How Kenya’s M-Akiba App Can Teach Nigeria a Lot About Financial Inclusion

The Nigerian government has spoken a lot about financial inclusion for several years. But it has been awfully slow in terms of policy and action. As a result, not much progress has been made in this direction over the years.

Nigeria to ensure financial inclusion to 60 million citizens by 2020. Nigerian government to ensure employment of 300k graduates. Nigerians, is this true? Is this happening? Or nah?

— Bonita Applebum (@kgomotso818) April 17, 2018

But if Nigeria is serious about making headway towards financial inclusion, it only needs to look at what Kenya is doing.

What is M-Akiba

Launched in 2017, M-Akiba is an investment mobile app developed by the Kenyan Government to enhance financial inclusion for economic development.

The Kenyan government recently announced that it would sell around $2.5 million worth of treasury bills through M-Akiba.

With the app, everyday Kenyans could open securities accounts. They could then purchase, pay for and receive periodic interest/coupon and principal amount invested, as well as trade their securities in the secondary market.

The development of M-Akiba also led the government to review a key investment policy which led to a reduction of the minimum amount needed to invest in bonds and treasury bills in Kenya.

Low income earners in Kenya were given an opportunity to participate in a product named 'M-Akiba' where wanjiku can buy bonds worth as low as Ksh 3,000

— Stpetersseminary (@Stpeterssemina1) February 2, 2019

Prior to M-Akiba, minimum investment for bonds was about $500. Now the financial requirement is just $30.

That increased the retail investment pool for the Kenyan government from 10,000 registered investors to 30 million registered mobile money users.

However, M-Akiba didn’t do so well when it first appeared in 2017. Over 300,000 people registered and appeared willing to invest when it was first launched . But only 5,988 actually purchased the bonds, collectively raising $2.4 million. Meanwhile the government had aimed to raise more than $10 million.

Studies showed that the reason why the product didn’t meet the $10 million target was because the bond offering was done during an election season. As a result, advertisement and awareness about M-Akiba couldn’t compete with political ads.

Now the government is having another go at it and this time, it is committing resources to awareness.

What Can Nigeria Learn From M-Akiba?

Financial inclusion is an important buzzword in today’s financial system. While in developed nations, banking concerns is on providing better financial packages for people, Africa is focused on reaching the unbanked and underbanked.

As a matter of fact, most fintechs operating in Africa are in existence to help deepen the financial roots of the continent.

On its part, the Nigerian government has talked a lot about financial inclusion, but it hasn’t taken the requisite action. Rather, it has even stifled moves for financial inclusion over the last few years.

Don’t Limit Direct Access to the Financial System

For instance, in 2017, the government announced a new investment offering for Nigerians: the FGN Savings Bond. The FGN Savings Bond was touted as an accessible government bond with low financial requirement. For as low N5,000 regular Nigerians could invest in the two to three years bond.

However, talk about the bond is limited. It rarely makes the headlines and almost never publicised on regular media.

As a result, it failed to reach its desired audience.

But worse, when the FGN Bond was introduced, the government further increased the minimum amount needed to invest in treasury bills. Prior, investors only needed a minimum of around N50,000 to invest in Treasury bills; now they need N50 million. This further blocks more Nigerians from directly owning this asset.

Avoid Policies That Block Innovations

Yet, away from outrightly blocking direct access to the financial system and products, the Nigerian government is also limiting innovators in this field.

The question is not whether the CBN should regulate Fintech: they must.

Rather, it is one of regulatory framework appropriate to Fintech and best suited to driving innovation in our environment

— Dr Aloy Chife (@ChifeDr) November 19, 2018

Last year, the CBN issued a draft with proposed regulation for fintech companies. One striking aspect of the draft was the N5 billion shareholder requirement before a company could operate anything close to a digital bank.

These regulatory issues are at odds with the government’s pursuit towards financial inclusion.

If the Nigerian government is truly serious about this, it would look to Kenya for guidance.

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