E-Financial
EFInA & 7 Lessons On Providing Financial Products to Unbanked, Under-banked
Enhancing Financial Innovation & Access (EFInA) is notably the financial sector development organization that promotes financial inclusion in Nigeria and currently has Innovation Fund that is made up of two types of grants: Technical Assistance Grants and Innovation Grants.
Technical Assistance Grants are short term grants to pilot and test new financial products and services, while Innovation Grants are provided to launch, implement, and scale financial products/ services that have already been tested and piloted.
In operating the Fund since 2009, EFInA has provided over twenty grants to commercial banks, microfinance banks, mobile money operators, and investment management companies that provide financial products and services to the low income population.
EFInA believes that these grants will incentivise organisations to provide innovative financial products and services to a large number of unbanked and under-banked customers by reducing the risk associated with delivering the products and services as well as enhancing their long term commercial viability.
In its July 2016 newsletter, EFInA shared the lessons gleaned from the grantees, though not new, but reflect the experiences of the market operators within the financial services industry in Nigeria.
According to the Body, “Organisations that seek to provide financial products and services to the low income population should consider the following tips:
Enhance Customers’ Experience:
Customer experience is defined as “the entirety of the interactions a customer has with a company and its products. The overall experience reflects how the customer feels about the company and its offerings.”
Companies that know and enhance their customers’ experience have an advantage over companies that neither know how customers experience their products nor innovate to enhance that experience.
As a workaround to systemic infrastructure challenges, organisations have developed Unstructured Supplementary Service Data (USSD) service string codes in order to keep the USSD sessions short and resolve the issue of frequently dropped USSD sessions; which is an industry wide problem. One organisation built a system that allows customers using USSD to continue from where he/she left off when he/she dials back into the service; thus making it a more user-friendly way to keep that customer engaged rather than having them give up in despair from multiple sessions drop.
Another organisation provided an Interactive Voice Response (IVR) for agents that provide voice prompts for less literate agents who can speak a local language but are unable to read the language.
Keep an Eye on The Value for Agents:
Ensuring strong agent value proposition is a key success factor for offering digital financial services.
The EFInA Mobile Money Agent Survey conducted in November 2015 revealed that, 43% of responding agents cited the opportunity to earn additional income as the reason for becoming a mobile money agent.
Among agents surveyed who were aware of and willing to disclose their average monthly commissions earned, commissions ranged from N100 to N500,000, with a median value of N4,000. 51% of those who had earned commissions earned N4,000 or less per month. The right level of agents’ commissions is dependent on several factors including region where agents are located, proximity to bank, level of business activities within agent location, nature of agent’s primary business, financial service needs of people within the agent location etc. Financial service providers should consider the following questions in an effort to increase the agents’ value proposition:
Determine the right amount in agent commission that would motivate the agent in the specific area.
Is the incentive structure appropriate for the agent or is it overly burdensome for the agent to reach or administer? How can organisations evaluate the opportunity cost of an agent’s time? Identify which transactions would attract the most commission for agents. What is the right mix of transactions in order for the agent to be profitable?
Based on the level of customer awareness, how many customers are projected to utilise the agents’ services in order for the agents to gain sufficient commission?
Look critically at the liquidity equation. The best way to maximise return on investment for the agent is to ensure he/she can manage liquidity easily, rather than holding larger sums in electronic money (float).
Think through the agent’s experience converting deposited cash to float. Ensure that there are cash centres for agents within an easy distance with good hours of operation so that agents are not shutting shop to balance liquidity.
Successful providers actively monitor float and allow agents to request visits to rebalance as well as plan sales force routes to visit the agent for replenishment services. This management activity is vital to maintaining a healthy agent network.
To offer financial products through a digital channel, selecting the use case is crucial: Understanding the reason that a low income customer would select a digital financial product/service or channel over the traditional channel is important for financial services providers.
There is a need to meet the customer “where they are”, and truly address the customer’s pain points when designing a product or service.
For example, it is not enough to assume it is obvious that because a mobile money operator has “over–the-counter (OTC) send to bank” provision that the customer will understand why they should care or use it.
Digital financial products and services have competition: the traditional financial products and services.
While most digital financial services providers reel off the reasons for digital financial services as “low cost, safety, convenience, etc.”, low income customers may not perceive the value in the same way that market operators do.
