As mobile and digital platforms continue to change the financial inclusion landscape across the world, EFInA (Enhancing Financial Innovation & Access) has stressed the need to embed financial inclusion into as many institutions as possible in Nigeria to achieve the targets in the Central Bank of Nigeria’s National Financial Inclusion Strategy. Modupe Ladipo, chief executive officer, EFInA, shares her thoughts in this interview with FEMI ASU.
Let’s look at the cashless policy in Nigeria. How has it fared and what future do you foresee for it?
I think as the policy is rolled out nationwide, people are becoming more aware of it. We did a survey in 2012 in Lagos, and we asked people about their awareness of the cashless policy and it was quite low. When we conducted the survey in the cashless phase II states in 2013, their level of awareness was higher. More people have a better understanding of the benefits of the cashless policy. Some quotes from out surveys include, “Now I don’t have to carry too much cash around, I don’t worry about being robbed. I can use my phone and my card instead. It gives them an alternative to cash. I don’t have to take cash and transfer it to my friend who is somewhere else; I can send it either via mobile money or through a bank account.” I therefore think the policy is really helping, but there is still a lot of work that needs to be done to make it successful. As the appropriate infrastructure is rolled out, it will make it easy for people to use alternative electronic methods for making/receiving payments. Then hopefully we will see a big shift from cash-based transactions to electronic transactions.
What role has EFInA played in driving the cashless policy?
The cashless policy was developed and implemented by the Central Bank of Nigeria (CBN). EFInA’s role is to try and make sure that the policy is communicated effectively, so that the general public fully understands the benefits of the policy, and are aware of the range of electronic products that are available. In addition, we will try and measure the impact of the policy – Is it working? What isn’t working? What are the challenges?
At EFInA, having been able to measure the impact of the policy, what would you advise the regulators such as the Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) to do to ensure that it gains more traction?
The CBN is doing some work on minimising fraud related issues pertaining to electronic payments; I think that information needs to be widely disseminated. What should you do if fraud happens? Where should you go? How should you complain? What are the issues and how do you go about it to get it addressed? I think if the CBN can communicate a lot more about the work they are doing around these issues, it will help to improve people’s confidence in electronic payments. Regarding the role of the NCC, many of the issues people complained about included network challenges and system failures. In a related vein, the Commission asked three of the four telecom providers to stop selling SIM cards in March so that they can improve their service levels. I think as the telecom providers strive to improve service delivery, the impact will be that the network will be better and people will have more confidence because it is one thing to have confidence in mobile money and another thing to make a mobile money payment where the recipient says, “I did not receive it.” There is currently no way a sender can say, “Can I verify whether you are being mischievous, that you received it but you are telling me you didn’t; or whether you actually did not receive it?” This is where the issue of “Okay let me just wait and see; I don’t want to use mobile money because I don’t know if the person is telling the truth or it is a network-related issue.” Another instance is you send it and then it goes twice and the recipient says he didn’t receive it, only to cash-out twice. These are some of the issues we just need to address.
What do you think about the uptake of mobile money in Nigeria?
I think the uptake of mobile money is gaining traction. However, more needs to be done to increase awareness of the different products and services that customers can use through mobile money and the benefits of using them. That is the next phase now. I think mobile money operators and the regulators should collaborate to undertake more informative consumer campaigns, so as to improve the level of uptake and usage of mobile money.
What are some of the benefits consumers will derive from the use of mobile money?
They don’t have to deal with cash all the time. It is an easy way to transfer money. It is convenient and flexible, as long as the experience of using mobile money is made easy. So if I want to transfer money or pay a bill, I can do it from my house without having to join a queue in a bank or go to an agent to pay it. It is a convenient way of doing things. For instance, if I get home and I suddenly remember “Oh it’s late, I forgot to pay my bill and I want to watch something on DStv, but I can still pay using mobile money.” So I think it is the convenience that we need to push to encourage wider usage of mobile money. To drive the uptake, we need to be able to use mobile money to pay for a range of services, such as bus fares, school fees, airline tickets, etc. We would start to see traction when I can go to a shop and pay with my mobile money, or my card, or cash.
Lack of trust and lack of reliable GSM network are said to be part of the challenges affecting the use of mobile money by the consumers. What’s your take on this?
I think it is up to the mobile money operators to address these misconceptions. For example, people think that their money will perhaps disappear if they lose their phones, which is not the case. To build trust in using mobile money requires effective communication and marketing by mobile money operators.
Would you say that financial inclusion in Nigeria has seen significant growth in the last few years?
Nigeria has a very strong commitment to financial inclusion and that is reflected in a lot of new policies that the government and CBN have issued in the last few years. The cashless policy is also another instrument for deepening financial inclusion. In 2008, the EFInA Access to Financial Services in Nigeria survey revealed that 20.4 million Nigerian adults had access to formal financial services; this figure had grown to 37.8 million in 2012. I think the challenge now is to provide good access to a range of financial products/services to the under-served, particularly those people in the rural areas, with low levels of literacy and numeracy.
EFInA is at the vanguard of promoting financial inclusion in Nigeria, what are the things you planned to do going forward to promote this?
We have done a lot work to ensure that regulators have implemented policies that help to enable financial inclusion in Nigeria. Our research is widely used by regulators as evidence to develop financial inclusion policies, and by providers to develop innovative financial products and services. We have also provided grants to organisations to develop relevant products and services targeted at the low income segment. We will continue to use all our existing pillars which are research, innovation funding, advocacy and capacity building to promote financial inclusion in Nigeria. We will try and measure the impact of some of the key financial inclusion policies to understand what has worked, what isn’t working and what needs to be fine-tuned so that we can ensure that the policies are effective. We will also continue to build the capacity of the financial industry by providing data to really let them understand what the customers want and need. You cannot develop products without understanding how the customer is going to use it and the benefits to them; because once you develop a product that fits people’s needs they will use it.
We will need to support a diverse range of financial institutions to provide a range of products, such as insurance and pensions to the unbanked and under-served population. For example, the National Pension Commission (PenCom) is investigating the feasibility of expanding the Contributory Pension Scheme to the informal sector and we ask: “What is the best way of doing that? What is the best way of collecting their payments? Is there a role for mobile money?” We really need to think about how we can use mobile phones as a platform for delivery of a wide range of financial products. We also need more agent locations, especially in the rural areas so that they have more financial access points, points where they can conduct financial transactions. So that people who don’t necessarily feel confident undertaking the transactions themselves can go somewhere close to their homes or where they work. EFInA will focus on deploying agent networks at scale in Nigeria over the next two to three years.
We will continue to work with a diverse range of stakeholders and regulators such as PenCom, NDIC, NAICOM and SEC in order to embed financial inclusion and institutionalise it in as many organisations as possible. This will help to ensure that the National Financial Inclusion Strategy target of only 20 percent of the adult population being financially excluded by 2020 is achieved.
Now, especially in the rural areas, illiteracy is very high and that is one the challenges hindering financial inclusion. What can be done to capture these many unbanked rural dwellers and those who are in the urban areas too?
We are encouraging financial services providers to think about using pictures rather than text in their promotional literature. In addition, providers should consider using interactive voice response applications which should incorporate all the key local dialects.
This whole talk about e-payments, mobile money and cashless policy, how will it impact on the economy of the nation?
The CBN introduced the cashless policy for the following main reasons – to drive the development and modernisation of the payment system; to reduce the cost of banking services (including the cost of printing money); and to improve the effectiveness of monetary policy in managing inflation and driving economic growth. It is well known that an efficient and modern payment system is a key enabler for economic development and growth.
