E-Financial

‘A mobile Led Risk-based Approach is Crucial to Achieving Financial Inclusion in Africa’

Published

2 years ago

July 30, 2022

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Fintechs that are innovating, operating and growing throughout Africa have moved on from the broad academic concept of financial inclusion to the practical onboarding and walking hand in hand with underserved people along a financial journey.

The first port of call is understanding that serving the underserved is not just about technology. It’s about the human element of dealing with people that are not part of the mainstream financial system; it’s about reaching them and engaging with them where they are and when they need you. Repeat use of a product or service happens when you create products that serve real customer needs.

The world of mobile access has unlocked an ecosystem where mobile channels can sit alongside a predominantly cash economy, and this is vital for meaningful digital inclusion.

If a fintech wishes to onboard people and develop trust, it must be able to do this without forcing customers to take a financial leap to mobile money or a digital store of value. Often, off the bat, it is a bridge too far. Trust needs to be developed first.

At Mukuru, we have utilised mobile digital channels to sit alongside a cash-driven transaction. This is important because 60% to 90% (depending on the region) of payment transactions in Sub-Saharan Africa are still happening in cash. If you attempt to force the move to a digital store of value it is often too much for a financially underserved individual in the region, particularly those who have left their home countries to find work.

Financial inclusion must be seen as a journey, and you start by putting someone in control of their financial destiny without asking them to put their money into something that they don’t yet understand, such as the concept of the cloud.

Our market still operates predominantly on 2G mobile connections, which means that USSD is a critical channel. An effective fintech meets these customers at the touchpoints where they currently transact and then walks them down a path towards understanding mobile use cases.

Once the customer understands that they can control a digital transaction, encouraging them to partake in the world of mobile wallets and digital payments becomes a logical progression.

This is a blueprint for financial inclusion. If we take Mukuru’s experience, and when looking at our 10-million customers and their journeys, by the end of February 2021, up to 90% of our customers were signed up through a field agent.

Despite this, 80% of orders were being created through self-service digital channels: 43% on USSD and 32% on WhatsApp. This is evidence that if you can create products that customers need, and meet them where they are, you can grow them from a face-to-face, field force model into a self-service model where they start taking control of their own financial agenda.

However, there are still millions of people who can’t be reached by field agents. It’s not fair that they should be excluded because they live in remote regions.

They, too, should have access to financial services. A mobile-led risk-based approach represents the solution to finding them and helping them along their financial journeys.

By the very nature of connectivity on this continent, mobile sign-up is a critical entry point to the journey and basic mobile channels need to be available. Fintechs must understand the market, as well as the regulations in various territories, and then address the barriers to sign-up which perpetuate financial exclusion.

Mukuru has taken a dual approach: We look at our core self-service channels and then we look at the limitations of those channels. Due diligence can, and must, be carried out using feature phones, and this allows access to a grassroots product.

Then, when customers upgrade, which they do, they are able to move to a place where they can buy data, use WhatsApp and supply selfies, for example, meaning they can upgrade to a higher-level product. Once they can travel to a city where a field agent can find them, they get access to further product offerings because they can supply biometric and legal identification documents.

Then, if they wish to move up to take out even more products – such as a mobile wallet – the documentation and due diligence requirements go up once more.

The next step up would be feature-rich, self-help services in the form of websites and apps. A big mistake is that many believe you can start the journey on this rung of the ladder. In Mukuru’s experience, in the SADC region, the use of these channels represents about 5% to 8% of total volume.

Fintechs must serve their customers what they need, and they are voting with their feet and fingers – they want to use simplified channels.

Collaboration between regulators is important – for access to identification – and fintechs make this process far easier. The point is that one doesn’t have to swing the door wide open in the first instance because of the very limitations that left people excluded in the first place.

Rather, with a careful, mobile-led, risk-based approach the door can be inched wider until they reach a point where they step into full financial inclusion.

If we look at a Mukuru snapshot in February 2020, 70% of our transactions were cash-to-cash.

In February 2022, we moved to only 49% of those transactions being cash-to-cash, and a digital store of value (which started as a remittance) is becoming a real way of life for a significant portion of the customers who were onboarded through access to a digital channel.

Financial inclusion and verified customer onboarding can, and do, work hand in hand. If you start someone on their financial journey by giving them access to a digital channel rather than forcing them to convert immediately to a digital store of value, you start moving people along a financial journey they can control.

