technology delivery channels provided by the FinTechs. The fund, to be known as “The FinTech Challenge Fund”, will be used to pilot and support the development of innovative financial products & services through the use of digital technology. In addition, the new fund will support projects that help strengthen financial resilience in Nigeria by aligning innovation and modern technology with the needs of the target audience.

    “As we see changes happening faster and faster in our environment, we have to anticipate and step up our pace as well.

    ‘’There is immense opportunity in this market and our aim is to see to it that Nigerians are well placed to take advantage of these new opportunities and in the process reduce poverty and boost our GDP.”

    She added that the grants will cover a range of $50,000 up to $200,000 for the “FinTech Challenge 1 Grant” and a range of $200,000 to $500,000 for the Fintech Challenge 2 Grant”.

    She said more information about the grants would be made available to prospective applicants at the formal Request for Proposal event to be held by the company soon.

    The event, which held at the FMDQ Exchange Place in Victoria Island and it was attended by the British Prime Minister and various UK Government officials and a high-level delegation of UK-based CEOs and their Nigerian counterparts.

     

  • Financial inclusion: BoI’s Trader Moni raises the bar

    The Federal Government’s financial inclusion agenda has moved a notch higher. The Bank of Industry (BoI), last week, unveiled ‘Trader Moni’, a mobile phone-driven scheme designed to support two million Nigerians with collateral-free loans to grow their businesses. The innovation bodes well for the government’s quest to take financial inclusion to Nigerians at the bottom of the pyramid who require very little to survive. This could be the much-needed template to incentivise operators in the informal sector, create jobs and drive inclusive growth. Assistant Editor CHIKODI OKEREOCHA reports.

    It’s arguably the most innovative and pragmatic response to addressing the lack  of  access  by  certain segments  of  the  society  to  affordable and convenient financial products  and  services  from  mainstream  providers.

    Courtesy of Trader Moni, a mobile phone-driven scheme introduced by the Bank of Industry (BoI) to support businesses with collateral-free loans, a petty trader can now approach any mobile money agent around and supply his details. His details are captured by an agent and sent to the Bank’s system for validation and within 48 hours, the trader gets cash notification or credit alert in his mobile wallet account.

    Under the scheme, the cash can either be transferred to the beneficiary trader’s bank account or cashed at any mobile money agent. Already, the BoI has engaged no fewer than 4,000 enumeration agents to identify the beneficiaries, following the deployment of the new scheme on Tuesday last week in five markets in Lagos State.

    The programme, which is pushing immense possibilities into the hands of operators in the informal sector, particularly petty traders, has reached Mushin, Ikotun, Agege, Ketu, and Abule Egba markets in Lagos. Traders in Kano and Abia states have also lined up to be part of the first round of beneficiaries to draw the collateral-free loans.

    The loans, The Nation learnt, start from N10,000 and can go up to as much as N50,000, depending on the trader’s ability to pay back the loan within the six months grace period. The icing on the cake is that unlike loans from conventional commercial banks, the trader does not need any documents or property as collateral to collect the N10,000. He just registers with any of the agents, gets captured and receives the money or loan through his mobile phone. He also has the six months’ grace to pay back N10,250 and qualify for a bigger loan.

    As BoI Executive Director Toyin Adeniji explained, a starter can access N10,000 and pay back N10,250 to qualify for N15,000.

    “Once you pay back N15,375, you will qualify for N20,000 loan and when you pay back N21,000, you will get N50,000. All loan categories have payback duration of six months,” she said at the launch of the scheme in Ojuwoye Market in Mushin, Lagos.

    Noting that the programme has been activated nationwide, she stated that BoI would not relent until every Nigerian who is willing has access to loan, irrespective of his status or level of education.

    Adeniji pointed out that BoI targets two million Trader Moni beneficiaries across the country between now and the end of the year. She, therefore, urged beneficiaries to do their best to pay back the loans so that others could benefit from the programme. She stated that BoI was in partnership with other banks, such as Fidelity Bank, Wema Bank, GTBank, United Bank for Africa (UBA), Heritage Bank, Stanbic Bank, Sterling Bank, Union Bank and Jaiz Bank, to make paying back the loans easier. The trader only needed to visit any of the banks or key in with a BoI-GEEP agent to pay direct.

