As the government and other stakeholders are stepping up efforts to deepen financial inclusion in Nigeria, many entrepreneurs are now providing financial services through Point of Sale terminals amid growing demand, RAHEEMAH AROGUNDADE writes
Globally, countries are striving to achieve an inclusive financial sector, as it has been proven that overall access to financial services contributes significantly to economic growth, specifically in the areas of poverty reduction, wealth creation, employment generation and improved standard of living.
It, therefore, becomes imperative for policy makers to create an enabling financial structure that caters for the demand and supply of financial services by the unbanked and underbanked, especially in this part of the world. Those mostly excluded from financial services are the poor and rural dwellers because of lack of access, financial illiteracy or lack of information.
A survey conducted by Enhancing Financial Innovation and Access in Nigeria in 2008 revealed that more than half of the adult population were excluded from financial services.
By 2010, Nigeria’s financial exclusion rate dropped from 53 per cent to 46.3 per cent. Spurred by this development, the Central Bank of Nigeria and major stakeholders in the country initiated the National Financial Inclusion Strategy to reduce the exclusion rate to 20 per cent by 2020.
Progress
To achieve this goal, there is a need for an improvement in the channels through which financial services will be deployed. For instance, deposit bank branches are to increase from 6.8 units per 100,000 adults in 2010 to 7.6 units in 2020. Likewise, microfinance bank branches are to increase from 2.9 units to 5.5 units, Automated Teller Machines to increase from 11.8 units to 203.6 units, POS terminals from 13.3 units to 850 units, and mobile agents from zero to 62 units. In addition, the major structures and measures put in place to achieve this include agent banking, financial literacy, consumer protection and credit enhancement programmes.
The implementation of this strategy has brought about a decline in financial exclusion in Nigeria, thereby improving financial inclusion in the past years. EFInA, in its 2018 survey of the Nigerian financial system, recorded a major boost in financial inclusion within the country when compared to previous years. The survey showed that the number of people who now have access to financial services has increased to 63.6 per cent, while only 36.4 per cent are financially excluded.
The indicators upon which the survey was conducted include banked population, savings, remittances, payments, loans and banking agents.
According to the survey, digital payments increased to 16 per cent. An increase from 5,000 monthly volume in 2011 to 30 million in 2018 became visible in the quantity of card transactions on POS, as reported by the director of Nigeria Inter-Bank Settlement System.
There has also been an increase in the quantity of installed POS terminals, from 10,000 in 2011 to 200,000 in 2018 – an indication that the measures put in place are productive.
Investigations by Financial Street revealed a widespread increase in digital payment systems and POS usage through agent banking.
A customer simply identified as Segun said, “I use the POS very well. And I don’t have to go to the bank regularly.”
He explained that he would go directly to the POS terminal from his house, which is just a stone’s throw away.
According to him, the stress people go through in banks, the wait in long queues and the distance of the bank to his house usually discourage him from visiting the bank.
Another customer explained that the cost of transport from her house to the bank was the same cost she would incur as charges for using POS by her doorstep.
Opportunities
Agent banking is not just restricted to POS terminals. According to the CBN, it involves the delivery of banking services outside traditional bank branches through additional touch points such as existing retail stores and petrol stations or via technology such as PoS devices and mobile phones.
Apart from those who use mobile devices, the POS terminal is perhaps the most common alternative for people to perform basic transactions like withdrawal, deposit, transfer and activation of subscriptions in Nigeria today.
It not only offers ease of access and convenience to people within a locality, it also serves as an avenue for entrepreneurship, which also benefits the agents.
“The POS terminals help people avoid long queues at the bank. Often, people have complained of waiting for hours to use ATMs and when it was their turn, the machine began to say, ‘Unable to dispense cash.’ We also help provide easy access to money anytime people need it. These are the major reasons people prefer to use our terminals rather than the ATMs. This method is more reliable and time-saving. Also, it is another means of earning money,” Ms Abiodun Adetona, a First Bank of Nigeria money agent, told Financial Street.
She explained that her business was similar to all other forms of POS agencies, adding that the only difference was that the POS terminal was issued directly from her bank.
Another money agent, Ms Olubote Tolulope, noted that the money agents take the stress of going to the bank away from people.
“There is no need to wait on long queues. Here, we cash in and cash out immediately. People avoid going to the banks for a lot of reasons; some because of the tedious documentation process. For others, it could be distance or stress, compared to the convenience of performing those transactions in their neighbourhood.”
Mrs Gloria Oloyede noted that POS was introduced to aid the cashless policy initiative of the Nigerian government.
Describing it as a welcome development, she said, “It helps people reduce the rate at which they hold cash, which makes them prone to attack from robbers.”
According to her, the POS allows people to get what they want at any time, even when there is no cash at hand.
“The major reason people don’t go to banks is the distance and cost of transport. Their preference for POS is because it saves them time.”
For her, being an agent is an addition to her other business, as it helps to prevent people from buying on credit.
“Some people would say, ‘I have to go to the bank so I can pay you.’ With POS, you have your bank with you, which is the ATM; so, buying on credit is being discouraged.”
Challenges
Financial Street gathered that the major challenge faced by agents is the network.
“When the network is down, most POS (terminals) do not function. Debits will occur in the client’s account, but we won’t be credited. So we can’t cash out money to such customer,” an agent said.
He advised banks to work on reverting money into a customer’s account within 24 hours in cases of false debits, to reduce the complaints and accusations from the clients.
“Due to this bad network, I incurred a loss of N15,000. I did transfer for someone and the POS went blank. The person had left before I received a debit alert in my account. Unfortunately, the customer didn’t give me money. I tried to reach out to him, but till now, he has not responded,” Abiodun said.
Banking through POS agents and other agents has been helpful in reducing financial exclusion in Nigeria. It doesn’t just serve as a way of easing access to basic financial services, it also creates jobs.
“You don’t need money to start. All you need is to open a bank account if you own a business and request for POS, and you will be given. You don’t even need money to get it,” Oloyede explained.
