Nigeria Turns To FinTechs To Boost Financial Inclusion

In an effort to expand access to financial institutions (FIs), the Central Bank of Nigeria is planning to license more payment providers, Bloomberg reported on Saturday (Nov. 30).

The goal is to improve Nigeria’s financial inclusion rate by 20 percent, bringing it to 80 percent by the end of 2020.

“The provision of licenses to several players will help support innovation and competition as all parties work to increase their customer base,” Central Bank of Nigeria Governor Godwin Emefiele said in a speech in Abuja on Friday. “Nigerians in underserved locations will have access to cost-effective payment services, cash-in and cash-out facilities, and savings products.”

Emefiele said that three licenses have been issued by the central bank for “shared-agent” and payment-banks.

Africa’s most populous country — roughly 200 million people — is behind in offering mobile banking compared to the rest of Africa. Only one mobile banking license has been issued this year. Lenders are hoping to stave off mobile competition by expanding retail banking.

“Your Central Bank today is more committed to creating wealth and putting in place strong policies for creating jobs for our growing youth population; your Central Bank today is ever more committed to promoting a more stable and resilient financial system,” he said.

Regardless of the recession Nigeria experienced, the governor said that the country’s economy remained the largest in Africa by GDP. He pointed to a diverse “mix of opportunities across different sectors,” — manufacturing, solid minerals, trade and agriculture.

He also said that the CBN was open to foreign investors “who were keen to support efforts at unlocking the immense opportunities in Nigeria’s economy.”

FinTech is helping to transform daily consumer life in Nigeria and other developing markets. One recent example comes from Kuda, Nigeria’s first digital-only bank with a standalone license.

Other examples include FairMoney and PalmPay. FairMoney, a consumer micro-lending technology company that operates in Nigeria, raised $11 million in September in a Series A round. Payments startup PalmPay raised $40 million in a seed funding round this month and is working to become Africa’s largest financial services platform.