Shrinking the gap between the banked and the unbaked in Africa has become a priority for the government, and no country can attain the desired economic growth without nearly all its citizenry having a bank account.
Ceyla Pazarbasioglu, Director of the Strategy, Policy, and Review Department (SPR) of the International Monetary Fund (IMF) once said The Fund was not going to eradicate poverty unless “the world has financial inclusion.”
“You have good finance, bad finance, and ugly finance. . . You need to make sure it serves citizens, the SMEs [small and medium-sized enterprises], and not just the banker, or the wealthy, or the chosen few,” she added.
Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.
According to EFInA, a total of 38.60 percent of the adult population or about 37 million adults in Nigeria were financially excluded in 2017 while the World Bank estimates that 40 percent people are unbanked; and this translates to 63 million adults without any form of account.
Egypt, for example, the share of people aged 15 and over with an account at a financial institution rose from 13.7 per cent in 2014 to 33 per cent in 2017. That compares with well above 90 per cent in advanced economies.
Globally, there were still 1.7 billion adults in the world without an account at a financial institution or a mobile money provider, according to the latest Global Findex database published by the World Bank.
The 2019/2020 Nigerian living standards survey released by the National Bureau of Statistics, NBS, shows that 82.9million (40.1 per cent) Nigerians are poor.
Little wonder the country has overtaken India to become the poverty capital of the world as the unemployment rate is now 33.25 percent while the Misery Index stands at 50.35 percent.
The Central Bank of Nigeria (CBN) had set an overambitious target of achieving 80 percent inclusion by 2020, but the regulator is now saying it will attain 95 percent financial inclusion by 2024.
Experts have identified lack of required documentation, lack of financial literacy, and lack of close transparency service point as the major impediments to deepening inclusion in Nigeria.
A study from InterMedia and the Bill & Melinda Gates Foundation reports that only 79 percent of Nigerian adults possess the documents needed to register for mobile money or a bank account, making the lack of required documentation arguably one of the biggest challenges facing financial inclusion in Nigeria.
It is worthy to note that some farmers and traders, especially in the rural areas, still starch cash at their backyards, some under their beds, as they bemoan the long distances they have to trek to get to a bank.
There is light at the end of the tunnel for Nigeria as Airtel Africa Plc is using its Mobile Money to help foster entrepreneurship and lower unemployment among the country’s burgeoning population.
With a subscriber base of over 120 million customers, retail footprint across major nooks and crannies of Nigeria and other African countries, Airtel intends to leverage its distribution to drive financial inclusion amongst the unbanked and financially excluded.
Mobile money is a technology that allows people to receive, store and spend money using a mobile phone. There are more than 270 different mobile money services around the world, although they are most popular in Africa, Asia and Latin America.
The Airtel Payments Bank has products such as Airtel Money which allows customers to recharge, pay bills, and shop online. It has 21.70 million mobile users across the continent, and 1.8 million retail touchpoints (48,000 exclusive retail touchpoints, including minishops, kiosks and Airtel Money branches).
The telco giant has an efficient strategic collaboration with regional and international partners for financial and money transfer services.
“We continue to drive the growth of digital financial services on the continent, thereby serving the wider purpose of extending financial inclusion to people who have been left untouched by traditional banking,” said Raghunath Mandava, chief executive officer of Airtel Africa.
“We have a clear strategy to continue to drive sustainable long-term growth in Airtel Money with a focus on assured float availability, distribution reach and increased use cases for our customers. Higher float availability in the farthest corners of our markets is helping more individuals, small traders and businesses to adopt mobile money for their daily business needs,” said Mandava.
In August 2021, the telecoms giant secured another $200 million for its mobile money Business-Airtel Mobile Commerce BV, AMC BV- which brought total investment to $500 million.
If Airtel is licensed as a payment service bank (PSB) by the regulator, it will be in a much more advantageous position to take leverage on Nigeria’s fast-growing smartphone users and ensure financial services reach those in the rural areas.
PSBs are envisioned to facilitate high-volume low-value transactions in remittance services, micro-savings and withdrawal services in a secured technology-driven environment to further deepen financial inclusion and help in attaining the policy objective of 20 per cent exclusion rate by 2020.
Currently, there are between 25 and 40 smartphone users in Nigeria at the moment, and the number is expected to soar to 143 million by 2025, according to number 1 global platform, Statista.com.
The continued investment by Airtel in 4G infrastructure across a broad spectrum indicates it is poised to increase its share of the market and that the future is propitious given the expectation of rising population or favorable demographics in Nigeria, Africa’s most populous nation.
Telcos and financial technology companies (FINTECH) are in the front line of digitalization, taking the shine off the traditional banks.
Between 2014 and 2019, Nigeria’s bustling fintech scene raised more than $600 million in funding, attracting 25 percent ($122 million) of the $491.6 million raised by African tech startups in 2019 alone—second only to Kenya, which attracted $149 million.
“Our continued focus on modernisation and rollout of our network, along with simplifying our products and improving our distribution, have all helped us to make handsome gains on our ARPUs across voice, data and mobile money. Our robust operating model and solid execution should enable us to continue our profitable growth,” said Mandava.
“We continue to see huge potential across voice, data and mobile money due to the low penetration levels in Africa, as we continue to partner the nations in bridging the digital divide and enhancing financial inclusion. We remain committed to continue to efficiently and effectively deliver services that help to improve the lives, communities and economies we serve,” summed Mandava.