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Leveraging financial inclusion opportunities to drive e-payment

By Babajide Komolafe
The e-payment industry needs to adopt financial inclusion as a strategy for driving growth and profitability.
This is the consensus of experts at the 3rd annual conference of Committee of E-Banking Industry Heads (CeBIH) held in Uyo, Akwa Ibom state.

The conference focussed on the need to maintain the impressive growth recorded by electronic payment courtesy of the cashless policy of the Central Bank of Nigeria (CBN).  This was aptly captured by the theme of the conference, “E-payment Systems: Harnessing opportunities for growth and profitability.

“The theme is in line with realities of today as banks in Nigeria are constantly seeking for ways to grow the use of electronic channels in a sustainable way”, commented Chuks Iku, CeBIH Chairman. “But our goal in CeBIH is to promote adoption and usage of electronic channels in a way that will bring about financial inclusion of the un-banked and under-banked,” he added.

“Are there opportunities for growth? Yes. Are we harnessing these opportunities for growth? Maybe, said Christabel Onyejekwe, Executive Director, Nigeria Inter-Bank Settlement System Plc.
In a keynote address which set the stage for discussions at the conference, Onyejekwe pointed to the huge number of people outside the financial system as one of the opportunities that needs to be harnessed for growth.

She said, “Only 28 per cent of our registered PoS are active. This is a meagre 31, 000 active PoS out of the 158,000 out there, yet we have not even gone cashless across Nigeria. Less than 20 per cent of rural Nigerians have been reached by the mobile money operators (MMOs) and more than 45 per cent of Nigerians are yet to be banked. These are veritable sources of growth and development for us as a whole and we believe that the PoS business can be improved more, mobile payment we can deepen more and revitalised, and our drive for financial inclusion must be re-energised.”

This position was emphasised by Robin Hofmeister, a payment specialists with the World Bank.  Speaking on “Driving E-Payments and Financial Inclusion through Branchless Banking”, he identified branchless banking as an effective tool of reaching millions of the under-banked and unbanked with electronic payment channels. Defining branchless banking as the delivery of financial services outside conventional bank branches using information and communications technologies and retail agents, he stressed the importance of mobile phones as one of the most effective means of delivering e-payment to the unbanked.

He pointed out the fact that 79 million Nigerians had access to a mobile phone compared to 27 million banked Nigerians, arguing that with the right mobile money framework, mobile phones can be used to deliver banking services to more people.
The use of mobile phones and retail agents to deliver electronic payment services to the unbanked was demonstrated by Frederik Eijkman, Founding Director, PEP Intermedius, Kenya

He said PEP started as a small microfinance institution in 2004, and  today has become a financial supermarket which acts for multiple money transfer services, bill-pay partners, international remittance services, lottery agencies, government payment services amongst others. “The result is that PEP currently offers a broad spectrum of payment services, making it the ideal transaction destination for both private as business customers”, he said.

He pointed out that the company achieved this through agency banking based on the developmental needs of the under-banked. “PEP currently operates 200 stores in three different formats:
Supermarket consisting of  33 “shop-in-shop” outlets, 17 in Nairobi and 16 in  urban area; PEP stores consisting  7 stores, 4 in rural areas and 3 in urban areas);  Franchise agents consisting of  160 stores, 80 per cent in  rural areas and 20 per cent in urban  areas). He said as at October 2013, this network of agents deliver 12,000 transactions per day valued at $750,000, with average transaction per size of  $65”.

To successful operate agency banking,  Eijkman said that there is need for a super agent, which will manage other agents, while sound business proposition must be made to the agents. He said most importantly, banks must use existing retail infrastructures, Deliver trust through technology, and use existing deployed technology.
His position was resonated with Duncan Otienno, Chief Executive Officer, Mobikash, Kenya, who averred, “Agency banking cannot work if the banks are far from the people”.

Speaking on “Creating demand pull for mobile financial services: the Kenya example”, he noted that, “Nigeria is still far behind with agency banking. Giving the country’s population, Nigeria needs about 200,000 agents, and they have to collaborate to break even.

But there is also the challenge of awareness about electronic payment. According to Emenike Eleonu, who represented the Director of Banking and Payment System, Central Bank of Nigeria (CBN), lack of awareness is the biggest challenge to the cashless policy initiative, introduced to encourage use of e-payment.

In his address to the conference, which was delivered by the Deputy Governor, Lady Valerie Ebe, Akpabio noted that despite the huge advantages offered by e-payment, Nigerians have not yet realised, and are yet to explore the full benefits of the technological advancement in the banking industry.


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