     

    Traders laud scheme

    Expectedly, the introduction of Trader Moni has elicited excitement from existing and prospective petty traders. Some of them, who spoke with The Nation, described the innovation as a game-changer, noting that it could not have come at a better time than now when they needed the bank’s support to boost their businesses and contribute to economic growth and development.

    For instance, a pepper seller in Ojuwoye Market, who identified herself as Madam Lucy, said she had been hearing about Trader Moni for a while, but did not believe that the government will be giving people like her loans. She, however, said on seeing other traders singing and dancing on stage, talking about how they received alerts on their phones courtesy of BoI’s Trader Moni, she too decided to give it a try.

    With voice tinged with initial disappointment and regret, the petty trader recalled that she had been turned away by banks when she needed capital to expand her business. She, however, said right there in the market, without having to leave her wares, a Trader Moni agent came to enumerate her, took down her details, captured her photograph and within 48 hours, she received a credit alert on her phone.

    The Iyaloja of Ojuwoye Market, Chief Mufliat Adewunmi, was also full of praise for the government for this laudable initiative. “We are happy about Trader Moni because it is a thing we have been expecting. The government should assist the masses, especially the traders. We thank Trader Moni, we thank the Federal Government for bringing this programme to us. It will help a lot, especially we traders because we all know what we have been facing to get loans,” she said.

    Another trader, Anna Enwerem, could also not hide her excitement. Thanking the Federal Government and the BoI for what she described as a laudable initiative, she said: “I sell clothes. This N10,000 would do a lot for me and my children. I like this programme so much. I will pay back the loan before six months’ time. Before, I didn’t believe it, but now that I have received my money I believe.”

     

    Boost for financial

    inclusion agenda

    For the BoI, Trader Moni is a shot in the arm of the President Muhammadu Buhari-led administration, which has never hidden its intension to drive its financial inclusion agenda.

    The agenda, which the government and, indeed, other experts in the financial sector believe is critical for achieving inclusive growth, seeks to democratise access to financial services to those at the grassroots where pure water, bread, food sellers and Okada riders, among others, can access loan to expand their businesses without any form of security or collateral.

    Adeniji put this in perspective when she said: “The goal of Trader Moni was to take financial inclusion down to the grassroots. The President Muhammadu Buhari-led administration recognised the contribution of petty traders to economic development and identified the fact that some of them may not have what the commercial banks may require to grant loans, hence, his support for this initiative to help them grow their businesses.”

    Government Enterprise and Empowerment Programme (GEEP) Chief Operating Officer Mr. Uzoma Nwagba was, perhaps, more specific on the imperativeness of the scheme for driving financial inclusion. He said: “This initiative is aimed at expanding financial inclusion because we have over 23 million Nigerians that are financially excluded. This administration aims to reach them so that they can grow their businesses.”

    GEEP is one of the social intervention programmes of the Federal Government. The programme promotes financial inclusion and access to credit for millions of traders, artisans, cooperatives, youth and farmers. BoI launched Trader Moni under GEEP, which also has other schemes aimed at reaching those at the bottom of the pyramid.

    Some of them include Market Moni, a micro-credit loan scheme, which targets market women, traders and artisans to get between N50,000 and N100,000 and is repayable over six months; Farmer Moni for farmers which avail them the opportunity to access up to N300,000 loan each.

    All the schemes, The Nation learnt, draw their strength from the rapid surge in mobile penetration/adoption and use of smartphone/devices, which is a platform for improving financial services, even to the unbanked in the rural areas.

    Unveiling these game-changing innovations, riding on the back of technology to deepen financial inclusion, BoI and experts believe that access to financial services suited for low-income earners promote enormous capital accumulation, credit creation and investment boom.

    This  is so because, usually, the low-income earners constitute the largest proportion of the population and so control enormous chunk of the economy’s idle fund, albeit, held in small amounts in the hands of each of the several million members of this group. The consensus is that harnessing and accumulating these resources provides a huge source of cheap long-term investable fund.

    According to the Senior Special Assistant to the President on Media and Publicity, Office of the Vice President, Laolu Akande, the Federal Government’s aim for launching Trader Moni and other similar schemes was to further enlarge its financial inclusion agenda for all Nigerians regardless of social class and economic status.

    However, the thinking and rightly so, is that such initiatives, if replicated by the 36 states and the Federal Capital Territory, could be the required template to unlock the huge potential in the informal economy and contribute significantly to job creation and inclusive growth.