How The Unsung Foot Soldiers Of Nigerian Fintech Are Hauling Financial Services To The Last Mile Via Agent Networks

It’s around noon on the eve of Christmas and the air is thick with fanfare. In the few hours leading up to Christmas Day, everyone seems to be heading somewhere. And Udoka is one of those people who are headed somewhere — many different places, actually.

Christmas Eve is typically the day for last-minute shopping and last minute travels. And on this day, Udoka has to make a run for the grocery store, and then the clothing store, followed by the gift store and finally the salon. And with some luck, she would also like to hitch a free ride later that day to her country home where her family was waiting.

She’s cutting it too close by trying to do all of these on Christmas Eve but it’s not like she ever had much of a choice. It’s the reality of holding down a nine-to-five in a crowded city like Lagos.

By the time she leaves office on Christmas Eve, it’s already past midday. First things first, Udoka needs cash for all the running around and lots of it too. So, she makes her way to a nearby bank to withdraw from an ATM. But on getting there, she finds a queue longer than what people see in major voting booths during elections.

Then she checks the next bank, and the next one, and another one. It’s all the same, the ATM centres are crowded and the machines are barely working. She would never be able to do everything on her to-do list if she waited it out.

But Udoka doesn’t panic. She just hails a bike and finds her way to her area of residence which is quite close to the central business district. There she finds what she’s looking for; a mobile money agent.

She gets all the cash she needs in a matter of minutes and also has time to stop by her apartment and relieve herself. She could have easily found a mobile money agent near her workplace with her phone if she was familiar with OPay or MoMo Agent.

But in any case, by 5 pm on that same day, she’s home and dry. Everything on her to-do list is checked. Udoka is all packed up and ready to hitch a free ride to her hometown with a neighbour who is going her way. 

Early the next day, she’s in her hometown in Eastern Nigeria, having a swell time with family and enjoying her first dose of Detty December.

Credit to Udoka who seems like a strong, determined fellow. But she probably wouldn’t have pulled it off if not for the existence of mobile money agents who have sort of become the unsung heroes of Nigerian fintech.

They are everywhere, they can be found in kiosks in every street corner these days. Some of them are even mobile such that they can come to find you if you want, or you can find them with your phone. They are known as mobile money agents and they are hauling fintech to the last-mile especially in areas where banks and ATMs are sparse, scarce and/or overstretched.

Mobile money adoption and the uptake of mobile money agent networks have grown in Nigeria over the years because of the inability of the traditional financial institutions to truly reach people at the grassroots.

ATMs are sparse. This is how people conduct their business here. For when you sit in Lagos and build, remember these people. pic.twitter.com/F0YRQ9Bvo7

— Celestine (@cyberomin) January 1, 2020

Operated by agents spread across towns, these pay points offer a number of services from cash withdrawal and deposits via PoS machines to bill payments, cable television and airtime subscriptions, and even sports betting payments. 

So true. They have the potential of reaching places no atm can. The Opay app has a nice feature that locates them easily with GPS details and phone numbers. Wish there was an app that does that for all of them..

— John Great (@dgreatestone) January 1, 2020

The agents are signed up to legacy institutions including the commercial banks themselves, plus telcos like MTN and Airtel, as well as fintech companies like PayPadi from Now Now Nigeria, Kudi, Paga, Bankly, Kuda, and more recently Opay. Some lesser-known, local mobile money services are also players in the space.

A sizeable slice of Opay’s transaction volume is from their agent network.

I laugh when people who have never traveled to other part of Nigeria talk about fintech payment. You don’t know what is going on. ? https://t.co/1MUUSIVsdY

— Usman Abiola (@Abiola_Usman) January 1, 2020

While the charges incurred in using mobile money agent services are typically higher than the fees charged by banks for ATM withdrawals/payments, people consider mobile money agents a no-brainer because of convenience and proximity, plus the fact that it is actually the cheaper option at the end of the day.

The charges common with mobile money agent services are relatively much higher when compared to regular ATM charges on withdrawals or deposits. For every NGN 5 K (USD 13.82), there is typically a service fee charged in increments of NGN 100.00 (USD 0.28).

Interestingly, ATM transactions are now a lot cheaper given that fees can be as low as NGN 10.00 (USD 0.027). But because ATMs aren’t as widely spread as they ought to be, it follows that there’s hardly any sense in spending as much as NGN 1 K on transportation expenses just make a withdrawal of NGN 5 K from an ATM.

Nor is there any merit in spending nearly 3 hours waiting in line to carry out a transaction that shouldn’t take you more than 5 minutes with a mobile money agent.

That’s why mobile money agent networks have established themselves in the Nigerian fintech environment and continue to assert themselves.

In 2018, the Central Bank of Nigeria (CBN), Deposit Money Banks (DMBs), and Nigeria Inter-Bank Settlement Systems (NIBSS), licensed mobile money operators and other stakeholders to prop up the role of agent banking in achieving financial inclusion.

And after a review of progress made in the financial inclusion journey, the financial institutions initiated the creation of Shared Agent Network Expansion Facility (SANEF) with the primary objective of accelerating financial inclusion in Nigeria.

The core objective of SANEF was to facilitate the proliferation of agent points throughout Nigeria.

At the moment, there are some 150,000 agent networks across Nigeria and that figure is on track to hit 500,000 by the end of 2020.

This is in line with concerted efforts by financial institutions and other stakeholders in the industry to bring about a drastic reduction in the number of Nigerian adults who cannot access formal financial services. And it sure looks like the whole plan is coming together.

Featured Image Courtesy: NigeriaBusinessDirectory