There should be some consideration for doing a little bit more detailed market education that involves a deliberate attempt to change consumer behavior within the sphere of financial inclusion
By Edmund Olotu
On financial Inclusion
Financial inclusion is a deliberate strategy or policy that involves connecting otherwise unconnected, undocumented or the less privileged bottom of the pyramid people to the financial infrastructure of society i.e. banking systems, mobile money etc. anything that facilitates electronic recording of financial transactions. So, in the Nigerian context, it would mean bringing the informal sector into the formal sector. This way, people in the rural areas, the underbanked, the people considered urban poor are brought into the financial infrastructure by giving them an element that can be tracked and traced, access to financial services that go beyond deposits and transfers to include loans, saving products, potential insurance, micro pensions etc.
On Nigerians embracing the concept
I believe Nigerians are ready to embrace the concept but I think the legislation being laid down to allow this to happen properly is not robust enough. There should be some consideration for doing a little bit more detailed market education that involves a deliberate attempt to change consumer behavior within the sphere of financial inclusion. Because, if we do not change the behavior of the people we seek to financially include, we will continue treating their finances or how they interact with money in exactly the same way. So, no matter the number of technological solutions put in place, if we are still communicating in the exact same way, then there is less adoption of these things. Whilst Nigerians are generally open to it because these initiatives are successful when they are carried out in silos, there is a high level of adoption by that specific target market, but when we consider a need for widespread adoption, there is a need for a lot of market education.
On Entrepreneurs taking advantage of financial inclusion
Reaching the last-mile target market specifically – delivering products to them – means them being able to pay for your services. It’s one thing to get your products in front of these customers but if they do not have the capacity to pay for your products in a manner that is affordable, accessible and effective to both you and the customer (you making a profit and them receiving value); those customers become exempt from your customer base.
So financial inclusion brings in more people who would have otherwise not been privy to your product and gives you a larger market size than you would have ordinarily been able to distribute your product to.
On Challenges entrepreneurs face
If we are speaking specifically about Nigerian fintech entrepreneurs who build financial technology products, the predominant challenge they face is regulation from the Central Bank. I think the regulation from the CB currently stifles Fintech companies. At this point in time, Nigeria should be an exporter of Fintech to other parts of Africa and indeed other emerging markets, but if we can’t develop or use our own country as a test bed for some of our solutions as a result of restrictive regulations, then the chances that we will be able to export them is extremely low.
So whilst there is integration into the existing Nigerian banking process, we must understand that the reason the term ‘unbanked’ exists is that the present banking system isn’t catering to this target market. Thus if all the platforms are still being directed at the cause of the initial problems, then we cannot expect a revolutionary change in financial inclusion in Nigeria. It is important that Fintech companies are given a bit more flexibility to be innovative, grow their business and improve the economy.
On the Nigerian government
I think the government has a role to play in ensuring that more youth get the opportunity to acquire new skills, however, I believe the government is set in its way in how it believes education and skills acquisition should take place. This obviously takes places through existing universities and technical schools. However, if these tertiary institutions are benchmarked against their counterparts abroad e.g. the MIT Media Lab and initiatives from the Stanford Program, we will realize that our institutions are years behind.
A role, I think, the government can play is to partner with innovative companies that want to take the front seat in developing up-to-date skills acquisition programs just like NESA and others willing to set the tone that states that formal education is not a compulsory prerequisite to get a job in the labor market.
When skills acquisition is mentioned, we are talking about a person’s ability to apply skills learned into carrying out a job and solving real problems. There is still a problem when individuals who acquire these skills attend interviews and employers can’t get past the fact that these individuals do not have degrees from formal tertiary institutions.
So, I strongly believe that the government can help in setting the signal by supporting such skills acquisition programs stating that graduates from these programs should be treated with the same level of reverence as the graduates from formal universities. The government can then approve and recommend the learning programs of such skills acquisition initiatives as being thorough enough to impart the required knowledge and skills into its students to be able to stand their own in the labor market.
On what the future holds
It is difficult to say what the future holds, but what I do know is that I would rather not bet against the future by saying it is bleak. I think with the right tenacity and the right communication and dialogue, things will begin to align themselves. Regulations and government signaling will align themselves. Corporate sectors will also align themselves in terms of consuming technology products and fintech platforms from Nigerian entrepreneurs. This will in turn help with setting the signal that individuals who are a product of such platforms may not necessarily have to attend formal institutions but have the right level of training to be accepted into the labor market. Also, it can be recommended that graduates of formal tertiary institutions should be allowed to polish their skills by passing through some of these programs.
All these with the right amount of dialogue and action will ensure a bright future. We need to be a little more deliberate, all stakeholders – government, educators, entrepreneurs – need to be more deliberate in ensuring the future is indeed bright for the generations coming after us.
Editor’s Note: This article was originally published in The Spark Magazine. Find the magazine here to read other articles.