Between 2016 and 2018, Africa’s largest economy, Nigeria, included 2.6 million more people in the formal banking system, reducing the exclusion rate from 41.6 per cent to 36.8 per cent in two years, according to the Access to Financial Services Survey by the not-for-profit Enhancing Financial Innovation and Access, (EFInA).
Thousands of the newly banked people were beneficiaries of the Anchor Borrowers’ Programme, (ABP) in Nigeria’s north, PREMIUM TIMES’ days-long investigation in Sokoto and Kebbi states show.
The outcome of the investigation, involving interviews with officials, locals and farmers in some of Nigeria’s most rural and remote local government areas spread across the two North-western states, points to how government social programmes could help drive financial inclusion in long-left behind communities.
But as investigation further showed, more literacy and economic improvements among wider local populations beyond the beneficiaries of a social programme would even help deliver greater impacts in terms of financial inclusion.
The ABP is the Buhari administration’s programme mainly targeting small-holder subsistence farmers to help them scale their businesses to a commercial level. It also targets millers with the aim of increasing their capacity utilisation.
In an official statement that followed the launch of the ABP in November 2015, the Central Bank of Nigeria, which coordinates the programme, “set aside N40 billion from the N220 billion Micro, Small and Medium Enterprises Development Fund for farmers at a single-digit interest rate of 9 per cent.”
The Central Bank said, then, that it had decided to shift from merely concentrating on price, monetary, and financial system stability to acting as a financial catalyst in specific sectors of the economy, particularly agriculture, in an effort to create jobs on a mass scale; improve local food production; and conserve scarce foreign reserves through the ABP.
Though not listed as one of the policy objectives at its launch, financial inclusion is now a considerable outcome of the ABP in Nigeria’s north.
“Many of us here opened bank account and got BVN because of the (Anchor) Borrowers’ Programme,” said Mallam Kashibu, Islamic cleric turned farmer in Argungu, speaking through an interpreter.
This is because the programme makes having Bank Verification Number, BVN, and an account with a commercial bank compulsory for any beneficiary.
Before the ABP was launched, most of the farmers in Sokoto and Kebbi were not banked, several persons interviewed, including former commissioner for agriculture in Kebbi, Garba Dadinga and chairman of the rice farmers association in Sokoto State, Salihu Ibrahim said.
“It was too poor,” said Alhassan Umaru of the use of banking service in Kebbi State before the ABP. Mr Umaru is the chairman of the rice farmers association in Jega LGA of Kebbi State.
Apart from Mr Umaru, his counterparts in other LGAs such as Wurno and Goronyo in Sokoto State, Yahaya Doka and Hamza Mohammed, respectively, lamented the rate of financial exclusion – even after the ABP.
Visits to Sokoto and Kebbi communities showed that, outside the city parts, the mostly banked populations are civil servants and farmers enrolled in the ABP, while others remain largely unbanked.
Nigeria’s north remains the most financially excluded with the North-west having 62 per cent exclusion rate by 2018, according to the EFInA. Comparatively, the South-west has 19 per cent exclusion rate.
Visits to LGAs in Kebbi and Sokoto would offer a window into the real conditions explaining the EFInA’s data. Two crucial conditions are widespread educational limitations and economic disempowerment.
“Of course, education has a role to play (in boosting financial inclusion),” Mr Alhassan said in Jega. “What contributes to the non-utilisation of the bank is illiteracy. If people are literate or educated, it will reduce ignorance, and once ignorance is reduced, you will see the importance of bank(ing) even if you don’t have much money.”
Mr Alhassan, who is the chairman of the rice farmers in Jega, is literate but most of his members, numbering thousands, are not, a reflection of the overall population, including other occupational groups.
Similarly, in Goronyo, the chairman of the farmers, Mr Mohammed, would be our interpreter when interviewing other farmers or when we had to haggle prices with traders or hire cabs.
Then, poverty means having not much to save, thereby providing no motivation to use banking services, reasons Yemi Okeremi, the Premium Financial Systems chief in an interview with BusinessDay.
“We still have a large population living below two dollars a day, how do you want to include them financially?” Mr Okeremi said in the interview.
So, as both poverty and illiteracy serve as inhibiting factors for financial inclusion, banks are scarcely present in several LGAs, which are mostly rural, due to consequent low patronage. In Goronyo and Wurno, for instance, apart from a microfinance bank in the former, there is no other bank. In each of the two LGAs, there used to be a branch of UBA, which shut down around 2009.
Bagudo, which is the largest LGA in Kebbi State, has just one bank – Union Bank. “But it’s mostly used for salaries,” said Umaru Salihu, a farmer and civil servant.
“Bagudo is the largest (LGA) and has the best land for rice, but they can’t use it due to low economic capacity,” he said.
In a 2017 special report by this paper, PREMIUM TIMES found from the CBN that 73,941 beneficiaries were involved in the ABP in Kebbi State starting in 2016. In Sokoto State, “over 40 thousand” farmers have benefited, according to Mr Ibrahim, the chairman of the rice farmers in the state.
Most of the beneficiaries became first-time bank account holders following the ABP, Mr Ibrahim and Mr Dadinga, the agriculture commissioner, who helped implement the programme in Kebbi, said, corroborating the assertions of heads of farmers’ associations across the LGAs.
“I was forced to go to bank (to open account) because of the ABP,” said Adamu Yahaya, another farmer, in Jega. “They made banking compulsory but initially I didn’t apply for ABP because of that condition.”
But for states like Kebbi and Sokoto, with remote rural areas and limited access to financial services, added to widespread educational disadvantages, implementing ABP requiring compulsory use of banking service was a challenge.
“Doing that (involving rural farmers in the formal financial system) was tedious,” Mr Dadinga said.
“Ordinarily our people believe they don’t have business owning bank accounts, but due to this programme you don’t have a choice than to open accounts,” Mr Ibrahim said.
At a cost borne by the farmers’ association, he said service providers and banks officials were mobilised to LGAs to help farmers open accounts and register for BVN.
But many farmers went to banks in Sokoto to avoid queues at single points in their LGAs, this newspaper was told.
Speaking in Jega, Mr Alhassan said, “people were forced because of the benefits the ABP promised, and we invited banks to bring their staff to Jega to open accounts and get BVN for our people. Because of the benefits, you need to see how people were coming out to open accounts. One hundred people every day.”
Both Mr Alhassan and Mr Ibrahim agreed ABP helped improve financial inclusion in their states “significantly”.
In Goronyo, since the beginning of the year, 17,000 new farmers have registered for the ABP and open bank accounts, Mr Muhammed, who is the chairman of rice farmers in that LGA, said.
But even for the population now banked in these states, challenges remain especially in more rural LGAs where banks are scarcely present.
In Bagudo LGA with only one bank, account holders have to travel “four hours” from towns like Kaoje and Ilo to Bagudo Town to perform transactions especially because of the low use of mobile banking apps.
Barely different, most of the banked people in Wurno and Goronyo like other LGAs without a bank still have to travel to Sokoto for most of their transactions.
But in Wurno, there are three mobile money agents who said they could not pay more than N50,000 and that they were mostly patronised by farmers and by civil servants when salaries are paid.
Notwithstanding, owning accounts has eased the operations of the farmers and also encouraged saving.
“After harvesting, we give buyers account number for payment,” Mr Doka in Wurno, said. “We will get alert, and they will load the produce.”