Nigeria’s Financial Inclusion Policy has Come at a Cost
Adeola Odeku Street in Lagos’ upscale neighborhood has the highest concentration of bank branches in Nigeria, but when people need cash they turn to mobile money agents armed with palm-sized point-of-sale devices , not the lending institution. Nigeria has more than 2 million mobile agents across the country (one for every 100 people) handling most of the country’s daily transactions and leaving the formal banking system starved of cash. The Central Bank of Nigeria hopes to increase financial inclusion and encourage its spread. But regulators now fear they are draining the currency system, undermining efforts to fight inflation and taking the naira further out of their control. According to the International Monetary Fund, there are currently approximately 1,600 such facilities per square kilometer. The surge is driven by an influx of young people looking for work and the rise of fintech companies such as Opay, Paga and Moniepoint that offer affordable terminals. Now, the central bank is trying to crack down on agents ahead of the holidays, when demand surges and agents raise fees.
