Modupe Ladipo is the CEO, Enhancing Financial Innovation & Access (EFInA), an independent, professional, non-profit organization conceived and funded by DFID and Ford Foundation.

EFInA’s mission is to make the Nigerian financial system work better, especially for the poor. Modupe previous work experience has primarily been within Investment Banking in the UK and she has has over 20 years financial services experience covering corporate strategy & development, product & markets development, mergers & acquisitions, retail and institutional brokerage.

She has worked for Tata Consultancy Services, Merrill Lynch, ABN AMRO, the London Stock Exchange and Credit Suisse Financial Products.  

Modupe talks about EFInA and sundry issues in this interview with peter ugwu

EFIna’s Achievements in Last Seven Years
At EFIna, we focus on four main pillars that include; research, advocacy, capacity building and innovation fund.
Through-out our lifetime as EFIna, we want to promote financial inclusion in Nigeria. So, if we look back on what we have achieved in those four pillars and in moving the wheel for financial inclusion in Nigeria, we have actually achieved a lot with support from the industry.
The supports are coming from both the regulator and the service providers. From the regulator’s point of view, we were recently commissioned to conduct a research; measure the impact of relevant financial inclusion approaches as part of measures to deepening financial inclusion in the country.

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EFIna’s Four Main Pillars
We have reviewed nine policies and eight came to play after EFIna was structured. In fact, EFIna had a very direct impact and involvement in the development and finalization in reviewing those policies and regulations.
Sometimes, we supported the regulator in sharing and disseminating composite information about some policies. That is part of the Advocacy piece of our work; which anchors on providing an enabling environment in such that players can come up with relevant products and services.
Then, for us Capacity Building is really imperative, because it’s a new area. Thus, both the regulators and the providers must improve; so that, one is not misleading the other.
Because, you can have regulations that providers might not agree with and such scenario creates logjam to development. Sometimes, if the providers are ready and there are no regulations, they cannot launch a particular product.
So, we work in tandem with both sides through conferences, workshops, and a lot of direct capacity building for individual companies to actually bring them up on a whole range of topics: mobile payment, agents banking; and other strategic measures to ensure the industry is well vest with its responsibilities.

Other Financial Inclusion Support Approaches
We do this by using data, conducting research and inviting keynote speakers who have experience working in this field. Also, we bring another provider or regulator to talk to us about and how they have actually done it.
As part of the advocacy, we have two working groups EFIna set up in EFIna secretariat, namely, Non-interest Finance Working Group, which constitutes: when we want to bring alternative or additional financial service or product.
The Group has been working since 2010. In the working group, we intend to have both regulators and operators as members. That way we can get in tandem; and it provides opportunity for the regulators to say, ‘this is what they are thinking about’, and for direct input from the market players to either support or seek ways for amendments.
Some regulators and few market operators are interested in that space. We also have Mobile Money Working Group which started in 2012. That again, it is about bringing together regulators and market players to really discuss on opportunities, and challenges.
For instance, when we started the non-interest group, none of the regulators had regulations in their respective segments; CBN, PENCOM, NIDC or NICOM none of them had regulations. So, we started with ‘blank sheet of paper’, and we sat down to look at the ways to go. We are happy that presently PENCOM has multi-fund guidelines; NIDC has set up their non-interest deposit insurance; CBN has guidelines; NICOM has its own way of doing it. We were involved in developing each of those guidelines or regulations and their capacity. On the operators’ side, we have seen very significant improvements, because they are better informed.
They have launched a lot of services; the Securities and Exchange Commission also sits on our non-interest finance model; now, they have come up with regulations. So, it has taken a lot and after about five (5) years and in our last meeting in December, the Group is now looking at how to sustain its operations via membership who will pay a contributory fee.

EFIna and Sustainability of Financial Inclusion in Nigeria
If we look at 2008 when we did the first survey, only about 21.7% adult population was banked. We addressed some of their concerns: the barriers, supply and demand sides. From the consumer side you see issues like irregular income, high minimum balance, charges, and a whole of issues we were battling with.
The supply side was basically ‘the cost of service to customers is too high’, ‘we cannot recoup what we spend on them, therefore, we are constantly losing money’. And financial inclusion is all about sustainability. If yours is a loss-making venture, you cannot sustain it….

