• Dr Olayinka David-West & Ibukun Taiwo

Creating an Enabling Environment for Digital Financial Services at the Last Mile


Creating an Enabling Environment for Digital Financial Services at the Last Mile

Since the inception of mobile money, adoption among the under-banked and unbanked has been extremely small. Ironically, the early adopters of mobile money were the banked population in the society; hence, proof of the hypothesis that Digital Financial Services (DFS) and other mobile-based financial services will augment financial inclusion is still pending.

With Nigeria’s recent commitment to reducing the financial exclusion percentage to 20 percent by 2020, the question on everyone’s mind is “how can we change this?” In the course of our research into the Nigerian DFS ecosystem, we took one step back and asked a more precise question: “How can we improve the delivery of DFS at the last mile?”

We got experts in the financial ecosystem together in a location for two days to debate the various challenges facing the DFS ecosystem, particularly at the last mile. They discussed possible solutions, in form of recommendations that involve building agent networks and improving awareness as well as enhancing consumer research.

Below are the details:

Agents and Agent Networks

Digital Financial Services delivery at the last mile, especially in rural and remote areas, depends mostly on the reach and quality of agent networks. Consequently, the quality of any agent network is its value proposition, i.e. the products/services the agent delivers to the consumer. According to the Helix Institute, the value proposition of every agent network “determines the network’s optimal size, growth rate, geographical placement, agent demographics, and the level of training and support that agents receive. It is the foundation upon which all strategic operations are built.”

Unfortunately, our agents are akin to limited human ATMs. They are not empowered to offer other financial services like pensions and micro-insurance, etc. This single-use situation presents a missed opportunity. Empowered agents who can provide a broad spectrum of financial services at the last mile will significantly improve the quality of our agent network, upgrade its value proposition and position the ecosystem to experience considerable inclusion.

This resolution is in line with another problem ignored by many ecosystem actors: the role of culture in the adoption of financial services. For instance, Islam prohibits usury, and the Fulani Herdsmen are not so enthusiastic about banking in general. Thus, financial inclusion strategies should integrate and not ignore our cultural context when creating relevant products and services. In an ethnically diverse country like Nigeria, there are  myriads of financial services that can be developed and offered to address cultural factors.


  1. Regulators of the Pension and Insurance industries; National Pension Commission, PENCOM and National Insurance Commission NAICOM, should review existing policies governing the retail of pension and insurance services through agents. To ease the transition and enhance agency attractiveness, a consolidated implementation framework that would enable them to offer these other financial services will be necessary.
  2. Agents should be licensed to represent all financial institutions. If we couple this with a market-led approach to pricing financial services (subject to regulation), prices would race to the bottom, and more people will be able to afford financial services. It will be necessary to issue a guideline on defining a unified interface for agents serving multiple operators.
  3. An instant settlement of risk-free transactions should be instituted for agents. This process would require a review of the Central Bank of Nigeria’s CBN transaction settlement framework.
  4. As for culture, it would be helpful to have policies that:
  • Provide alternative products and services that recognise religious and cultural beliefs.
  • Promote alternative and culturally-sensitive distribution channels (using peers as agents).
  • Provide tax incentives to encourage the development and deployment of products that are culturally suitable especially in rural locations.


Consumer Research and Insights

The importance of research in driving financial inclusion at the last mile cannot be downplayed. Studies to examine financial inclusion help identify ecosystem gaps – knowledge, institutional, demand or supply-side. Research investigations also highlight constraints and inhibitors to DFS penetration and adoption while offering an evidence base for concocting the best strategies to reach consumers. Despite current efforts such as the work of EFInA and ours at the Sustainable and Inclusive Digital Financial Services, there is still a dearth of knowledge and insight into consumer behaviour at the bottom of the pyramid.



The Financial Services Regulation Coordinating Committee (FSRCC) should be tasked to create a research and development framework which would increase the quantity and depth of research on financial inclusion, especially in rural and remote areas. The research guideline should cover funding as well as make data available for relevant stakeholders.



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