Onofiok Kings, a financial expert with Proficient Capital, a finance company with interest in loans, retail credit, risk management, debt counseling, investment, quality risk assets and contingent liability, headquartered in Abuja.
He believes that Nigeria is a perfect place to apply financial inclusion to its full potential.
In this interview with Abdulkareem Mojeed of PREMIUM TIMES, he speaks about the state of financial inclusion in Nigeria and said emerging nations should implement initiatives that take into consideration the peculiarities of their environments and most critically its local people. With this, he said financial inclusion should rise to a socially acceptable level.
PT: So what’s your impression about the POS kiosks that we now have positioned at strategic places in our environment today?
Kings: The idea has always been apt, and even more significant when the pandemic started in March 2020. The fact that a lot of people couldn’t go to the bank as the bank was running skeletal services saw a high rise of financial inclusion taking advantage of the Point of Sale (POS) or Cash Points. Most customers and potentials had the freedom to deposit and withdraw cash and also bring banking services closer to everyday people. Cash points and agency banking which used to be a thing of the unbanked and underbanked segments of the society became a foremost means of funds circulation, thereby increasing turnover of various agencies by 50 per cent. Cash points are now building branchless banking, which comes with the benefits of risk management, product availability, improving financial inclusion, and ensuring a wider customer base. It is a method for traditional banks to extend the network of their branches in a cost-effective way, via authorised agents in the rural populations and projectively this might even target over 40 per cent of the underbanked before the end of 2021.
PT: What role is your firm playing towards boosting financial inclusion status in this regard, and what are the untapped opportunities you think Nigerians are not harvesting?
Kings: In Nigeria, which is the biggest economy in Africa, about 62 per cent of the population lives below the line of poverty. Many people in Nigeria’s rural areas are still underdeveloped with little or no earnings. About 70 per cent of Nigeria’s population earn less than $1.25 a day. With more than 200 million people being one of the largest populous countries in Africa and a fast-growing economy, Nigeria is a perfect place to utilise financial inclusion to its full potential.
Despite getting about 40 per cent GDP from Nigeria’s rural agricultural economy, most of the development and investments are city-oriented.
At Proficient Capital, we have in count over 20 cash points with two loan offices in the city of Abuja. This has enhanced opportunities like quick funds, loan collections, job creation, build lives/homes, create synergies, foster unity, boost businesses, circulate funds, build investments and above all improve the development of the economy.
PT: What do you think are the major constraints and challenges bedevilling the quest of expanding financial services access and use to underserved populations?
Kings: Everything in this country is a function of funds. From starting a small business to growing it. Proficient Capital is presently funded by our own equity contribution whilst we hope to get positioned on call to inject more capital on a sustainability basis and enormous demands for risk asset. Given the intense competition for businesses in Nigeria, capital commitments from potential investors are often a prerequisite for participating in transactions. In addition, capital allows lending companies to earn good returns or enhance yield. Considering the emerging nature of the structured lending market, there are significant opportunities to provide high-yield products to end-users seeking capital to fund their expansion.
We have been structured to have the capacity to attract significant deposits from corporate clients, institutional investors, and in the interbank market to provide cost-effective funds needed to support its lending business/Cash Point activities and enhance its underwriting capacity in equity capital market transactions. We have instituted a specialized committee driven by people who have the requisite knowledge and skills in deal structuring, investment banking, corporate finance, and wealth management businesses drawn from within leading investment banking companies in Nigeria. We believe that given the expected growth in the country over the next decade, the economy will demand more structured lending products and advanced advisory skills away from the current vanilla equity capital market and debt financing activity. The success of lending firms at all the national, regional, and international levels will also provide adequate under-pillars for Proficient Capital to build upon.
PT: Are there specific strategies you think Nigeria can adopt to close the financial inclusiveness gap amongst her citizens?
