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Increasing access to finance through agent banking

September 14, 2010

Speaking at the event, Modupe Ladipo, Chief Executive Officer, EFInA said, “Following consolidation in 2005, Nigerian banks embarked on aggressive retail banking strategies and branch expansion programmes, but this is an expensive approach to securing smaller, low value deposits”. Banks and customers can interact through retail agents in a secure manner, through the usage of Point of Sale devices and/or mobile phones. Agent networks sometimes called business correspondents, have been successfully rolled out in other emerging markets including Brazil, Columbia, India, Pakistan and Kenya.  Agent banking is an innovative approach to providing banking services to the unbanked and underbanked population in Nigeria. In addition, Ms. Ladipo also stated that the data from EFInA’s Access to Financial Services in Nigeria 2008 survey could be used to develop a business case for expanding access to low income segments. Analysis from the data showed that there is a potential to mobilise deposits of USD14.2 bn annually from the low income segment and that break even can be reached within 3 years, by using an agent-based banking model.

The keynote speakers at the event were Frederick Eijkman, CEO of Pep InterMedius Limited and Jennifer Barassa, CEO, Top Image Limited.

Pep InterMedius Limited is the leading cash distribution network for Kenya’s successful mobile money platform M-PESA and manages a network of over 150 agent outlets. Mr. Eijkman stated, “The average size of each transaction is $25 and through our agents we conduct over 250,000 cash-in and cash-out transactions per month. The total value of transactions is over $4 million per month”. Mr. Eijkman stated that the key success factors for agent management are as follows:

  • Agents must be compensated adequately for providing cash-in/cash-out services, preferably on a per transaction basis
  • An aggregator model must be implemented to ensure liquidity across the agent network
  • When mobilising rural agents, stick to local people, as the unbanked prefer to deal with people they know when it comes to money

In terms of Nigeria, Mr. Eijkman stated that a robust agent network is critical to the success of any branchless banking distribution model. He reiterated that one of the main challenges is to ensure agents have sufficient cash and e-float so that they can meet customers’ needs for quick deposits or withdrawals.

Top Image was appointed by Safaricom to manage, train and educate M-PESA agents on the use of M-PESA services. To date, M-PESA has over 19,000 agents. Ms. Barassa, stated that it is critical to regularly train and monitor agents as they are the interface between the mobile money provider and the customer. Training should include topics such as product knowledge, anti-money laundering (AML) and know your customer (KYC) requirements to ensure compliance with the Central Bank’s regulations. Agents are tested and must score a minimum of 80% before they can be registered. Top Image also educates consumers on how to use M-PESA services.


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