CAN CASH TRANSFER PROGRAMS DEEPEN FINANCIAL INCLUSION IN NIGERIA?

Tochukwu Okwuanya Lagos, Nigeria

In the past five years, I have had boots on the ground in the quest to deepen financial inclusion in Nigeria; first as Agent Network Manager for one of the early Digital Finance Startups in Nigeria, but later as a Product Manager for one of the Mobile Money Operators in Nigeria.

However, in the past two years, I have enjoyed the huge privilege of developing and building technology platforms that facilitated the Cash Transfer programs of both Federal Governments, State Governments and International Non-Governmental organizations.

During the programs, these technology platforms, agency network and processes were useful in delivering both cash and commodities to over 150,000 beneficiaries across 18 states in both online and offline locations.

What I learned from managing these massive projects was that cash transfer programs whether implemented by the government as one of their social investment programs or by International Non-governmental organizations as one of their humanitarian intervention programs, remains Nigeria’s best bet in the quest to deepen financial inclusion.On the one hand, you have hundreds of thousands of people receiving monthly or bi-monthly through agents who have been properly incentivized to take basic financial services to them, on the other hand, these agents are wielding ingenious platforms that unbundled financial services to its necessary bare bones.It would seem that advancing financial inclusion in the current climate is a straightforward ask. The government or the interested private sector participants only need to layer financial services on top of this framework and then, voila! However, organizations have found it rather difficult to appropriately design and deploy a working model that will properly exploit the massive opportunity. Let’s not forget that the backdrop of this critical outcry for financial inclusion in Nigeria is that almost 40% of the country remains financially underserved.

That’s about 70 million people.

It is my informed opinion that cash transfer programs can be leveraged as vehicles to deepen financial inclusion in Nigeria but there are five things I believe that needs to happen.

1. Private Sector should be more daring and do more than paying lip service to financial inclusion drives in Nigeria. Pilot projects layered on cash transfer programs of the governments and International NGOs need to take off to validate or disprove our assumptions. My little interactions with the stakeholders there shows that they are willing to listen to private sector initiatives even if it is profit driven.
2. 2. Regulation needs to be more flexible. In the many locations where the excluded are, some of their characteristics are not best suited for the current regulatory regime. Illiterate, innumerate, price-sensitive yet economically active, a product that speaks to their uniqueness might need unique regulatory attention. I am not asking that regulation be sacrificed, I am only suggesting that they listen deeper. Cash Transfer programs is a huge vehicle as their programs can be used as a template to enforce some standards. NFC, Biometrics and QR Technologies have to be defined again and can be used to reach the hard-to-reach customers.
3. 3. Agent Network needs to be more robust and properly incentivized. I have stated in other fora that Nigeria’s financial inclusion challenges are no longer technology challenges. We currently have a surfeit of digital finance solutions. With Agents visiting all nooks and crannies during Cash transfer programs, certainly, a product can be crafted around their disbursement schedules. Currently some parts of the country have no banks at all and have no means of accessing financial services, certainly those parts will not be averse to having access once every week for a start and then move towards a more steady access.
4. 4. Agents have to also be properly managed. I have found out that managing agents properly is key towards retaining loyalty and driving performance. Fixed location agents needs this close Management as they need to buy into the humanitarian dimension of their job as much as they buy into the business. This is because the business case alone is insufficient towards keeping an agent active.
5. 5. Basic Financial literacy needs to be adopted as part of the programs. The beneficiaries need to be taught how to save their meager funds, invest for growth and insure against shocks. If this doesn’t happen, beneficiaries would never see the reason why they need other financial services beyond withdrawal and consumption.

I remain hugely excited by the prospects of Cash Transfer Programs but it is a lot of work and as experts interested in solutions, we all should embrace it.