Kings: Financial inclusion has assumed a critical development policy priority in many countries, particularly in developing economies like Nigeria. Even though they may have become a general phenomenon, its nature, form, and challenges differ among jurisdictions and as such cannot be addressed by a single product or “one size fit all” approach. I believe emerging nations should implement initiatives that take into consideration the peculiarities of their environments and most critically its local people. With this, inclusion should rise to a socially acceptable level.
PT: To the best of your knowledge, how would you say the National Financial Inclusion Strategy (NFIS) adopted by the Central Bank of Nigeria (CBN) in 2012, has fared?
Kings: Financial inclusion is today widely considered as a right of all citizens to social inclusion, better quality of life, and a tool for strengthening the economic capacity and capabilities of the poor in a nation. Using the Central Bank of Nigeria as a case study, financial inclusion has manifested prominently in Nigeria with the bulk of the money in the economy staying outside the banking system. Over these years, the government and monetary authorities have introduced varying policies aimed at deepening financial inclusion within the economy. The policies ranged from various institutional involvements such as the establishment of community and microfinance banks to specific policies and programmes designed to facilitate access of the financially excluded to formal financial services. The private banks, on the other hand, have also been engaged in innovations and activities aimed at getting more people involved in the financial inclusion process, though their level of involvement have always been moderated to the extent that profitability is enhanced. Going by these thoughts and synergies, whereas putting a lot of economic factors to play we believe more can be done to at least onboard over 60% upward curve before 2025.
PT: According to a CBN analysis, in 2016, 58.4% of Nigeria’s 96.4 million adults were financially included, 38.3% banked, 10.3% served by other formal institutions and 9.8% served by informal service providers. However, in 2020, Nigeria plans to have 70% of its adult population in the formal financial services sector and 10% included in the informal sector. Do you think this has come to fruition?
Kings: This is possible. Since 2005, the Nigerian financial services sector backed by the apex bank has witnessed increasing activities by both the government and the regulatory authorities aimed at deliberately promoting policies that are intended to grow financial inclusion. The CBN has been at the forefront of encouraging and supporting products that are specifically targeted at the low-income and financially excluded, while the government has focused more on both interventionist financing arrangements and building institutions and frameworks that promote financial inclusion. Worth noting that, one of the critical initiatives in this direction was the incorporation of financial inclusion as one of the cardinal objectives of the Nigerian Financial System 2020 (FSS 2020). The FSS 2020 represents a holistic and strategic road map and framework for developing the Nigerian financial sector into a growth catalyst that will enable Nigeria to be one of the 20 largest economies by 2020. The Financial System Strategy (FSS2020) identified six stakeholders within the financial sector. These were the providers of financial services, which are regarded as the suppliers in the value-chain of financial inclusion. The group included the banking institutions, non-bank financial institutions, insurance companies, capital market players, pension institutions, and technology providers together with their regulatory bodies, all important to the process of financial inclusion.
PT: The NFIS document of the CBN has it that a total of 40.1 million adult Nigerians (41.6% of the adult population) were financially excluded in 2016. The strategy plan of the CBN revealed that 55.1% of the excluded population were women, 61.4% of the excluded population were within the ages of 18 and 35 years, 34.0% had no formal education, and 80.4% resided in rural areas. How is your establishment in its own microway contributing towards bridging these gaps? Does it bother you?
Kings: All over the world, the microfinance model which involves majorly the provision of financial services to the poor and low-income earners has been identified as a potent instrument for promoting financial inclusion as well as poverty alleviation. The government, in 2005 launched the National Microfinance Policy which provided the supervisory and regulatory framework that will not only facilitate the growth of privately-owned microfinance institutions but also permits and facilitate the participation of mostly the third sector institutions, including market associations, cooperatives, non-governmental organisations, self-help groups, in the microfinance model.
These institutions together remain the major vehicle for the inclusion of the large and many users of the informal sector where the bulk of the unbanked exist. I think if anything bothers me, it should be the powers and the potentials not to achieve these objectives, because we are strategically positioned and with our good corporate governance practices, we would be positioned to inject more funds based on sustainability.
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