Driving Pervasive Broadband Penetration To Deepen Digital Financial Inclusion For Nigeria’s Socio-economic Transformation – Swift Reporters

Available data clearly indicates that 73.2 million adults, representing 41.6 per cent of the adult population in Nigeria, are financially excluded, but current interventions through policy initiatives by the Nigerian Communications Commission, NCC, is deepening and significantly closing the exclusion gap, writes YEMISI IZUORA

With a population put at 190 million people, 73.2 million adults have been identified to be financially excluded and the figure represents 41.6 per cent of the adult population.

According to a 2018 World Bank Report, financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.

The Enhanced Financial Innovation and Access (EFInA), an organisation that promotes financial inclusion and an organization that conducts biennial report on Nigeria’s financial inclusion industry, defines financial inclusion as ‘the provision of a broad range of high quality financial products, such as savings, credit, insurance, payments and pensions, which are relevant, appropriate and affordable for the entire adult population, especially the low-income segment.’

In other words, financial inclusion means the sustainable provision of affordable financial services that bring the poor into the formal economy.

As such, being able to have access to a transaction account becomes a first step toward broader financial inclusion since a transaction account allows people to store money, and send and receive payments. A transaction account serves as a gateway to other financial services.

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Indeed, financial access facilitates day-to-day living, and helps families and businesses plan for everything from long-term goals to unexpected emergencies. As account holders, people are more likely to use other financial services, such as credit and insurance, to start and expand businesses, invest in education or health, manage risks, and weather financial shocks, which can improve the overall quality of their lives.

Great strides have been made toward financial inclusion and 1.2 billion adults worldwide have gotten access to an account since 2011. Today, 69 per cent of adults have an account, according to a World Bank Report.

Interestingly, Nigeria remains one of the countries identified by the ITU to have developed policy directions towards deepening financial inclusion in order to address the challenge of access to formal financial services.

Oriental News Nigeria, reports that in 2012, the Central Bank of Nigeria (CBN) adopted the National Financial Inclusion Strategy (NFIS).

The thoughtful and well articulated strategy defined a set of targets for products, channels and enablers of financial inclusion.

The Key Performance Indicators (KPIs) were defined, based on the various dimensions of financial inclusion, including access, usage, affordability, appropriateness, financial literacy, consumer protection and gender. In line with the 2012 NFIS monitoring plan, a review was carried out from October 2017 to June 2018 based on research reports, data analysis and stakeholder engagements.

The exercise aimed to understand the state of financial inclusion in Nigeria, assess past approaches and lessons learnt in order to prioritise the most critical interventions to achieve the NFIS objectives.

One of the key findings of the Review Committee, show that “Nigeria had made significant progress to implement the NFIS because Stakeholders regard financial inclusion as a national development tool.”

According to information made available, In 2016, 58.4 per cent of Nigeria’s 96.4 million adults were financially included comprising 38.3 per cent banked, 10.3 per cent served by other formal institutions and 9.8 per cent served by informal service providers.

Last year, however, Nigeria had targeted to have 70 per cent of its adult population in the formal financial services sector and 10 per cent included in the informal sector.”(National Financial Inclusion Strategy (Revised), October, 2018)

The CBN further reviewed the financial inclusion target from 70 per cent to 80 per cent highlighting in the reviewed strategy that the role of the Nigerian Communications Commission (NCC), as a strategic partner in promoting access to digital infrastructure and platforms to financial inclusion drive of government, so that the banks, mobile money operators and fintechs can leverage such digital platforms to offer mobile-based or digital-based financial services to those already in the formal financial service sectors and those outside the financial inclusion curve.

Understanding Digital Financial Inclusion

In a 2016 report by the International Telecommunication Union (ITU), Digital Financial Inclusion, Scope and Policy, digital financial inclusion (DFI) is captured basically as ‘the use of Information and Communication Technology and other non-bank retail channels to extend the delivery of financial services to the unbanked.’ Digital financial inclusion, thus, has the following characteristics:  no bank account needed; use of agents for cash in and cash out; and use of mobile handsets and other digital means for transactions.

Today, digital financial services are offered through the use of a mobile phone to access financial services (with or without bank account) and to execute financial transactions. Mobile money, mobile insurance, mobile credit and mobile savings are mobile financial services. Digital financial inclusion, therefore, involves the deployment of cost-saving digital means to reach currently financially-excluded and underserved populations with a range of formal financial services suited to their needs that are responsibly delivered at a cost affordable way to customers and sustainable for providers.

The World Bank report has it that, with the prospect of reaching billions of new customers, banks and a widening array of non-banks have begun to offer digital financial services, leveraging access to mobile phones, for financially excluded and underserved populations. They are also building on the digital approaches that have been used for years to improve access channels for those already served by the formal financial sector, which takes the “brick and mortar” approach.  Today, mobile money has been most successful, as one of the means to drive digital financial inclusion, replacing cash transactions for domestic remittances, such as urban workers sending money to rural families. The fastest growing mobile money service is cross-border, led by remittances but with potential to support trade and regional integration. In Central America, Colombia, Kenya, Mexico, Philippines and Tanzania, more remittances are sent by mobile phones than in cash.

Available records show that digital financial services — including those involving the use of mobile phones — have now been launched in more than 80 countries around the world, including Nigeria, with some reaching significant scale. As a result, millions of formerly excluded and underserved poor customers are moving from exclusively cash-based transactions to formal financial services — payments, transfers, savings, credit, insurance, and even securities — using a mobile phone or other digital technologies to access these services. The picture is continuing to shift rapidly with the emergence of ever more new technologies.

