‘Digitization of Social Protection, Humanitarian Payments Enhancing Financial Inclusion in Nigeria’

A joint report from FSD Africa, Enhancing Financial Innovation and Access (EFInA) and the GSMA, and conducted by Strategic Impact Advisors (SIA), has revealed that a gradual transition from physical cash transfers to digital would improve the recipients’ usage.

The report noted that although this transition will not be immediately possible everywhere due to limited network connectivity, low mobile phone ownership levels, and low literacy rates among other barriers, it outlined different opportunities for social protection and humanitarian actors, and the private sector, to work together to support increased access to digital payments for poor and vulnerable recipients of assistance.

The Central Bank of Nigeria (CBN) has been championing the government’s efforts by designing policies that could enhance the transition from physical cash transfers to digital. The CBN is committed to achieving their 95% financial inclusion target set for 2024.

The report, “Opportunities and Barriers to Digitising Social Protection and Humanitarian Payments in Nigeria,” highlighted the opportunities within digitisation of cash transfers and presented a roadmap for its actualisation.

The study reinforces the need to create an ecosystem in which recipients could eventually access cash transfers on a permanent digital wallet through their mobile phones, leading invariably to multi-choice usage, which they can then use to transact to meet all of their needs and help to reduce reliance on physical cash.

Also, the report offers recommendations to improve Nigeria’s capacity to deliver digital payments to the poor.

It points out the need for humanitarian and social protection organizations to work in partnership with the Government and financial service providers to support an enabling environment to reach last mile recipients, the importance of coordination to promote a more cohesive use of cash transfers wherever appropriate, and efforts to better inform the development and extension of relevant services by payment providers wherever feasible.

The report noted that there are pockets of digital transaction-ready recipients who could support the development of digital payment ecosystems and help to advance financial inclusion. Although digital payments will not be enough to bridge the financial inclusion gap in Nigeria, access to digital payments is an integral component and this report charts out practical next steps.

Commenting on the report, Director – Digital Economy at FSD Africa, Juliet Munro said: “Cash transfers are a vital source of income for many underserved households.

“We are delighted about the ongoing conversations with our partners on the existing possibilities to digitise cash payments. Once the systems are in place, the targeted households will be able to access the much-needed aid faster and more efficiently.”

CEO at EFInA, Ashley Immanuel said: “Fintech Innovation is a key driver of financial inclusion and very useful in providing access to financial services, especially for the underserved. Digitising cash transfers will help reduce the burden for cash disbursement and support recipients’ application of healthy financial habits like saving.”

On his part, Development Director at FCDO Nigeria, Chris Pycroft, said: “Really encouraged to see this report highlight principled and important opportunities for development actors to support increased access to payments among the poor, lay the foundations for financial inclusion, and harness Nigeria’s growing Fintech scene.”