Organisations that get it right have developed compelling use cases for customers to use digital financial services.
Some of EFInA’s grantees have discovered that conditional cash transfers offered through mobile money that reach recipients in remote locations, bulk salary payments where workers are able to access their salary without the additional cost of traveling to the bank branch, in addition to products such as microinsurance, microloans, and microsavings provide a compelling reason to take up digital financial services. The level of customer awareness and the quality of the products will determine the continued usage of the products. Low-income customers are as discerning about the quality of products and services as other customer segments.
Converting Processes From Manual To Digital Is Profitable
When an organisation decides to offer digital financial services, it is important for them to audit their business processes to justify why a process should remain manual (paper based).
If an organisation does not have strong justification for retaining a manual process, then they should digitise it.
Based on research by McKinsey, “to meet customer expectations, companies must accelerate the digitization of their business processes. But they should go beyond simply automating an existing process.
They must reinvent the entire business process, including cutting the number of steps required, reducing the number of documents, developing automated decision making… ” Several organisations provide digital financial products and services, yet the customer journey is laden with paper forms.
Organisations that consciously make a case whether a process should be manual or digital have better chances of reaping business efficiencies.
Digital conversion is not a panacea; however to profitably serve the mass market, some level of digitisation is imperative.
Organisations that are able to identify and digitise repetitive and boring tasks have more efficient processes and better customer service.
Reviewing what happens to the paper trail and where it adds value is an important exercise in designing these efficiencies. Not all innovation is customer-facing.
Build The Agent Network Before Launching the Customer Campaign
In planning to launch a mobile money project, EFInA finds that organisations often struggle with the right building sequence.
Should they build the agent network first or launch a customer campaign? Without the agents in place, knowledgeable customers have nowhere to go for transactions.
However, without customers’ transactions, agents are dormant. In kicking off a new project in new territory, agents’ presence precedes customer awareness campaigns.
Based on this sequence, initial expectations for transactions, commissions, and customer acquisition targets for agents should be modest and be expected to grow over time. However, timing is key; agents who are trained too far in advance may have forgotten the lessons by the time the customer campaign is launched.
Benefit from Insurance Products Should Focus on the Living
The EFInA Access to Financial Services in Nigeria 2014 survey shows that 1 million adults (1% of the total adult population) have insurance.
However, 14 million adults (15% of the total adult population) say they would be interested in microinsurance products. Our experience shows that low income customers want insurance benefits while they are alive; they don’t want to think about death.
Therefore, insurance products with greater uptake are those that care for customers in the eventuality of ill health, adverse effects on their business, livestock, etc., as opposed to companies offering life insurance.
Develop A Sustainability Plan and an Exit Strategy
Few organisations start offering a product thinking they will one day no longer offer it. Most hope that the product will succeed and be profitable in the long term. However, sometimes after a successful pilot, the roll-out could be fraught with challenges.
When the management of an organisation decides to discontinue a product offering, does the organisation have a comprehensive exit strategy and plan? A poorly executed project termination can ruin the brand of an organisation within the financial sector.
According to the EFInA Access to Financial Services in Nigeria 2014 survey, 68% of the adult population (63.5 million adults), get their financial information from friends and family. Therefore, when an organisation exits its product poorly, the wordof-mouth news taints the brand among the current and potential customers.
The onus is therefore on the organisation, to think through all the stakeholders that need to be informed.
How should the stakeholders be informed? Is there a customer service number for customers who have questions or complaints about the exited product?
The way a product is discontinued might be more important than the way it is introduced. Enhancing Financial Innovation & Access (EFInA) is a financial sector development organisation that promotes financial inclusion in Nigeria.
Established in late 2007, EFInA’s mission is to make the Nigerian financial system work better especially for the poor. EFInA achieves its mission through four pillars; Research, Innovation Fund, Advocacy and Capacity Building.
EFInA is funded by the UK Department for International Development (DFID) and the Bill & Melinda Gates Foundation and the article is originally published by EFInA in it’s July 2016 e-newsletter.
African fintechs hoping to sign up the continent’s next billion users will need to rethink the industry’s long-running growth playbook, according to Musty Mustapha, Managing Director of Kuda Microfinance Bank, who says cashbacks and incentives may drive downloads but rarely help build sustainable businesses.
