“We salute the innovative Fintech leaders in T-shirts…. However, the need of the hour calls for evangelical Fintech companies, that would abandon the familiar profit-hunting zones, and embark on a hunt for the souls of the unbanked.”
Several video clips of desperate Nigerians stuck in the banking halls across the nation were heartbreaking and are sources of concern for law and order in Nigeria. However, for us at Lawracles Legal Practitioners, it is our considered view that these financial-policy challenges are calling out on Nigerian Fintech companies to step forward and take the lead in Nigeria’s financial inclusion journey.
While some regard it as an interference with our election cycle, the CBN has so far attempted to assuage the concerns of Nigerians over the cashless policy drive, by reassuring them that it is not politically motivated. In the past, Lawracles had criticized some flawed monetary policies of the CBN, especially the E-naira policy. However, we hold the considered view that the implementation of all aspects of the monetary policy that expedite Nigeria’s arrival at the ‘promised land’ of a cashless economy is long overdue.
In 2012, the Sanusi Lamido-led Central Bank of Nigeria (CBN) introduced a cashless policy with the aim of reducing physical cash that is being used in the system in an attempt to cut down on cash handling expenses of banks and getting more of the money in circulation into the system as well as track money laundering activities. Nigeria is lagging behind her eastern counterparts like Kenya, which is years ahead in cashless innovation. The gaping vacuum between the announcement in 2012 and the full implementation in 2023 should be subjected to a deeper investigation and query like every suspicious gap in the curriculum vitae of a job applicant. Why did the implementation take this long? What is the quality of our infrastructural support for the policy? And finally, what have our Fintech companies been doing, really?
EFInA’s (Enhancing Financial Innovation and Access) report shows that over 42 million Nigerians live in rural areas where formal financial services are scarce. It confirms that 60% of people in rural areas don’t have access to financial services.
There had been major concerns that the common Nigerian living in the remote parts of the country may be left behind, if not forgotten by the CBN’s cashless policy. However, it was obvious from the civil uproar that even people living in the city, with bank accounts, were left out of the cashless-policy implementation, talkless of the helpless people in the remote areas of Nigeria.
HOW DO WE RESOLVE THE NIGERIAN ‘FINTECH IRONY’?
Nigeria has one of the most vibrant Fintech ecosystems in Africa, yet, a 2020 report by EFInA revealed that up to 38 million Nigerian adults, translating to about 36% of the total adult population in the country, were financially excluded.
About Sixty-Seven percent of the banking population, still maintained that they trust their traditional banks more than Fintechs, while SMEs on the other hand have only embraced Fintechs for the sake of speed (not trust) in transactions and settlements- a speed we so desperately need now more than ever in Nigeria,
Regardless of the number of commercial banks and microfinance banks available, a good percentage of the Nigerian adult population remains under-banked – a bulk of this unbanked population comprises rural dwellers, farmers, and petty traders. Fintech adoption is highest in Lagos and among middle-class and affluent citizens, due to higher education and reliable digital infrastructure. Meanwhile, Fintech uptake is still a far cry at the grassroots level of society.
Conclusion
We salute the innovative Fintech leaders in T-shirts. Nigerians admire every celebration of every multi-million dollar funding or investment from Silicon Valley as celebrated on social media. However, the need of the hour calls for evangelical Fintech companies, that would abandon the familiar profit-hunting zones, and embark on a hunt for the souls of the unbanked. Fintechs that are bored of the familiar realm of profit-making, but hungry for real impact and financial-culture revolution.
We are not oblivious to the risks along this path ‘not’ traveled, but it is exceedingly possible that when this uncharted territory is conquered, the reward, influence, and fulfillment that come with it will be worth the while.
References
https://leadership.ng/economy-as-full-implementation-of-cashless-policy-starts-today/
https://techpoint.africa/2022/12/14/cbn-cashless-maketransferfree/
https://www.thisdaylive.com/index.php/2022/12/19/cash-withdrawal-limits-and-cbns-drive-to-enforce-cashless-policy/
https://core.ac.uk/download/pdf/234669973.pdf
https://www.vanguardngr.com/2022/11/nigerian-fintech-solution-improving-access-to-bill-payment-in-rural-communities/
https://www.mckinsey.com/featured-insights/middle-east-and-africa/harnessing-nigerias-fintech-potential
Kayode Adeniji is the Senior Partner at Lawracles. He offers legal advisory services for major Fintech companies in Nigeria.