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How YDFS is closing the financial exclusion gap in Nigeria

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According to a 2019 report by the National Bureau of Statistics, 73.2 million adults representing 41.6 per cent of the adult population in Nigeria are financially excluded.

About one in five adults and 38 per cent of households report having a formal bank account. This includes both commercial banks (34 per cent of households) and other financial institutions such as microfinance institutions (MFI), cooperative societies, and savings associations. The incidence of banking is higher in the South West region with 56 per cent of households banked and lowest in the North West region with only 16 per cent of households having a formal bank account.

The issue of financial exclusion has therefore been a major economic challenge that has received the attention of various governments over the past four decades. Prior to the recent efforts to promote financial inclusion, the Nigerian economy was largely a cash-based economy with a significant proportion of the narrow money stock in the form of currency outside the banking system.

Financial inclusion is an enabler of development, it is important in bringing integrity and stability into an economy’s financial system as well as its role in fighting poverty in a sustainable manner.

High levels of financial exclusion pose major threats to economies such as loss of opportunities for business growth and stunted economic growth. In the absence of finance, people who are not connected with the formal financial system lack opportunities to maximise their income and expand their businesses. Also, when resources are unutilized in the form of money in the hands of people who are in the informal sector, it could limit a country’s economic growth potential.

The foregoing spells the need for deeper agent banking if Nigeria is to attain the National Financial Inclusion Strategy (NFIS) target.

In 2019, Y’ello Digital Financial Services (YDFS) rolled out MoMo Agent service across Nigeria to provide safe and accessible money transfer services to financially underserved communities. A subsidiary of MTN Nigeria, YDFS utilises its wide network of over 150,000 agents to deliver these services to underserved and unbanked communities. Recently, the financial service provider expanded its services to further deepen the financial inclusion drive, with the MoMo agent service now providing bill payment, cash deposit and withdrawal, data and airtime purchase, and bulk disbursement services to anywhere in Nigeria without a bank account.

On the 6th of May, 2021, Mercy Corps’ ‘Building Resilience in Complex Crisis (BRICC)’ programme funded by the European Union, signed a new partnership with YDFS, to efficiently deliver automated cash transfers and provide an avenue for programme participants with or without bank accounts to receive funds. This partnership will kick-start the use of MoMo Agent in the distribution of conditional and unconditional cash transfers to 14,270 households in Damaturu and Potiskum LGAs in Yobe state.

MoMo Agent presence in communities where BRICC is implemented means faster and more efficient means of delivering cash transfers without participants having to wait in long queues. MoMo Agents provide safe, fast, and easy access to financial services for customers through their widespread presence and reliable service, with over 150,000 Agents spread across the country.

This partnership with Mercy Corps affords a unique opportunity to extend these benefits to the most vulnerable families in Yobe State and other conflict-affected states in the North East.

Y’ello Digital Financial Services is committed to ensuring that every Nigerian is able to seamlessly access financial services for their personal and business needs. They do this by leveraging partnerships, to support the financial inclusion strategy of the federal government. It is a step in the right direction, to complement the efforts of the Central Bank of Nigeria towards closing the 8.5% financial inclusion gender gap in Nigeria and achieving 95% financial inclusion by 2024.

An inclusive financial sector is characterized by the diversity of financial services providers, the level of competition between them, the legal and regulatory environments that ensure integrity and access to financial services for all. Evidence worldwide shows that access to financial services contributes both to economic growth and wealth creation and is, therefore, the key to tackling the ‘poverty trap in Nigeria. It is critical for regulators and policymakers to create an enabling policy environment to actively promote both the demand for and the supply of financial services to the unbanked and under-banked.


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