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E-Financial

PenCom, PenOp to Integrate Uncovered Workers into Micro Pension Plan

Published

7 hours ago

November 28, 2024

Chike Onwuegbuchi

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The National Pension Commission (PenCom) and the Pension Operators Association of Nigeria (PenOp) are taking steps to integrate workers who are not currently contributing to the Contributory Pension Scheme (CPS) into the Micro Pension Plan (MPP).

The initiative targets workers without any form of pension coverage, including those who have left previous employers under the CPS but wish to join the MPP.

The MPP is designed to allow self-employed individuals and those working in companies with fewer than three employees to contribute towards a pension for their retirement or in cases of incapacitation. Additionally, pension operators are developing incentives to make the MPP more appealing to potential contributors.

At the micro pension plan industry stakeholders’ engagement forum held in Lagos recently, organized by PenCom and PenOp, the Acting Director-General of PenCom, Omolola Oloworaran, highlighted the critical role of the MPP.

She said the event’s theme: “Reimagining Micro Pension Plan: Balancing Service, Policy, and Health” accurately captures the essence of the MPP as a transformative tool for improving the lives of Nigerians.

To maximise the impact of the MPP, PenCom is embarking on several initiatives like market segmentation, rebranding, advanced technology, incentives and others.

Oloworaran pointed out that with over 77.5 million workers in Nigeria’s informal sector, even a small increase in MPP participation could unlock billions of naira in savings, positively impacting individuals and the wider economy.

In his presentation on the “Overview of the Micro Pension Plan,” Babatunde Alayande, head of the micro pensions department at PenCom, emphasised the importance of providing incentives to make the MPP more attractive and accessible to its target market.

Okhueleigbe John, head of the micro pension unit at Stanbic IBTC Pension, stressed the need for tailored policies to promote the growth of the MPP. He also advocated more financial literacy, public-private partnerships, and innovative funding strategies to drive incentives for the scheme. Additionally, he called for a review of the pricing structure of micro pensions to make them more appealing to investors.

Dr. Shem Ouma of Kenya APSA also provided valuable insights, recommending that operators incorporate built-in benefits, ensure flexible payment systems for contributors, and leverage technology to drive the MPP forward.

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E-Financial

Foreign Transactions on NGX Hit N744.34bn in 10 Months, Up 156% YoY

Published

1 day ago

November 27, 2024

Chike Onwuegbuchi

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NGX has seen a record foreign investor transaction activity, with a 156% YoY increase reaching N744.34. Foreign investors’ transactions on the Nigerian Exchange Limited (NGX) reached a total of N744.34 billion in the first 10 months of 2024, which was an increase by 156 percent Year-on-Year (YoY) when compared to the N291.38 billion recorded in the first 10 months of 2023.

The N744.34 billion foreign investors’ transactions recorded was another all-time high for the Nigerian bourse.

The latest NGX’s “Domestic & Foreign Portfolio Participation in Equity Trading,” for October 2024, revealed that foreign investors contributed about 16.65 percent out of the total transactions of N4.47 trillion reported in the 10 months under review.

The report revealed that foreign investors’ inflow and outflow stood at N344.30 billion and N400.04 billion, respectively.

The CBN recently implemented some reforms in the foreign exchange market aimed at enhancing transparency, compliance, and market stability. These reforms were part of the CBN’s broader strategy to create a fairer, more stable FX market and support economic growth through better monetary policies.

In tandem with these reforms, the CBN has also implemented aggressive Monetary Policy Rate (MPR) hikes, with the goal of curbing inflation and stabilising the naira, a move supported by the International Monetary Fund (IMF).

Domestic investors made up of retail and institutional investors transacted an estimated N3,726.63 trillion worth of stocks in the period under review.

The breakdown showed that domestic retail in 10 months of 2024 transacted N1.909.99 trillion as against N935.78 billion recorded in 10 months of 2023, while domestic institutional transacted N1.816.64trillion in 10 months of 2024 from N1.706.23 trillion in 10 months of 2023.

According to the report, the total transactions at the nation’s bourse increased marginally by 1.97percent from N493.01 billion (about $307.84 million) in September 2024, to N502.73 billion (about $300.05 million) in October6 2024.

“The performance of the current month when compared to the performance in October 2023 (N220.94 billion) revealed that total transactions significantly increased by 127.54per cent.

“In October 2024, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by circa 82 per cent,” the report stated.

“A further analysis of the total transactions executed between the current and prior month (September 2024) revealed that total domestic transactions increased by 0.81per cent from N451.60 billion in September 2024 to N455.27 billion in October 2024.

