Financial Inclusion in Rural Nigeria: Challenges facing agent business viability

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In the quest to extend financial services to the unbanked, particularly those in remote and rural regions, it is critical that we discuss the viability of agents. Agents are retail storefront operators representing financial services providers with the delivery of financial services.

According to EFinA’s 2018 Access to Finance Survey, financial exclusion is highest in rural areas. This is because the traditional model of delivering financial services —  the bank branch — is not sustainable in these areas.

Financial Inclusion in Rural Nigeria: Challenges facing agent business viability

In a bid to explore cheaper and sustainable alternatives, in 2013, the Central Bank of Nigeria (CBN) introduced the agent banking guidelines which permitted financial institutions and Mobile Money Operators (MMOs) to appoint third parties as agents to provide financial services to members of the public on their behalf. The CBN’s regulatory framework also includes a super-agent framework, responsible for monitoring and supervising the activities of agents, including the volume and value of transactions for each type of service they offer.

In spite of these developments, there have been challenges in scaling agent business across the country. In 2018, we set out to understand the economics of the mobile money agent channel which concluded in a report titled, CICO Economics Study in Nigeria.

Some of the revelations from our study include:

  1. Rural is not homogeneous

According to the World Bank, about 51.4 percent of Nigeria’s population live in rural areas. Within these rural areas, there are distinctions we have labelled as the rural oases and the rural frontiers.


The rural oases are locations in proximity to economic activity such as markets and bus parks. These locations are considered “potentially viable” due to the aggregation of people and other factors including (but not limited to) moderate digital financial services (DFS) penetration and the existence of infrastructures like power, paved roads and mobile connectivity. On the other hand, the rural frontier refers to areas which are scarcely populated, have limited DFS penetration, experience minimal economic activity and also lack adequate infrastructure.

  1. Agent viability varies tremendously across the country

We discovered that, even within rural regions, due to the absence of several features, agent viability varies significantly across the identified regions.

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For the rural oases, agent viability is high due to the presence of/proximity to regions of high economic activity. We found that agents in these regions are usually located near markets, village centres, busy streets etc. The moderate DFS penetration and presence of critical infrastructure (e.g. bank presence, paved roads, power and mobile connectivity) also increase the chances of viability for agents to do their business.

The reverse is the case for the rural frontiers. The absence of those enabling features — DFS, low economic activity, limited infrastructure — limits the profitability of the agent business.

  1. The potential for scale is currently limited

The question of the attainment of 80 percent inclusion by 2020 comes up again, even as preliminary modelling suggests that using current agent models, agent services could scale to reach, at most, 51 percent of Nigeria’s adult population.

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How did we arrive at this number? By layering the viability of agent business in the different regions of Nigeria over the geospatial distribution of requisite infrastructure for financial inclusion (such as mobile network connectivity, electricity supply, bank infrastructure etc), the results reveal that 51 percent of Nigeria’s adult population today live in agent-viable areas.

That would leave a sizeable number still without financial access.


Our financial inclusion aspirations require an extensive agent network. However, viability at the scale we desire will be elusive without proper interventions:

  • Infrastructure: Allocation of resources to improve mobile network connectivity, electricity supply, and bank presence is required to improve the viability of some areas.
  • Introduction of subsidy facilities for agents/providers, to support those venturing into the rural frontiers.
  • Other possible interventions include digitisation of Government to People (G2P) payments, float runners and so on.


It is admirable that the National Financial Inclusion Strategy hopes to bring financial access to 80 per cent of the adult population. However, the lack of infrastructure and other utilities which are critical to the delivery of financial services at the last mile, suggest that the road ahead may be tougher than we assumed.

What other possible interventions can you suggest in ensuring the viability of agents?

Professor Olayinka David-West and Ibukun Taiwo are members of the Sustainable and Inclusive Digital Financial Services initiative at the Lagos Business School

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