Wednesday 11 December 2019
BUSINESS DAY
35
FINANCIAL INCLUSION
& INNOVATION
6 activities shaping future of Nigeria’s financial inclusion deliver financial services especially to the underserved and the financially excluded while players in the Telecommunications industry are expected to obtain the mobile money licence.
Stories by Endurance Okafor
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ith a target to increase the number of Nigerian adults in the financial system from the current 38 million to 100 million in the next five years the Central Bank of Nigeria plans to use both the bank and mobile money-led financial inclusion model. There are five activities of ecosystem stakeholders, especially financial services regulators and other government agencies, which are likely to shape the outlook of financial inclusion in a country where 36 million people are financially excluded. Payment Service Banks (PSBs) Before October 2018 when the apex bank released an exposure draft that requested application from Telcos, retailers and other industry players to apply for Payment Service Bank (PSB) aimed at giving financial access to Nigeria’s excluded population, Nigeria only depended on its bank-led model in driving financial inclusion. Nigeria’s quest to ensure 80 percent of its adult populations are granted financial access by 2020 has largely been driven by its bank-led
Panellists at the 2019 LBS Financial Inclusion Conference which held recently in Lagos
model. While its Africa peers reported growth in financial inclusion through the use of mobile money, Nigeria has been lagging due to its bank led-inclusion model. The latest figures by EFInA put Nigeria’s financial inclusion rate at 63.2 percent, meaning as much as 36.8 percent of adults still lack access. 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. 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 Data by the International Monetary Fund (IMF) revealed that there is positive correlation between financial inclusion and mobile penetration. This suggests that the rollouts of Information and Communications Technology (ICT) could stimulate financial inclusion. The Central Bank recently granted Approvalin-Principle to three PSBs. The PSBs are expected to leverage their distribution network and technology to
Increasing loan-deposit ratio of deposit money banks to 65% In its bid to improve lending to the real sector of the Nigerian economy; the Central Bank of Nigeria mandated all Deposit Money Banks (DMB) to maintain a Loan to Deposit Ratio (LDR) of 65 percent after the September deadline of 60 percent. According to industry analysts, the policy by the apex bank is likely to increase access to formal credit with the potential to attract the under-banked and the unbanked into the formal financial system. CBN’s Cashless policy Nigeria’s apex bank plans to implement the cashless policy in six pilot states and Federal Capital Territory, and there are high hopes from industry sources that it could drive the use of digital channels for financial services and reduce the cost of providing the services by providers in order to financially include the excluded. Stamp duty The collection of N50 stamp
duty charge on every point of sale (PoS) transaction of N,1000 or more is likely to discourage the use of this digital channel, as compiled from industry analysts. According to the players it could negatively affect the critical mass needed by providers to lower cost of providing financial services and boost financial inclusion. Continuing the national social investment programmes The conditional cash transfer (CCT), home grown school feeding programme, a job creation and skills empowerment programme (N-Power) and Government Enterprise and Empowerment Programme (GEEP) which started in 2016 have brought over a million financially excluded into the formal financial system. Financial inclusion is likely to be positively affected as more Nigerians benefit from the programme in the coming years, industry sources have stated. Introduction of micro insurance guidelines It is believed that the initiative will is most likely to boost financial inclusion as it targets low-income Nigerians that constitute the majority of the underserved and financially excluded.
PalmPay introduces Lucky Money: A rewarding way to send money
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almPay, an Africafocused mobile payment start-up said it has introduced Lucky Money, a new money transfer feature on the PalmPay app that allows its customers to win instant rewards for using the app to send money. According to the Fintech Company which recently obtained an Approval-In-Pr inciple for a mobile money license from the Central Bank of Nigeria, the Lucky Money feature was introduced to encourage money transfer in Nigeria. “Instead of getting charged for sending money, you get rewarded. What we are doing at PalmPay is revolutionary, now you can send money with a greeting card attached for special occasions, events or holidays and become lucky by winning instant rewards,” the company said. On how the users of
the mobile App can access Lucky Money, PalmPay explained that Lucky money can be sent to another PalmPay user or someone who does not have the PalmPay app. “When you send Lucky Money, the receiver has to accept your Lucky Money within 48 hours for you to get a chance to play the lucky game to win rewards, if the receiver does not accept Lucky Money after 48 hours of receipt, the sent amount would be returned to the sender. You can also create a Lucky Money link which will allow your friends to claim the money. The link expires after 48 hours or when all the money has been collected,” Palmpay told BusinessDay by mail. According to the company which recently raised $40million in a seed round led by device brand TECNO Mobile, the users of the PalmPay app can send
Lucky Money directly to one or more than one persons in their phone book. Also, the users can create a Lucky Money link which will allow their friends to claim the money. “The Lucky Money link can be shared across social media platforms and the sender gets to play the lucky game with ever yone who claims the Lucky Money,” it said. On how the users can play the Lucky game, PamPay explained that when a user sends Lucky Money and the receiver accepts, such a person will get to play the lucky game. “You can send Lucky Money 3 times per day and there is no limit to how many times you can play the game.” On what can be won as a prize from the game, the Fintech Company explained that : “There are PalmPoints and raffle tickets to be won in the lucky game. The raffle ticket
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qualifies you to participate in the raffle to win a brand new Hyundai xcent car on 15th December and other exciting prizes like mobile phones, generator sets, refrigerator sets, washing machines and more.” PalmPay offers consumers a range of digital services via its mobile application, including transfers, payment of electricity bill, internet sub renewal, DSTV subscriptions, and airtime purchases. Billing itself as “the payment app that rewards you”, its unique selling proposition of offering cashback and discounts to its users has caught on in the pricesensitive Nigerian and Ghanaian markets. In Nigeria, PalmPay is offering 10percent cashback on airtime purchases and bank transfer rates of N10 with free deposits and withdrawals to its mobile wallet. Over a million transactions have been made
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on the platform within its first two months of pilot operations and the company is now eyeing rapid expansion. With the recent launch of its App in Nigeria, PalmPay plans to bring Nigeria’s financially excluded population into a financial world that will make their lives easier, better and more connected. The company plans to give access to both the banked and unbanked population in Nigeria where about 36 million people don’t have access to financial services. Through the wallet on its mobile App, a Nigerian without a bank account can be granted access to financial services including P2P transfers, airtime and bill payment. To be able to do this, the company is building an agent network to facilitate in-person cash in and cash out to its mobile wallet. @Businessdayng
PalmPay plans to leverage the network of 100,000 merchants belonging to Visa, which the company counts as strategic partners. In April 2019, PalmPay announced that it would work together with VISA to roll out innovations in the African digital payments space. Visa cardholders can initiate payments within the app and make online and mobile payments by attaching their card details to their PalmPay profile. Non-card carriers will be able to instantly generate a virtual Visa card upon registration. “Our vision for the app is that PalmPay becomes the one-stop-shop for your digital and financial world and that PalmPay becomes the place to go that has the best choice and offers in the market,” said Greg Reeve, PalmPay Global CEO.