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Deposit Money Banks (DMBs) and their Impacts on Financial Inclusion

The level of access to bank branches across the country was determined by the number of branches per 100,000 adults. The target for the year under review was 7.31 while the actual result achieved was 5.9 (about 81 percent of the target) as at September 2014. Access to Bank branches has been one of the major barriers to financial inclusion because bank branches are concentrated in urban centres to the disadvantage of rural and semi-urban dwellers. Product complexity and cost of service are other major barriers to financial inclusion. In a drive to bring bank services close to the people, the CBN launched the Agent Banking guidelines 2012. Some banks have bought into this framework already, by opening agent locations in under-served areas, but the roll out of agent banking has been very slow.

Mobile Money Operators

The number of Mobile Money Agents serving 100,000 adult was 80.7 in 2014. This outperformed the target of 20.02 per 100,000 for the year. The main driver of this strategy was the implementation of the Regulatory Framework for Mobile Money released in 2009. As at 2014, there were a total of 21 Mobile Money Operators (MMOs) licensed to conduct business in Nigeria. The CBN adopted the Bank-led and the Non-Bank led models in the implementation of the Mobile Money scheme. The scheme, which is in its formative stage was faced with a number of challenges, which included:

• Inadequate capital outlay on the part of the MMOs

• Basic infrastructural challenges – power, telecommunications network etc.

• Lack of awareness/customer education which has slowed down the adoption rate

• Lack of wide-spread agent network. Apart from being concentrated at the urban areas at the moment, they are grossly inadequate thus inhibiting financial inclusion.

• Interoperability and inter connectivity yet to be fully achieved among all networks

Mobile Payments Framework

The Central Bank of Nigeria implements a Mobile Banking Framework in collaboration with the deposit money banks, payment service providers and other stakeholders. Under the existing guidelines, a total of 21 mobile money operators’ licenses have been issued by the CBN. Due to the low uptake of Mobile Financial Services in rural areas as a result of a lack of agent network, the Bank is currently looking at exploring an amendment of the Agent Banking Guidelines to allow the TELCOS and any other interested entities to build and manage a Shared Agent Network (SAN).

As part of the mobile payment initiative, a robust framework, ‘the Nigeria Agriculture Payment Initiative (NAPI)’ has been developed by the Federal Ministry of Agriculture and Rural Development. The primary purpose of NAPI is the provision of an end-to-end payment system for the agricultural sector. It leverages on the existing agriculture wallet infrastructure Growth Enhance Scheme (GES) and Bank of Agriculture (BOA) wallets to ensure seamless flow of payments within, across, and amongst all the NAPI participants. NAPI rests on 4 foundations: identity; financial inclusion through wallet services; association of farmer with a location/group/cluster; and linkage to relevant services and markets and facilitates payments among stakeholders through the mobile wallet.

See Frequently Asked Questions on Financial Inclusion