…But You Can Break Even At A Point?
Of course, you may break even for some time, but incurring losses could impoverish you. In other words, we were out to understand both sides and see how we can support them.
So, through our Innovation Fund, we gave grants to organizations as incentive to them. So, if you are planning to develop products and services aimed at the low income segment and relevant to their needs, we can support in two different ways.
We can do that at a Technical Assistant grand level, which is ‘I have an idea. I want to test, pilot it, refine it and I need support’.
We can give a grant on that level at $250,000 Or you have tested, piloted and ready to launch; again, a financial product targeted at low income earners, we can help in the implementation, nurture, launch or roll out.
We can give up to $2 million. So, those are not for individuals, not for lending rather for developing relevant products and services. In that, we see sustainability. So far, we have seen progress.

Results So Far
Based on data we have launched since 2008 to 2014, in terms of number and population, we added 25 million (customers) to the banked segment. And that is a lot, we are looking at the sizes of some African nations.
And it takes a lot to achieve such feats. For the banks, you talk about Know Your Customers (KYC), mobile agents, regulations. In fact, every regulation has paid its role in trying to get us to where we ought to be.
The providers have also considered ways to cut their operational costs. So, you wouldn’t want to go and build a branch in the middle of a rural area, where you get 10 customers. So, how else can you support the rural dwellers, who also are in dire need of the financial services that are not so costly?
That is when the Agent Banking Regulations came up in 2013. What the concept means is that, those ‘mums’ and papas’’ shops can be used as agents by banks; in such that when you go there you can conduct certain banking transactions.
The challenges rural dwellers are facing are obvious. For instance, if it will cost N200.00 to visit the nearest branch of a bank, probably to go and deposit N500.00, it doesn’t make (savings) sense. We hope Agent Banking will address that issue with time.
People talk about M-pessa. It took the operators three years to break even; get volumes. It was only towards the end of 2012 that mobile money licences were given in Nigeria; we are coming to our three years. To us, it is like a reflection point. So, till last year, the things that needed to be done are such as customer awareness.

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Evolving Trends in Financial Inclusion (Services)
In our last year’s survey, some of the respondents are still asking questions like, ‘what do we need mobile money for?’ And the kind of things they talked about, you cannot currently use the products to execute them.
So, that might be why it’s still not getting the expected attractions. For example, people are asking if they can use the platform to pay school fees, hotel bills, ‘pay for my boss fares’, among others.
So, if we do not have such platform available now, they are not likely to use it. None of them talks about money transfer, because we have many ways of transferring money in Nigeria.
Even if it is not the automated process, you see people go to motor parks, send the money through the drivers or through friends, family members; some send airtime and you go and cash it at a discount.
So, because we have so many other ways of dealing with cash transfer, which they didn’t have in Kenya and some other African countries, it is either post office or a bank account; then if you don’t have access to either of the two, you will be subject to sending it through a family member, so, each country is different.
We should focus on our differences and not try to replicate what is obtainable elsewhere verbatim. By the time it can be used to pay bills or transport fares, and then the more people will use it.
In Nigeria, most people tend to wait for others to testify about the operational competencies of a particular phenomenon before they ‘rush’ to embrace it. That is the kind of stage we need to get to increase the uptake and adoption rate of mobile money. 

Comparing Nigeria to Other African Countries’
Probably, our growth rate is slower, but we are catching up with the trend and we have more numbers. It is about really finding what it takes to get to the peak. I am confident that with the data we have just gathered; because we have not asked such questions before, we will soon get there.
The data are telling us about something. We only need to sit down with our mobile money group and make the data available to them to work on. Topical will be how to address the raised points, because it is about the customers; their satisfaction is paramount. We will identify channels to help us scale up the process.