Kuda MFB MD
Speaking at a fintech panel discussion on scaling digital financial services across Africa at Tech Revolution Africa, a gathering of tech leaders, investors, operators, and professionals which was held at Landmark Event Center on January 31, 2026, Mustapha objected to what he described as the “growth at all costs” culture which has defined much of African fintech so far. While incentives can quickly inflate user numbers, he said they often fail to create the kind of trust and consistent usage that keeps customers long term.
“It is easy to buy users,” he said. “But if you grow without creating real value, you’re only solving for today’s numbers and ignoring whether the business survives tomorrow.”
His comments come at a time when many startups are under pressure to demonstrate stronger unit economics as venture funding tightens and investors shift attention from rapid acquisition to profitability and retention. In that environment, Mustapha argues that reliability, not marketing spend, will determine which fintechs endure.
Contrary to common assumptions, he said African consumers are not resistant to technology but cautious, shaped by years of unreliable services and weak infrastructure. Products that work seamlessly elsewhere often struggle locally because they fail to account for that trust deficit.
“They’re not digitally naïve,” he said. “They’ve just operated in low-trust environments. If something fails even once or twice, you lose them.”
That focus on trust has influenced how Kuda Microfinance Bank has approached its growth. Launched in 2019 as a digital-first bank, it expanded from roughly 100,000 customers within its first year to nearly 300,000 the next, before surging past 2 million customers in 2021. Today, the microfinance bank serves more than 7 million Nigerians, Mustapha said, describing the journey as less predictable than the numbers suggest.
“The reality is, you can’t forecast scale neatly,” he said. “You can wake up and suddenly have a huge spike in users. If your systems and people aren’t ready, you crumble.”
In his view, the strain on a fintech typically shows up first behind the scenes, not on its app. As volume increases, back-office functions such as reconciliation, chargebacks and customer support can quickly become chokepoints, eroding the trust that fintechs are trying to build. Founders, he said, often underestimate these operational demands in the early days while prioritising product development.
“Anything you don’t pay attention to in your first six months will come back to hurt you at scale,” he said.
External constraints add more complexity. Payment rails, power supply, and connectivity remain outside the control of most fintechs, making outages and delays inevitable. Rather than trying to outspend those limitations, Mustapha said companies must design around them by building redundancies and multiple pathways for critical services.
“You don’t assume perfection,” he said. “If one channel fails, there must be another. That’s how you stay reliable.”
As traditional banks, telcos, and startups increasingly compete for the same mass-market customers, Mustapha expects the winners to combine the strengths of each group — the capital base of banks, the distribution reach of telcos, and the speed of fintechs. But regardless of the model that dominates, he believes the fundamentals will remain the same.
For millions of first-time or underserved users, the deciding factor is simple: whether the service works every time.
“There’s this idea that the average customer can’t use sophisticated products,” he said. “That’s not the issue. What they want is something they can trust.”
As fintech chases its next phase of growth, trust, rather than incentives, may prove to be the sector’s most valuable currency.
Majority Nigerians do not trust the government to properly utilise their tax payments for good use, according to a survey by SBM Intelligence across nine cities.
The survey highlighted why recent tax reforms have triggered widespread anxiety and resistance.
“Survey data from 200 respondents across nine cities indicate that 68.5 percent of Nigerians completely distrust the government’s use of tax revenues, whereas only 27.5 percent view the reforms as beneficial to the country, ” SBM intelligence said in its recent report titled Taxing Patience.
Nigeria’s 2025 Tax Reform Acts took effect in January, introducing the most comprehensive overhaul of the tax framework in decades. The reform has created more awareness among Nigerians than ever before, increasing their further distrust in the government’s use of tax revenues.
The distrust reflects years of poor service delivery and weak accountability, shaping public doubt toward the new tax system despite assurances that the reforms are designed to ease burdens and improve fairness.
“In the past, people avoided tax because they felt the government wouldn’t provide basic amenities,” businessday quoted Okanlawon Hakeem, a Lagos-based businessman, as saying.
“You drill boreholes yourself, pay for public transport yourself, and sometimes fix your local road yourself. So, you ask yourself what the government is doing with the tax money.”
The SBM Intelligence report noted that access to reliable electricity, improved security and better roads were the clearest signals that would make tax compliance worthwhile.
“46 percent of participants identified improvements in roads and security as their primary motivation for tax compliance,” SBM Intelligence noted, explaining that service delivery, rather than enforcement alone, is likely to shape taxpayer behaviour.