“Similarly, total foreign transactions increased by 14.61 percent from N41.41 billion (about $25.86 million) to N47.46 billion (about $28.33 million) between September 2024 and October 2024.”

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E-Financial

Presidency Reaffirms Commitment to Financial Inclusion, Commends Moniepoint

Published

1 day ago

November 27, 2024

Ugo Onwuaso

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Federal Government has hailed the contributions and remarkable achievements of Africa’s fastest-growing financial institution, Moniepoint Inc in the financial technology sector, its commitment to advancing financial inclusion, and its ongoing collaborations with law enforcement agencies to combat financial fraud.

This was stated by the Vice President, Senator Kashim Shettima, when he received the Moniepoint’s leadership team led by its Chief Executive Officer, Tosin Eniolorunda, on a courtesy visit at the Presidential Villa. The Moniepoint delegation included, Babatunde Olofin, MD Moniepoint Microfinance Bank; Didi Uwemakpan, Vice President, Corporate Affairs, Moniepoint Inc; Ross Strike, SVP, Investor Relations and M&A; Efemena Ogie, Head of Partnerships; Abdulmumin Tijjani, Regional Manager, North West; and Ravi Sharma, Partner, Lightrock Global – a global private equity and investors in Moniepoint Inc.

During the course of the visit, CEO, Moniepoint Inc, Tosin Eniolorunda expressed gratitude to the Vice President for making time to meet with the team, underscoring the administration’s dedication to digital innovation and financial inclusion.

He emphasized Moniepoint’s commitment to Nigeria’s financial ecosystem, stating that the fintech giant has grown into Africa’s latest unicorn this year, a testament to its resilience and innovation.

He detailed Moniepoint’s contributions to financial inclusion, including providing digital banking solutions to millions of Nigerians, particularly underserved communities, and empowering small and medium-scale enterprises (SMEs).

Highlighting their robust collaboration with law enforcement agencies such as the Nigeria Police Force, the Nigerian Financial Intelligence Unit (NFIU), and the Economic and Financial Crimes Commission (EFCC), Mr. Eniolorunda reiterated Moniepoint’s commitment to using intelligence-driven technology to fight financial fraud and strengthen trust in the digital payment system.

“At Moniepoint, we are big believers in driving collaborations across the entire eco-system and this is premised on collaboration being the cornerstone of progress.

“Our engagement here underscores our intentionality to enhance government to business relationship in a way that powers the dreams of millions of many more Nigerians.

“Together, we can unlock opportunities, transform lives, and build a more inclusive economy for all”, Eniolorunda said.

The Vice President congratulated the Moniepoint team on achieving unicorn status, lauding their innovative approach to leveraging technology to solve financial challenges.

He acknowledged the company’s impressive growth trajectory, its workforce of over 3,000 employees, and its contribution to the country’s vision of building a $1 trillion economy.

In his remarks, the Vice President highlighted the diversity within Moniepoint’s team, describing it as a “kaleidoscope of colors” and reflecting the beauty of Nigeria’s multicultural and multi-regional identity.

He was particularly pleased with the inclusion of individuals from various regions and backgrounds, including a notable representation of women in leadership and operational roles.

While celebrating Moniepoint’s achievements, the Vice President emphasized the need for stronger auditing measures to prevent misuse of the platform, especially by fraudsters and criminal elements. He urged Moniepoint and other fintech platforms to remain vigilant and proactive in addressing these challenges.

He acknowledged the company’s impressive journey over the past five years as Moniepoint and their earlier contributions as a software solutions company for banks, applauding their resilience and innovation.

In closing, the Vice President encouraged Moniepoint to continue expanding its global footprint, referencing his ongoing support for similar initiatives such as Amal Hassan’s Outsource to Nigeria project.

He assured the Moniepoint team of his unwavering support, promising to be their “chief promoter” in advancing the brand’s visibility on the global stage.

It will be recalled that Moniepoint partnered with the Corporate Affairs Commission to formally onboard over two million businesses while targeting 30m businesses over the next five years.

It also launched Nigeria’s Informal Economy Report in July this year, in conjunction with SMEDAN and the Federal Ministry of Industry, Trade and Investments to provide a policy thrust for advancing Nigeria’s informal economy in the light of its huge contributions to the nation’s GDP.

The courtesy visit marks another milestone in the partnership between the Nigerian government and private sector innovators like Moniepoint, who are key players in the administration’s drive to build a robust digital economy and foster financial inclusion across the nation.

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