How CBN intends to protect Nigerians in unbanked areas amidst Naira redesign

Ahead of the circulation of the new Naira notes, the Central Bank of Nigeria has disclosed that agency bankers have been accorded priority to enable cash collections in unbanked areas.

How CBN intends to protect Nigerians in unbanked areas amidst Naira redesign
Godwin Emelife 

The Central Bank of Nigeria (CBN) has disclosed that it has made provisions that will enable residents of rural communities in Nigeria—mostly unbanked, to deposit their Naira notes ahead of the issuance of new notes starting from December 15, 2022.

More than 42 million Nigerian adults live in rural areas that lack basic banking services. According to a 2021 EFInA study on trends in access to financial services in Nigeria, there are numerous gaps to fill in the rural areas populated by unbanked people excluded from the financial ecosystem.

The EFInA report shows that while 71% f urban adults have bank accounts, only 40% of those in rural areas have a formal account. An estimated number of five bank branches services 100,000 adults in Nigeria, according to the World Bank.

Since the CBN announced its plan to redesign Nigeria's legal tender, the question of how communities in unbank areas will be able to deposit the current Naira notes before it will become invalid has been asked.  

To address it, Osita Nwanisobi, CBN's Director of Corporate Communications said that:

"Agent locations across the country have been fully enabled for BVN registration, opening banking accounts/wallets and e-Naira wallets, electronic card distribution, and cash deposit, among others. Due to the policy, the agents have also been accorded priority to enable them to deposit cash collections through bank branches across the federation."

Why is the CBN using agency banking?

Agency banking is a model that takes financial services to the last mile using human agent networks or merchants, equipped with point-of-sale (POS) machines on behalf of a licensed deposit-taking financial institution and/or mobile money operator.

In June 2020, a study by EFInA revealed that 30% of Nigeria-based agency banking outlets are dedicated shops, while over 60% operate alongside their regular business. This has enabled financial inclusion in rural communities as well as the adoption of cashless transactions since regular shops now have access to POS machines.

As of 2020, Access Bank and FirstBank had about 59,000 and 100,000 agent bankers, respectively across the country. Access Bank said it added 4.46 million new bank customers through its agents between 2020 and 2019. FirstBank reported a 167% growth in annual agency banking transaction value to $16.2 billion in 2020, compared to 2021.

"Whilst noting the progressive increase in financial access points and alternative banking channels over the years (electronic/internet banking, mobile apps, ATM, Cards/PoS, eNaira, agent banking, etc.), the Bank acknowledges that these may not be evenly distributed across all geopolitical zones and in some rural areas," Nwanisobi said. "In operationalizing this initiative, the CBN has been collaborating with relevant agencies and other stakeholders in the financial system in its execution, particularly ensuring that vulnerable citizens are not disenfranchised."

Related Article: How Errandpay is powering financial inclusion through Fintechs, MFBs and MFIs

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