Regulatory Flexibility and Agency Banking Will Enhance Financial Inclusion in Nigeria - Henry Chukwu

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Wednesday, May 13, 2020 / 2:39 PM / Bukola Akinyele for WebTV / Header Image Credit: Ecographics

 

The Programme Specialist for Enhancing Financial Innovation and Access (EfinA), Mr. Henry Chukwu, recently spoke on the prospect of deepening Financial Inclusion in Nigeria as a guest speaker on WebTV's Economy and Politics Show.


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Chukwu said that Financial Services Agents spread across the country need continuous support from financial institutions to carry out their duties effectively.


Speaking on how COVID-19 has affected Nigeria's 2020 financial inclusion target at a 20% exclusion rate,  Chukwu disclosed that the pandemic has affected the actualization of the target as the country is less likely to achieve its inclusion goal by the end of the year. According to him, the spread of the virus affects the lower rung of businesses and jobs that rely on daily business to earn income.


Sharing his thoughts on the EfinA Access financial survey 2018, he said that out of 44.3million adults that owned businesses about 23million adults earned income from daily activities. Looking at this figure and considering the restrictions on movement and enterprise placed by the government a lot of these individuals have  had their livelihoods disrupted and become financially excluded.


Looking back to 2016-2018 the excluded population declined by 8.23%  from  40.1million adults excluded in 2016 to 36.8million adults excluded in 2018 the percentage decline within 2 years shows it would be difficult to reduce the 16.8% difference between the target of 20% by 2020 and the current 36.8%.


According to him, EfinA's focus is to build resilience in financial service providers such as agents and individuals needed to combat the effects of COVID-19, EfinA would put a lot of effort into providing credible information that could support financial service providers within the period.


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Speaking further, Chukwu explained that EfinA had worked very closely with the Shared Agent Network Expansion Facilities (SANEF) and other stakeholders to understand and identify opportunities of harmonizing efforts and continuing to deepen access to financial services in Nigeria.


He commended the Central Bank of Nigeria (CBN) for commencing several initiatives such as the 50billion credit facility to support individual households affected by COVID-19 and the reduction of the interest rate on government intervention loans from 9% to 5%.


In respect of the challenges faced by financial services company's in supporting inclusion, he said the major challenge was the low level of economic activity which had cost several jobs and livelihoods.


He was of the view that despite the challenges there was still an opportunity for the industry to leverage the palliative measures provided by the federal and state governments to deepen financial inclusion, drive account opening, increase financial literacy, improve financial capability among beneficiaries while also driving financial inclusion in the country.


Speaking on what needs to be done to extend palliatives to the informal sector and financial service agencies. Chukwu noted that there was a need to use the resilience of agency activities, and enlighten them on precautionary measures to prevent poor business choices whilst promoting collaboration to generate business activities that would support transactions.


Giving insight into the breadth of Agency banking in all 774 local governments in the country,  Chukwu said the only channel that ould be used to extend financial services to the LGAs was through agents and this was the time for agency banking to adopt appropriate strategies to deepen the deployment of the agent network in rural areas to continue to provide business. He noted that EFINA was working variously with SANEF, stakeholders and service providers to see how they could support agents and identify problems within the industry. He said Post COVID-19,  there was a need for sustained activities to reassure agents of commitment to support them.


Speaking on the interaction with the Fintech Community, according to him, the Fintech community was very critical to financial inclusion by providing innovative ideas to support the expansion of services. "We have seen a lot of opportunities around Fintech and we would continue to engage and support them to come up with initiatives that ould deepen financial inclusion", Chukwu said.


On how to improve women's financial inclusion, Chukwu believed that women had a huge role to play in terms of driving financial inclusion and promoting overall improvement in the household economy.


He said EFINA partnered with Central Bank of Nigeria (CBN) to understand inclusion among women looking at the women exclusion rate of 55%. Chukwu noted that  EfinA tried to understand the factors that affected women financial inclusion in the country and how best to improve the conditions that promote increased women participation.


He encourages more women to become financial activity, he noted that in the North West 65% of women were financial excluded and in the North East 68% of women were financial excluded.


Speaking on deepening financial literacy in Nigeria, Chukwu observed that financial literacy was very important for EfinA, the organisation works closely with other stakeholders to drive financial literacy. He said that by deepening financial literacy, individuals would have the proper set of knowledge and skills to grow their businesses and make positive contribution to the economy at large.


He called for regulatory flexibility post-COVID-19 to ensure consumer protection and also the National Insurance Commission (NAICOM) to push for the adoption of Microinsurance which was very important especially for low-income enterprises and individuals. 


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