Nigeria is working to promote financial inclusion by making the most of its digital opportunities
by Bethan Rees
In Nigeria, different sectors are collaborating to facilitate financial inclusion in the country. Writing for Reuters, Alexis Akwagyiram reports that a subsidiary of MTN Nigeria, a telecoms firm, has been given a licence by the Central Bank of Nigeria to provide financial services. This allows the subsidiary, Yello Digital Financial Services (YDFS), and others with the same licence, to extend access to financial services to all of the Nigerian population.
This will allow telecoms companies to provide banking services, which could help millions who don’t have access to bank accounts to obtain mobile money services. Kenya has already been successful in adopting this policy, according to Akwagyiram.
MTN Nigeria’s CEO Ferdi Moolman said: “Through the network established by YDFS, MTN is in a position to broaden the availability of financial services for the under-served across the country. This marks a very important first step in leveraging our infrastructure to scale our fintech initiatives.”
Digital opportunities in Nigeria
Digital banking plays an important role in Nigeria, as fintechs and retail banks work more closely together to “solve issues in an exciting and modern way”, says Desola Ososami writing for Stears Business.
Ososami references an article from the Nigerian newspaper that states that only 30% of adults in Nigeria have a formal bank account, highlighting the issue of financial inclusion in the country. “Digital innovation in banking is one avenue to tackle this problem, and Nigerian banks are successfully venturing into the digital realm of mobile banking to do so,” she writes.
There are examples of successful mobile money banks, such as Bank 737, which allow customers to make payments without access to the internet through unstructured supplementary service data (USSD) codes, a text-based communication. Ososami explains: “This type of banking tailors to financially excluded demographics in Nigeria who possess low literacy levels and are often under-identified.”
Nigeria’s younger population requires better financial services too, according to Ososami. She points to statistics including that there are more than 100 million internet users in Nigeria and the median age of the population is 18.4 years old. “This pinpoints the need for banks to anticipate a booming demand for internet banking services amongst young entrepreneurs and professionals seeking to manage their money with ease and speed,” she writes.
She also references the growing middle-class population of Nigeria who, according to Ososami, account for 23% of the population. She writes: “This is a group with growing spending power, which comes with the need to easily manage their finances and connect their growing capital to better investment opportunities.”
Stears Business article
Islamic finance upgrade
Digital disruption in Nigeria is extending to its Islamic finance sector too, according to Megha Bhattacharya for IBS Intelligence. Path Solutions, an Islamic banking software company, has announced that Jaiz Bank, a Nigerian Islamic bank, upgraded its Islamic core banking platform to enable innovation that will meet evolving customers’ needs.
Bhattacharya quotes Mohammed Kateeb, group chairman and CEO of Path Solutions, who says that the upgrade will “empower our clients to be future-ready, given the digital disruption that we are facing”.
She also quotes Hassan Usman, managing director of Jaiz Bank, who says, “With the new Sharia-compliant core banking platform, our customers will benefit from the best practices and enhanced features that Path Solutions has invested in the software.”
IBS Intelligence article
What else can be done to promote financial inclusion in Nigeria? Leave your comments below.
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