Government officials have defended the changes as necessary to improve public finances and reduce Nigeria’s dependence on oil revenue, pointing to the country’s historically low tax-to-GDP ratio.
With a tax-to-GDP ratio of less than 10 percent, Nigeria has lagged behind regional peers such as Ghana and Kenya. Taiwo Oyedele, chairman presidential fiscal policy and tax committee, hopes the reforms will lift the ratio toward 18 percent over the medium term.
Public sentiment, however, has not moved in step with these fiscal ambitions. According to the report, only 27.5 percent of people believe that the new tax laws are good for the country.
The report also suggests that greater awareness of the reforms often coincides with stronger skepticism rather than acceptance.
Distrust cuts across regions and occupations but is especially pronounced in major commercial centres.
The report mentioned that people in Lagos and parts of the Northeast have the strongest resistance and protest sentiment, reflecting concerns about enforcement, fairness and legislative integrity.
In its Year Ahead 2026 outlook, SBM Intelligence projects that protests are likely as the real impact of the new framework becomes clearer. The report points to the June 2024 youth-led protests in Kenya, which resulted in a reversal of the policy.
In Nigeria, where inflation is only just beginning to show signs of easing, the tolerance for perceived government excesses, including lavish convoys and budget padding, is at an all-time low.
Business owners, traders and informal workers expressed particular unease, fearing the reforms could deepen the problem of double taxation. Many worry that government levies will exist alongside rather than replace the fees already collected by unions and non-state actors.
“ Nearly a third of business respondents said they expect to pay both official taxes and union fees,” the report stated.
For informal workers such as market traders, drivers and artisans, this fear is grounded in experience. Many already make daily payments to unions or associations, often under pressure.
Without a clear plan to eliminate these parallel charges, new government taxes are widely viewed as an additional burden rather than a simplification of the system.
In Lagos, Kano and Onitsha, constant electricity emerged as the strongest trigger for compliance. In Abuja, Port Harcourt and Bauchi, respondents prioritized roads and security. Across cities, the message was consistent: willingness to pay is conditional on visible outcomes.
Analysts warn that without clear improvements in service delivery, stronger enforcement could harden resistance rather than improve compliance.
The report stated that without rapid, visible improvements in public services, the government risks collecting more money while winning.
Femi Otedola, group chairman, First Bank Holdings, has justified the company’s decision to write off N748bn in legacy non-performing loans, saying the move was a deliberate strategy aimed at securing long-term financial stability, even though it significantly reduced reported profits.
Femi Otedola, group chairman, First Bank Holdings,
Otedola made this known in a post on his X handle, where he explained that the large-scale provisioning led to a 92 per cent drop in the holding company’s profit figure.
According to the billionaire investor, the write-off was in line with the Central Bank of Nigeria’s directive encouraging banks to confront non-performing loans openly instead of postponing the issue.
“At First HoldCo we decided to clean house properly. We took a huge one-time hit of N748bn to admit old bad loans instead of pretending they do not exist. That is why profit looks like it crashed by 92 per cent. Painful headline, but it is a serious long-term move,” he wrote.
He noted that the decision was taken to finally address problematic loans accumulated over previous years and to strengthen confidence among stakeholders.
“Why do this now? Because the CBN is pushing banks to stop kicking problems down the road. So First HoldCo basically closed the chapter on messy loans from past years which sends a clear message that borrowing has consequences and it helps rebuild trust,” Otedola added.
Despite the scale of the write-off, Otedola maintained that the bank’s core business remained solid, stressing that strong earnings demonstrated the institution’s underlying financial strength.
He disclosed that the bank generated N2.96tn in interest income and N1.91tn in net interest income, figures he said were sufficient to absorb the clean-up while keeping operations stable.
“The key point is this: our business itself is STILL strong. It made N2.96tn in interest income and N1.91tn in net interest income, which gave it the strength to take the cleanup and still stay standing,” he stated.
Looking ahead, Otedola expressed confidence in the bank’s future, saying the balance sheet clean-up has positioned First Bank well for recapitalisation and sustained growth.
“Now at First Bank and beyond we go into 2026 lighter, cleaner and better prepared for the recapitalisation era and serious growth. Bad loans cleared + strong income engine + long-term thinking = real value creation,” he concluded.
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