Nigeria Aims To Reduce The Financially Underserved Population via Agent Banking

January 5, 2021

Agent banking brings many benefits to customers, banks, businesses, and the Nigerian economy.

Agent banking also strengthens financial inclusion by providing banking services where the bank does not have a physical branch. For banks, using an agency model instead of setting up a branch has the advantage of reducing costs by providing limited financial services to those who spend less.

The Agent Banking Business

For agents within this scheme, this offers opportunities to diversify their businesses and earn additional income. In this way, they deepen customer service skills and acquire even more skills in information technology, liquidity management, and relationship building.

To be successful in agent banking, your business should ideally be placed or if not already be situated in an environment with few or no bank branches or in an environment with high customer traffic. Also it will be imperative that as an agent you need to develop appropriate risk management strategies to prevent fraud, especially that perpetuated by previously honest employees. You also need to raise reasonable working capital and follow laid down rules by the scheme promoter (bank) to strengthen your liquidity management skills and increase liquidity.

As with any other business opportunity shared here, conduct relevant research and, if possible, seek expert advice before embarking on this line of business.

The Regulatory Landscape

In 2015, the Central Bank of Nigeria released a regulatory framework for super-agents recognized by Nigeria and expanded financial inclusion through major contact points across the country, thereby identifying agent network managers' roles.

A super-agent entity is signed by an agent bank provider (mobile money operator, money deposit bank, or microfinance bank) and then subcontracts other agents in the network while maintaining overall responsibility. 

In other words, this new participant will treat agency management as its core business, while operators will focus on the core business of providing financial services. This may be a better strategy for traders who appeared to be struggling to manage their agents' banking relationship in the beginning.

In reality

Financial inclusion's positioning is to defeat and change the narrative of the unbanked in the most radical way, and Nigeria is gradually achieving this goal. 

Kenya is one of the only major countries in Africa to have made significant progress in creating an enabling environment for agency banking. It has worked hard to make it easy for citizens to obtain financial services. Case in point we can see the resounding success of  Vodafone M-Pesa. 

Together with other talented mid-career and affiliated agents licensed by the Central Bank of Nigeria through the Commercial Bank of Nigeria, we see China’s OPay as having the most opportunity to be as encompassing as M-Pesa and establish a lasting foothold for Nigeria.

This strategy is clearly taking hold based on statistics from the Central bank,albeit at a slower pace than Kenya experienced and from a very low base of agents to begin with. The CBN shows that  agency acquisition volume increased by 184% year-on-year,  from 83,560 agents in December 2018 to 236,940 at the end of 2019.

Electronic payments

Under the electronic payments and e-bill stats, we take and keep a close eye on the mobile payments stats because this is the area that will pretty much make or break this financial inclusion plan.

According to the same report released by the CBN, the number and amount of electronic payments in 2019 increased by 46.7% and 25.5% to 3,028 million and NGN 167,014.32 billion from  2,046.million and NGN 133,042.24 billion in 2018. This reflects the growing acceptance of electronic transactions due to increased awareness of electronic payment channels and increased consumer confidence.


From the above stats, it is clear that the arrow is pointing upward, even though recent numbers have shown that the target of 70% inclusivity by 2020 might not be met but could actually be attributed to the coronavirus pandemic. Mobile money uptick is also pointing higher even though it has a long way to go at less than 20% from the above data.

Nigeria faces many challenges in this endeavor to serve the unbanked. However, the future is bright, and we hope that it ends up successfully.

Send more than money.