According to Precise Financial Systems (PFS), a Software company that provides software products and services to Nigerian financial industry, financial disempowerment is the reason why financial exclusion rate is high in Nigeria.
Yele Okeremi, MD/CEO of PFS, disagrees with the claim by some people that the problem with financial inclusion is about creating products. “I do not think so; people will remain financially excluded because they are financially disempowered,” the MD disclosed to BusinessDay on Monday, in an interview session to mark the company’s 25th annual anniversary.
“We still have large population living below two dollars a day, how do you want to include them financially?” the CEO questioned.
According to World Data Lab, a predictive analytics social enterprise, Nigerians living in extreme poverty crossed the 83 million mark in 2018, surpassing India’s number of extremely poor at 73 million.
This means that almost one out of every two persons living in Africa’s most populous nation is now living in extreme poverty. This is despite India having more population at 1.35 billion than Nigeria, who population is about 201 million people.
Nigeria currently has 36.6 million of its population excluded from the financial cycle. With 36.8 percent exclusion rate, the Central Bank of Nigeria (CBN) is left with a 16.8 percentage gap to attain its 80 percent inclusion rate.
Nigeria’s apex bank launched National Financial Inclusion Strategy (NFIS) on October 23, 201,; with the overall target to reduce the percentage of adult Nigerians excluded from access to financial services from 46.3 per cent in 2010 to 20 per cent in 2020.
“Financial inclusion will be able to ease the level of poverty in Nigeria, in the sense that, when people and small businesses are financially included, they can have access to credit, which will enable them to expand operations, employ more people, and achieve what they would have not been able to achieve prior to when they were not financially included,” Ayo Akinwumi, Head of Research FSDH, Merchant Bank, told BusinessDay.
Aimed at driving home its course, the CBN on the 5th of October 2018 released an exposure draft guideline in which it proposed Payment Service Banks (PSB) directed at deepening financial inclusion in a country that is lagging its African peers on inclusion rate.
Checks by BusinessDay revealed that at least 30 business names are currently undergoing registration as payment service banks with the functions to: maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and pre-paid cards; and operate electronic purse.
But months after the lender requested for submission of proposal by the interested businesses, the apex bank is yet to give mobile money license to those that have applied, at least as it the time of filling this report.
“Apart from encouraging the collaboration between the telecoms and banks, through mobile money to spur financial inclusion, there is need to reduce the cost of financial transactions, as mobile money is more expensive than core banking,” Wale Okunrinboye, head of Research at Lagos-based Sigma Pensions, said.
According to Okeremi, the first solution to financial inclusion is financial empowerment.
“When you have a situation where 90 percent of your population are engaged in meaningful work, financial inclusion will solve itself, that is the honest truth. Anybody that says something contrary doesn’t understand it,” the MD said.
On how to financially empower Nigerians which will translate to growth in the country’s financial inclusion rate, Okeremi said egalitarianism was the way to go.
“Egalitarianism means creating equal opportunities. Take for instance a situation where the financial industry is doing well, textile industry, the manufacturing, etc. as a result more jobs will be created,” he explained.
According to him, what Nigeria needs to do is to make the country’s system to be in a way that “if anyone thinks and is innovative then he/she can eat. If you can work, you will make money, then you will see that Nigerians are actually ingenious.”
An indigenous software development company, PFS has innovative and world-class solutions that are running thousands of computers, serving numerous clients both in Nigeria and in more than twenty-seven (27) countries in Africa.
The company’s environmentally friendly software technologies include an integrated accounts reconciliation solution; cheque and e-payment processing, security & remittance solution; end-to-end outward and inward cheque clearing solutions; cheque MICRisation and personalisation solution; banking and finance solution; bonds and financial derivatives trading and monitoring solution; bureau de change solution; cooperative societies solution; stock brokering solution; billing and revenue collection solution.
Others include card issuance and monitoring systems; self-service cheque, cash, & card deposit and withdrawal solution; pension remittance monitoring solution; project appraisal and monitoring solution.
“Through these ingenious solutions, PFS has successfully positioned herself as a foremost force in the financial software development space of the nation,” the company said on its website.