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Digitisation of Social Protection and Humanitarian Payments to Pave Way for Financial Inclusion – EFInA, GSMA, SIA

New report charts pathways through which entities supporting the poor with cash transfers could work in partnership with the private sector to enable sustainable access to payments and steps towards financial inclusion

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Digitisation of payment, Financial Inclusion, Humanitarian
Sadia Umar-Farouq, Minister of Humanitarian Affairs, Disaster Management and Social Development (Nigeria), supervising the disbursement of N20,000 under its Conditional Cash Transfer scheme to 5,000 beneficiaries in Kwali Area Council of the Federal Capital Territory, Abuja (Photo: PremiumTimes/Google)

Cash transfers are increasingly used by the Government of Nigeria, development and humanitarian agencies as a tool to support the poor and vulnerable and promote wellbeing.

However, a large proportion of cash transfers delivered to the poor in Nigeria require recipients to “cash-out” immediately.

The Central Bank of Nigeria (CBN) has been championing the government’s efforts by designing policies that could enhance the transition from physical cash transfers to digital.

The CBN is committed to achieving their 95% financial inclusion target set for 2024.

A joint report from FSD Africa, Enhancing Financial Innovation and Access (EFInA) and the GSMA, and conducted by Strategic Impact Advisors (SIA), has revealed that a gradual transition from physical cash transfers to digital would improve the recipients’ usage.

GSMA, EFInA, SIA, FSD Africa

Although this transition will not be immediately possible everywhere due to limited network connectivity, low mobile phone ownership levels, and low literacy rates among other barriers, the report outlines different opportunities for social protection and humanitarian actors, and the private sector, to work together to support increased access to digital payments for poor and vulnerable recipients of assistance.

The joint report, Opportunities and Barriers to Digitising Social Protection and Humanitarian Payments in Nigeria, highlighted the opportunities within digitisation of cash transfers and presented a roadmap for its actualisation.

The study reinforces the need to create an ecosystem in which recipients could eventually access cash transfers on a permanent digital wallet through their mobile phones, leading invariably to multi-choice usage, which they can then use to transact to meet all of their needs and help to reduce reliance on physical cash.

The report offers recommendations to improve Nigeria’s capacity to deliver digital payments to the poor.

It points out the need for humanitarian and social protection organizations to work in partnership with the Government and financial service providers to support an enabling environment to reach last mile recipients, the importance of coordination to promote a more cohesive use of cash transfers wherever appropriate, and efforts to better inform the development and extension of relevant services by payment providers wherever feasible.

The report recognizes that there are pockets of digital transaction-ready recipients who could support the development of digital payment ecosystems and help to advance financial inclusion.

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Although digital payments will not be enough to bridge the financial inclusion gap in Nigeria, access to digital payments is an integral component and this report charts out practical next steps.

Digitisation of payment, Financial Inclusion, Humanitarian

Juliet Munro, Director – Digital Economy at FSD Africa

Commenting on the report, Juliet Munro, Director – Digital Economy at FSD Africa said: “Cash transfers are a vital source of income for many underserved households.

We are delighted about the ongoing conversations with our partners on the existing possibilities to digitise cash payments. Once the systems are in place, the targeted households will be able to access the much-needed aid faster and more efficiently.”

Digitisation of payment, Financial Inclusion, Humanitarian, efina

Ashley Immanuel, CEO at EFInA

Ashley Immanuel, CEO at EFInA said: “Fintech Innovation is a key driver of financial inclusion and very useful in providing access to financial services, especially for the underserved. Digitising cash transfers will help reduce the burden for cash disbursement and support recipients’ application of healthy financial habits like saving.”

Chris Pycroft, Development Director at FCDO Nigeria

Chris Pycroft, Development Director at FCDO Nigeria

Chris Pycroft, Development Director at FCDO Nigeria said: “Really encouraged to see this report highlight principled and important opportunities for development actors to support increased access to payments among the poor, lay the foundations for financial inclusion, and harness Nigeria’s growing Fintech scene.”

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