How Growsel Is Solving The Financial Inclusion Problem

Financial Inclusion

The percentage of the adult population (especially those in the low income segment) that have easy access to a broad range of high quality financial services, such as savings, credit, insurance payments and pensions, that meet their needs, at an affordable cost, is a problem that governments in different countries are striving hard to tackle, in collaboration with development partners and the private sector. In 2012, the Central Bank of Nigeria (CBN) collaborated with stakeholders and launched the National Financial Inclusion Strategy (NFIS), with a view to sustain the gains made prior to that time, further reduce the percentage of the population financially excluded to 20%, and increase the rate of people using formal financial services to 70% by 2020.

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Country comparism

According to recent data from the World Bank, the number of the Nigerian adult population without a bank account, and consequently no access to formal financial services, stands at 62.7 million as at 2017, an increase from 59.3 million in 2010. This figure is enough cause for concern, considering that the ‘target 2020’ is just around the corner.  Recognizing the need to reinvigorate the NFIS, CBN and other stakeholders unveiled a new initiative known as Shared Agent Network Expansion Facilities in the first quarter of 2018, designed to extend financial services to 60 million financially excluded Nigerians by 2020. Clearly, despite the efforts by the government, banks, mobile money operators and other financial service providers, a lot still needs to be done to surmount challenges like low and irregular income, financial literacy and eligibility for financial service and credit, that are threats to achieving this target.

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Year on Year

Indeed, this validates our efforts in creating access to peer-to-peer lending and access to low-cost lending for smallholder farmers, who typically have less than 2% access to any form of institutional finance in Nigeria. As a condition to get access to free crowdfunding and other credit facilities from Growsel, farmers are required to open a bank account when signing up, which their labour fees will be paid into. We’ve partnered with Union Bank to make the account opening process seamless for farmers so they don’t get discouraged from becoming financially included. Concerned about the threat posed by the lack of physical access to bank branches in rural communities, we decided to work hand-in-hand with Trustees like Microfinance banks, NGO’s and other organizations domiciled in the community to help facilitate farmers’ access to financial services.

Stats

The major function of the Trustee is to identify, verify and register farmers to Growsel. By implication, a Trustee is expected to know a farmer and verify that the details submitted are correct at the point of registration. After the registration has been completed by the Trustee, the farmer is visited by the Growsel verification team and with the use of Geographical Information System (GIS), the farmer’s expanse of land is mapped to him. The previously verified information and the mapped assets are stored in a database and used as an identification for farmers, to fulfil the eligibility criteria for loans. We are currently offering this solution to CBN and the Bank of Agriculture, helping them identify farmers before they are given credit and we are open to offering the same solution to commercial banks, whose KYC requirements could be rigorous and cumbersome for smallholder farmers.

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As stated earlier, the lack of a clear understanding of financial institutions and products is also a major problem plaguing the financial service ecosystem. This is why we made financial literacy one of the cardinal pillars of the agricultural best practices training we give to farmers. We not only get underserved farmers banked, in line with the cashless policy, we crowdfund for them and use the funds to purchase and provide them with improved seedlings, best quality agricultural inputs and other technology driven solutions to enhance their yield and ultimately their income. Smallholder farmers also have access to farm insurance to protect them from the risks associated with farming, which are often out of their control.

Being well aware of the benefits of access to financial services on economic growth of the nation, wealth creation and the quality of life of numerous smallholder farmers, who are at the bottom of the pyramid across the country, financial inclusion permeates the entire fabric of our operations at Growsel. And we are also ready to get busy with ready hands to tackle this menace and free Nigerian underfinanced farmers from the poverty ‘trap’.