A report by the Enhancing Financial Innovation & Access (EFInA), a financial sector development organisation that promotes financial inclusion in Nigeria, has shown that about 2 out of 5 agents charge above the maximum fees prescribed by CBN.
EFInA survey on financial services agents, which revealed that agents are determining the customer charges, noted that on the average, agent commissions make up 55% of the price charged.
According to the survey, agents who charge extra fees reported that they do so to remain profitable and stay in business.
The report noted that the cost to serve differs across different locations and is driven by other factors such as seasonality, availability of alternative channels, operational cost, among others.
“Perhaps this is the right time for deregulation of agent pricing to allow for market-based pricing, which may encourage more widespread deployment of agents, particularly in difficult-to-serve remote areas with high rates of financial exclusion”, it added.
Agent banking is a key driver of financial inclusion and very useful in providing access to financial services, especially in underserved/unserved areas.
The National Financial Inclusion Strategy (NFIS) identified agents as an important channel for achieving the financial inclusion target.
The Shared Agent Network Expansion Facilities (SANEF) has been actively coordinating providers towards achieving the target of 500,000 agents by the end of this year.
The study also revealed that financial services agents lose about 2% of their recurring monthly cost to transactions associated with fraud.
In recent times, agent banking business has been threatened by robbery, fraud, and harassment from law enforcement agencies.
Some agents have been arrested and imprisoned for processing transactions linked to fraud unknown to them.
“The Financial Service Providers (FSPs) need to invest more on agent training, especially on fraud prevention and management. Agents need to know how to identify, document and escalate to their principals any suspicious transaction”, the report added.