PSBs as the Key to Driving Financial Inclusion?


Tuesday, November 24, 2020 / 06:23 PM / CSL Research / Header Image Credit: Twitter; @9PSB_ng


News reports say 9PSB, a Payment Service Bank (PSB) recently granted license to operate has commenced operations. Speaking at the launch, the Chief Executive Officer, 9PSP, Branka Mracajac noted that the 9PSB will aid the CBN's financial inclusion goal. According to the report, that the firm has set a target of achieving six million new users in the first year. By dialing *990#, customers can easily open accounts using their mobile numbers as an account number, transact and earn money per transaction, receive instant cashback on airtime purchases, savings proposition and investment opportunities.


The CBN launched its financial inclusion strategy in 2012 with the objective of achieving 80% financial inclusion by 2020. Despite many initiatives promoted by the CBN however to achieve its goal, the inclusion rate has remained below expectations. The CBN came up with the idea of the PSBs to leverage on mobile and digital channels to enhance financial inclusion and stimulate economic activities at the grassroots through the provision of financial services. The key objective of establishing PSBs as stated by the CBN is to enhance financial inclusion by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other financially excluded entities through high volume low-value transactions in a secured technology-driven environment.

The Central Bank of Nigeria (CBN) recently approved three new PSBs. The three PSBs are Hope PSB, a subsidiary of Unified Payments, one of Nigeria's oldest fintech firms; Moneymaster PSB, a subsidiary of Glo, a telecom company; and 9PSB, a subsidiary of 9mobile, a telecom company. Interestingly, MTN, Nigeria's largest Telco does not have a PSB licence. The CBN released guidelines for the operations of PSBs in 2018 and these guide lines were revised by the CBN on 27 August, 2020. Under the guidelines, prospective PSBs are required to pay a non-refundable 500,000 application fee and have a minimum paid-up capital of 5 billion (US$13.2 million).


The PSBs are expected to operate mostly in the rural areas and unbanked locations targeting financially excluded persons, with not less than 25% financial service touch points in such rural areas as defined by the CBN from time to time. PSBs are permitted to accept deposits from individuals and small businesses, carry out payments and remittances services through various channels within Nigeria, sale of foreign currencies realized from inbound cross-border personal remittances to authorized foreign exchange dealers, issue debit and pre-paid cards on its name, operate electronic wallet, render financial advisory services, invest in FGN and CBN securities. The PSBs are not permitted to grant any form of loans, advances and guarantees (directly or indirectly), accept foreign currency deposits, deal in the foreign exchange market except as prescribed, undertake any other transaction which is not prescribed by the set guidelines.


In our view, a major obstacle towards the significant of the contribution of the PSBs to financial inclusion is the restriction of the operation of the PSBs to rural areas and unbanked locations as many of the locations lack adequate power and internet access which are critical for the successful operations of PSBs.

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