Nigeria remains a largely cash-dominated society, primarily due to limited financial literacy and a lack of financial infrastructure. Against this backdrop, the Central Bank of Nigeria (CBN) is launching Payment Service Banks (PSBs) to make banking services available to over 60 million financially excluded Nigerians by 2020, says GlobalData, a leading data and analytics company.

The company’s report, ‘Payments Landscape in Nigeria: Opportunities and Risks to 2022’, reveals that this measure is expected to bring low-income earners and the unbanked population under the country’s financial services sector. Currently, more than half of the country’s adult population remains outside the purview of a formal banking system. CBN is now taking several measures to promote financial inclusiveness and thereby encourage electronic payments in the country.

Kartik Challa, Payments Analyst at GlobalData, comments: “The concentrated efforts by the central bank and other stakeholders are expected to drive banking penetration in Nigeria. This development will gradually alleviate cash dependence and help accelerate the shift towards electronic payments.”

In collaboration with deposit money banks, mobile money operators, and banking agents, CBN launched the Shared Agent Network Expansion Facilities project in March 2018. As part of this initiative, 500,000 agent networks will be deployed in under-served urban and rural areas.

This banking model provides basic banking services such as cash deposits and withdrawals, fund transfer, bill payments, and government benefits, with a plan to serve 60 million financially excluded Nigerians by 2020.

In addition, the central bank in October 2018 released a new set of guidelines for the licensing and regulation of PSBs, allowing companies other than banks to offer banking services to their customers. Telecommunication companies, including MTN Nigeria and Airtel Nigeria, have already shown their willingness to launch their respective PSBs in 2019.

IMAGE FOR PUBLICATION: PLEASE CLICK HERE: ‘Nigeria: Projected Growth of Debit Cards in Circulation (m), 2014–2022f’

Challa concludes: “With a combined subscriber base of nearly 100 million and an extensive distribution network, these two companies can contribute significantly towards financial inclusion. These financial inclusion initiatives will drive overall banking penetration in the country which in turn will aid the demand for banking products such as saving accounts and debit cards.”