NCC And The Drive For Enhanced Financial Inclusion In Nigeria

Taking a peep back and citing available records, the Nigerian Communications Commission (NCC) has been actively involved in the actualisation of the Federal Government’s financial inclusion target of 20 per cent exclusion or 80 per cent inclusion by the year 2020.

But a recent report by EFInA indicates that even though its data showed that more people have become financially included, the financial inclusion pace was, however, not matching the country’s population growth rate.

Stakeholders are therefore of the view that in order to achieve an accelerated financial inclusion target the country desires, even as the population grows, technology and more importantly, broadband, has to play a massive significant role and what I see technology doing in terms of Nigeria’s financial inclusion is actually to democratize access.

Deepening Broadband Strategy

Consistent with its intervention strategy the NCC have simultaneously embarked on various regulatory initiatives that have continued to increase access to telephone lines and improve access to high-speed Internet or broadband.

This is in line with the Commission’s mandate of ensuring universal access to telecoms services in the country consistent with the ITU’s goal of achieving digital inclusion, globally.

Foremost amongst these regulatory initiatives, is the implementation of the Open Access Model for infrastructure deployment through the competitively selected Infrastructure Companies (InfraCos) called the InfraCo Project: The InfraCo initiative is expected to provide, at a minimum, broadband fibre and connectivity to every Local Government Areas (LGAs) of the Federation, totaling 774 fibre Points of Access (PoAs) with a minimum speed of 10 Gbps which will translate to, at least,  38,296km of Optic Fibre Cable (OFC) to the Transmission over the next years.

Confirming most of these interventions, Prof. Umar Garba Danbatta, Executive Vice Chairman/CEO, of the Commission, at the 5th Annual The Bullion Lecture

Organised by the Centre for Financial Journalism on Thursday, March 11, 2021, disclosed that so far, the Commission has licensed six of the seven InfraCos to implement this project and it is intended that the presence of fibre point of access in each LGA will not only spur development, lower cost of entry for telcos and bring about innovative services and applications, but also, improve the conditions of living in the rural, urban and semi-urban areas, especially with respect to access to financial services.

The InfraCo Project is considered as the beginning of the “Next Level” journey towards achieving the 120,000km target of fibre connectivity set by the current administration.

The agency recently begun a process to strategically review the InfraCo framework and its funding options towards ensuring effective implementation of the national fibre project. When fully implemented, it will ensure robust and pervasive broadband infrastructure to drive availability, accessibility and affordability of financial services.

The NCC also provided the requisite infrastructure, connectivity and capacity to interconnect four Internet Exchange Points (IXPs) in Lagos, Enugu, Port Harcourt and Kano in order to localise some of the internet traffic in Nigeria and encourage the creation, hosting and interchange of data within Nigeria.

This has enabled the local hosting of companies like Google, Facebook, Vodacom, China Telecom, Akamai, Juniper Solutions etc. alongside all major Nigerian Internet Service Providers (ISPs), Mobile Network Operators, Sub-Marine Cable Operators as well as major tier 1 to 3 Data Centers.

This has not only reduced cost, which is key to digital financial inclusion  and conserved foreign exchange but also has drastically reduced latency. Thus ensuring sustainability of digital financial services.

Realising the promises of wireless infrastructure for rapid advancement and ubiquitous coverage, which can be leveraged for financial inclusion, among other services, the Commission has put in place a number of guidelines and regulatory measures towards ensuring availability and sustainability of wireless technologies. Some of these include: development of  Spectrum Trading Guidelines to enable operators in possession of un-utilised or under-utilised frequency spectrum to trade such limited assets in the secondary market place, thus freeing resources and eliminating spectrum hoarding; Ongoing efforts to leverage the television white space (TVWS) technology to extend affordable  broadband services to Nigerians in the digitally excluded areas.

Others are effective and proper utilisation of available wireless spectrum frequency resources for widespread service deployment to Nigerians; Trial of Fifth Generation (5G) network in Nigeria, preparatory to its commercial deployment to improve digital services experienced by Nigerians; Development of Guidelines for commercial satellite deployment which has seen the registration of major satellite providers in the country. This will help to provide satellite-based broadband services to those hitherto excluded, among others.

There is also the development of framework for National Roaming Service, which is currently being trialed on some networks as well as ongoing development of licensing framework for Mobile Virtual network Operators (MVNOs), that will ride on and buy capacity from incumbent mobile network operator to provide telecoms services to unserved, under-served  and rural communities sin the country.

Dambatta, also placed on record that the Commission, through the Universal Service Provision Fund (USPF), has been actively stimulating the adoption of ICT in various areas of the society in order to facilitate connectivity and access, thereby building resilient infrastructure and promoting sustainable industrial growth in the country. Some of the projects undertaken in this regard are Tertiary Institutions Knowledge Center (TIKC), School Knowledge Centre (SKC), Base Transceiver Station (BTS), Backbone Transmission Infrastructure (BTRAIN) project, University Inter-Campus Connectivity (UnICC), E-Accessibility or ICT for Challenged Groups/Persons Living with Disabilities (PWD), among others.

He informed the gathering that broadband penetration in Nigeria has been on the upward trajectory, rising to 45.02 per cent as of December, 2020.

Oriental News Nigeria gathered that penetration was far below 10 per cent when  he assumed office in 2015.

The Commission is also poised to further accelerate this growth, as it works with the Ministry of Communication and Digital Economy to support the Federal Government’s National Digital Economy Policy and Strategy (NDEPS), drive the Nigerian National Broadband Plan (NNBP) 2000-2025 targets of 70 per cent broadband penetration, towards boosting digital access across the nooks and crannies of the country.

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