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‘A mobile Led Risk-based Approach is Crucial to Achieving Financial Inclusion in Africa’

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Fintechs that are innovating, operating and growing throughout Africa have moved on from the broad academic concept of financial inclusion to the practical onboarding and walking hand in hand with underserved people along a financial journey.

The first port of call is understanding that serving the underserved is not just about technology. It’s about the human element of dealing with people that are not part of the mainstream financial system; it’s about reaching them and engaging with them where they are and when they need you. Repeat use of a product or service happens when you create products that serve real customer needs.

The world of mobile access has unlocked an ecosystem where mobile channels can sit alongside a predominantly cash economy, and this is vital for meaningful digital inclusion.

If a fintech wishes to onboard people and develop trust, it must be able to do this without forcing customers to take a financial leap to mobile money or a digital store of value. Often, off the bat, it is a bridge too far. Trust needs to be developed first.

At Mukuru, we have utilised mobile digital channels to sit alongside a cash-driven transaction. This is important because 60% to 90% (depending on the region) of payment transactions in Sub-Saharan Africa are still happening in cash. If you attempt to force the move to a digital store of value it is often too much for a financially underserved individual in the region, particularly those who have left their home countries to find work.

Financial inclusion must be seen as a journey, and you start by putting someone in control of their financial destiny without asking them to put their money into something that they don’t yet understand, such as the concept of the cloud.

Our market still operates predominantly on 2G mobile connections, which means that USSD is a critical channel. An effective fintech meets these customers at the touchpoints where they currently transact and then walks them down a path towards understanding mobile use cases.

Once the customer understands that they can control a digital transaction, encouraging them to partake in the world of mobile wallets and digital payments becomes a logical progression.

This is a blueprint for financial inclusion. If we take Mukuru’s experience, and when looking at our 10-million customers and their journeys, by the end of February 2021, up to 90% of our customers were signed up through a field agent.

Despite this, 80% of orders were being created through self-service digital channels: 43% on USSD and 32% on WhatsApp. This is evidence that if you can create products that customers need, and meet them where they are, you can grow them from a face-to-face, field force model into a self-service model where they start taking control of their own financial agenda.

However, there are still millions of people who can’t be reached by field agents. It’s not fair that they should be excluded because they live in remote regions.

They, too, should have access to financial services. A mobile-led risk-based approach represents the solution to finding them and helping them along their financial journeys.

By the very nature of connectivity on this continent, mobile sign-up is a critical entry point to the journey and basic mobile channels need to be available. Fintechs must understand the market, as well as the regulations in various territories, and then address the barriers to sign-up which perpetuate financial exclusion.

Mukuru has taken a dual approach: We look at our core self-service channels and then we look at the limitations of those channels. Due diligence can, and must, be carried out using feature phones, and this allows access to a grassroots product.

Then, when customers upgrade, which they do, they are able to move to a place where they can buy data, use WhatsApp and supply selfies, for example, meaning they can upgrade to a higher-level product. Once they can travel to a city where a field agent can find them, they get access to further product offerings because they can supply biometric and legal identification documents.

Then, if they wish to move up to take out even more products – such as a mobile wallet – the documentation and due diligence requirements go up once more.

The next step up would be feature-rich, self-help services in the form of websites and apps. A big mistake is that many believe you can start the journey on this rung of the ladder. In Mukuru’s experience, in the SADC region, the use of these channels represents about 5% to 8% of total volume.

Fintechs must serve their customers what they need, and they are voting with their feet and fingers – they want to use simplified channels.

Collaboration between regulators is important – for access to identification – and fintechs make this process far easier. The point is that one doesn’t have to swing the door wide open in the first instance because of the very limitations that left people excluded in the first place.

Rather, with a careful, mobile-led, risk-based approach the door can be inched wider until they reach a point where they step into full financial inclusion.

If we look at a Mukuru snapshot in February 2020, 70% of our transactions were cash-to-cash.

In February 2022, we moved to only 49% of those transactions being cash-to-cash, and a digital store of value (which started as a remittance) is becoming a real way of life for a significant portion of the customers who were onboarded through access to a digital channel.

Financial inclusion and verified customer onboarding can, and do, work hand in hand. If you start someone on their financial journey by giving them access to a digital channel rather than forcing them to convert immediately to a digital store of value, you start moving people along a financial journey they can control.

 


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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