Roles Of Post Offices & Agent Banking
Actually, a lot of people would say they don’t really know where the Agents are; neither can you open up a database that shows us where the stations nor shops are. That first, is a bit difficult. As part of our survey this time we asked questions like, ‘Is there a petrol station near to you? Is there any post office around your area? Or do you have a ‘provisions’ shop near to you? Can you identify a restaurant near to you? The questionnaire was meant to give people ideas about where they can go and establish agents presence, so they can be as close to the customers as possible. So, they are beginning to roll out. The problem those establishing the agents are battling with is as per how many transactions you can be able to push to the agent for sustainability. Although, the agents have their core businesses but you have to train them.
Some of them (agents) expressed concern that should they fix a bank’s signage on the roof of their shops that people might have the notion they are keeping large amount of money. So, there was a lot of discussion around security and how we can have insurance cover for them.
The truth is that for the rural areas we just have to come up with strategies about how to penetrate those areas. With the agents, we can achieve that; but we need to be claver about how we do it. Post Offices offer us an option. But there are only about 5,000 of them.

CBN & Partners’ Efforts
The CBN and the Bill and Merindagate Foundation are mapping out the potential and current access points. And they intend to map out motor parks, and some other points. The result is expected in April this year.
They did similar exercise few years ago. They added markets this time. Although they did mapping in motor parks before, but they shave more questions to address. That will help; give ideas as the potential outlets are situated.
Secondly, they will map commercial and microfinance bank branches, mobile money outlasts, etcetera. They are doing it all over Nigeria and the map can show you where there are, ‘nothing’ at the moment or maybe just one and other areas have everything. So, you will begin to see where supply is an issue. From our end, we can look at demand, because we have asked questions about those who don’t have accounts and would like to open.
We have actually seen high level of ‘yes, I would like to have this or that’. The numbers are in the region of ten to fifteen million. Some of them are concerned about how it benefits them or how to access it or use it.
So, financial education or literacy is very important. A lot of people do not, yet, understand the benefits of certain products.
Also, having a robust customer-challenge-redress mechanism is very important; ‘if I have a problem, who do I go to? Those are the things we see that before people will start dabbling into the process, they need to fully understand.

Incentives for Operators
Government can digitize payment systems. Government can say for example, you can pay your taxes through your mobile money. We have seen that happen in Cameroun. If there is a property tax, it can be used as a pilot scheme.
Afterwards, we will learn from the mistakes, readdress them and move other payments to the digital or mobile platform. If you want to pay cash you can as well go to the bank and pay through the mobile. So, if government can give that as a sort of mirage, it will help.
There are other conditional transfers-where they give money or benefits to certain loyal-privileged homes, they can increase the trend. They are actually doing it with a kind of program between mobile money operators and certain departments of the Government like the Ministry of Health. Then, they will publish the result on what worked, how it worked, and what the issue is.

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Connectivity
The challenge people talk about is network failure. The issue of drop calls; you send an SMS and it’s not delivered. For instance, if somebody had paid money into your account and you are expecting to get an alert, yet it didn’t come.
Someone might send a partner to purchase goods in a particular shop with a promise to transfer the money to your account. If that didn’t deliver, I might be thinking you are trying to be claver and vice versa, because I might think you got it and lied.
How mobile money operators address that issue is very important too. If they, the telcos are to take the responsibility, let them address the challenge. For instance, we still need to extend network coverage to certain rural areas; use multiple channels or mobile shops like the PoS, it will become more ubiquitous.

EFIna, E-Tranzact Mobile Money Activation Project
E-Tranzact is one of our guarantees. Like I explained earlier, we give grants for innovations. So, we gave them a grant to do some work in Kano and Ogun States. They will try to demonstrate how market women, for instance, can pay each other for goods and services through using the mobile phones. They have made progress on the project.
The fund was based on combined efforts of EFIna and E-Tranzact. They had a little challenge in Kano State, because of the security related issues. In Ogun State, they have made fair progress in terms of recruiting agents, customers.
So, there was a lot of customer awareness they had to do. They also give incentives to customers, motivating them to participate and continue to use the channels afterwards. The pilot phase is coming to an end. We will see if they will continue when the incentives are withdrawn. We have other guarantees operating in many jurisdictions in the country.

EFIna’s Expectations In 2015
We hope that financial inclusion will continue to be at the forefront for the banks and providers to add value to their customers.
While the banks will continue to see they have to diversify, the customers will see the need to embrace the platforms. With the drop in oil price and the devaluation of the Naira, they (the banks) have to think of other ways to generate revenue, increase their customer number with different products and services. So, we see it as a major opportunity to really focus on what need to happen to deepen financial inclusion.