The Importance Of Partnerships And Collaboration In Financial Inclusion

Financial Inclusion Today with BusinessDay analysts; Patrick Atuanya, Bala Augie, Lolade Akinmurele and Endurance Okafor, and anchored by Lehlé Baldé

 

Addressing issues surrounding partnership and collaboration as a way to help achieve the set financial inclusion target by the Central Bank of Nigeria (CBN), which involves all stakeholders working together in order to bring in more Nigerians into the financial circle.

Yewande Adewusi, a consultant, with a strong financial inclusion background from both Airtel Nigeria and EFInA, the Enhancing Financial Innovation & Access organisation, cited out challenges and the ways to go for collaboration to be possible between telecoms, fintechs and the banks.

On the major hindrance to collaboration, she said the central bank mobile payment policy  that specifically states that mobile money services can be run by banks and non-bank operators excluding mobile network providers, and that she said ,this is the biggest challenge.

“There is a situation where by some models in certain markets are actually led by techos, that is not concluding that it has to be led by techos but you can see the advantages of tech involvement in achieving skill and reach,” Adewusi said.

Meanwhile, the CBN has a set target to include 80 percent of Nigerians into the financial circle by the year 2020, thereby reducing the number of the citizens without access to financial services and product to 20 percent by the same year.

Although, that goal seems threatened considering the financial inclusion performance of Africa’s largest economy in the World Banks’ Global Findex Database released 19, April 2018.

According to the report, Nigerian adults who are 25 years and above with bank accounts declined by 5 basis points from 49 percent in 2014 to 44 percent in 2017.

This was not different with account holders over 15 years, as their numbers fell 4 percentage points from 44 percent in 2014 to 40 percent in 2017.

“So before now, I thought if CBN is not achieving the targets, surely they are going to say techos will come into play but I was in Airtel for nearly five years and I did not see that happen so in my opinion I said if we cannot be able to owe a license, then partnership is the only way to go,” the guest said.

She however pointed out that financial inclusion sector should not be seen as a Corporate Social Responsibility (CSR) and that also the sector is not a very quick return kind of business and such a patient capital is required.

So on the way to go, she said partnership, as this will make it easier to provide patient capital.

“The partnership could include; the banks, techos, the small fintech start-ups; start-ups that have got an amazing product because the advantages of fintech start-ups is that they are innovative, willing to take risk and they are very nibble, as supposed to thinking of product development in a bank, which would take time, considering risk management, MD requesting ROY of the product and the regulator also asking if the product will cause risk to the financial sector,etc,” Adewusi added,

Yewande Adewusi,Financial Inclusion Consultant

 

The financial inclusion consultant said if the banks, techos and fintech work together, they we have the skills, the advantages of different entities coming into play, and with all of them working together, it will make achieving the financial goal easier.

As at the time Nigeria was considering the optimal approach needed to leverage new, innovative technology to deliver financial services to its people, the Central Bank analysed in some detail how to structure the guidelines and the regulatory environment to deliver the benefits on offer, without compromising the integrity of the financial system.

Africa’s largest economy needed to see how the regulation of mobile money could evolve owning to significant volumes of currency that could be circulating in mobile wallets, and may not be visible to the regulatory authorities.

As such it was clear that a better balance between the market and the regulatory structures was required.

Meanwhile since then there has been an explosion in mobile money wallet usage in Kenya and other Africa peers, the Nigeria’s CBN was rather focused on an independent bank led model that would supplement and support the existing banking system, as compiled from a BusinessDay survey.

“The central bank in its policy, compared to certain markets is very hands-on in the Nigerian market, as it is not very ‘go forth and try and see’ it’s very ‘this is the policy, this is what you can do and this is what you cannot do and do not deviate from that”.

This she said can be hard if you are trying to innovate because there is no real answer and if one is stringent in the beginning when thinking out the solution, it will mean confining one’s self.

The key challenges in the collaboration of both banks and techos as mentioned by the consultant were; “Who owes the customers? Who owes the infrastructure? Who is spending what well?”.

In the way to go for the CBN in achieving its set 80 percent financial inclusion target by 2020, Adewusi said there have to be some consistency in the policy, as this is very important, and as such if a policy is implemented, it should be left to stick for a while because that will build trust in the players, in terms of constant regulatory environment but if otherwise, people are going to hold back their investment for the fear of CBN changing its policies.

The CBN, also has to be able to work with their regulatory counterparts, which are the telecom regulators and those of the fintech.

She however stated that the CBN seem consistent these days, compared to the early days when it was not.

On the policy that could serve as catalyst to including more Nigerians into the financial circle, she said agency banking could be the way as it could also involve techos.

Adewusi, recommended  that the CBN  allow people to develop different models that will work for them but should be on the watch on when to tighten it because of consumers protection and financial system sustainability, however should loosen up on trying new models as they would not know the one that best work for Nigeria.

She was nevertheless optimistic about achieving the set 80 percent target but stressed on the CBN to achieve it.

“The Nigeria apex bank would have to do something radical and as such trying out loosed policy and not locking down kind of policy, introduction of new products and different channels of distribution that will add different and better value to consumers should be the way to help achieve the financial inclusion goal,” Adewusi concluded.

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