EFInA Annual Review 2012
Report prepared for DFID Nigeria by Hennie Bester
April 2012
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EFInA 2012 Review
Contents
Executive summary ............................................................................................................................. 3
Glossary ............................................................................................................................................... 5
1.
Introduction .................................................................................................................................... 6
2.
Background ..................................................................................................................................... 7
Key developments in the financial sector ........................................................................................... 7
3.
Performance ................................................................................................................................... 9
3.1 Purpose level ................................................................................................................................. 9
3.2 Output 1: Generating and disseminating information on financial inclusion ............................ 10
3.3 Output 2: Identify and stimulate opportunities for innovation.................................................. 13
3.4 Output 3: Obstacles to innovation identified, communicated and addressed........................... 16
3.5 Output 4: Innovative projects identified, funded and monitored .............................................. 19
3.6 Support to IMF experts at CBN ................................................................................................... 22
3.7 Gender ........................................................................................................................................ 25
3.8 Communication ........................................................................................................................... 26
3.9 Value for Money ......................................................................................................................... 27
2.
Logframe revision and five year strategy...................................................................................... 29
3.
Management ................................................................................................................................. 34
Financial performance ...................................................................................................................... 36
4.
Governance ................................................................................................................................... 37
Annexure 1: Consolidated recommendations ...................................................................................... 38
Annexure 2: Performance by output .................................................................................................... 40
Annexure 3: Proposed revised logframe .............................................................................................. 45
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EFInA 2012 Review
Executive summary
This report is the outcome of the 2012 independent review of the two components of DFID Nigeria’s
Financial Sector Development (FSD) Programme, i.e. the EFInA (Enhancing Financial Innovation and
Access) Accountable Grant as well as the IMF Trust Fund to provide support to the Central Bank of
Nigeria (CBN) through the placement of three experts. The FSD Program, amounting to £9.3m, was
approved in July 2006. The EFInA accountable grant, which started on 1 January 2009 and ends on 1
December 2012, absorbs £7.4m of this. As at 31 March 2012, DFID had disbursed £4.67m to EFInA.
The purpose of EFInA is to increase access to financial services for the Nigerian population. It does so
by generating and disseminating credible market information, stimulating opportunities for
innovation amongst private sector providers of financial services, identifying and addressing
obstacles to innovation, and funding innovative projects.
Since its inception, EFInA has delivered remarkable value for money for DFID. Its overall
effectiveness is measured through the increase in adult population with access to formal financial
services as measured by the two-yearly EFInA Access to Finance (A2F) Survey, a representative
household survey sampling about 24 000 Nigerians. The most recent survey was undertaken in 2010
and revealed an increase in formal usage of financial services of 11 m people (to 30.7m) compared
to the baseline survey in 2008 (when only 19.7 million people had access to financial services).
Though not all of this increment can be directly attributed to EFInA, it played a substantial role in
this advance. If all expenditure to date is included, the cost per beneficiary amounts to £0.42,
increasing to £0.85 if we assume an undercounting of 50% in 2008 due to the sampling methodology
used. The 2012 survey will be completed in December.
The review also calculated effectiveness indicators for EFInA’s two completed grants – one technical
assistance and one innovation grant. The technical assistance grant – to Pagatech to implement its
mobile payments pilot following the award of an approval-in-principle license by the CBN – yielded a
cost per beneficiary (calculated on the basis of 15 770 users of the service at the end of the pilot in
August 2011) of £5.45. The pilot has since grown to 57 000 users, which yields a cost per beneficiary
of £1.51. The comparative figure for the Innovation Grant to StanbicIBTC to roll out its esusu agent
banking project, is £10.90, based on 86 000 customers at the end of the pilot. Stanbic has since
rolled this model out to other countries in Africa –this systemic impact is not taken into account in
the calculation of the indicator.
In terms of efficiency, the review found that, without EFInA’s interventions, the following changes
would not have occurred in the Nigerian financial sector, or not at the same speed that they did:



The promulgation of the mobile payments regulatory framework and the issuance of 14
commercial licenses to operate mobile payment services in Nigeria;
The opening up of Islamic Finance as a regulated financial sector in Nigeria and the
allocation of approval-in-principle licenses to operate Islamic finance products to two banks
and one capital market operator;
The generation and dissemination of the most reliable and widely used market intelligence
on the usage of financial services in Nigeria – providing a market map for financial
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EFInA 2012 Review
institutions at a time when they are being forced, for the first time, to enter the retail
banking space.
Economy: EFInA achieved this impact with very limited human resources – significantly less than
other financial sector deepening trusts set up by DFID in Africa.
Performance against logframe indicators: The revised EFInAlogframe contains 16 indicators including
one goal level indicator which is not evaluated. The purpose level indicator could not be evaluated
for 2012, since the A2F survey will only be completed by the end of 2012. Of the other 14 indicators,
EFInA achieved the 2012 milestone for 5 indicators, the 2014 milestone for 7 indicators and failed to
achieve the 2012 milestone for 2 indicators. Of the latter two indicators (one being of lesser import),
the number of technical assistance grants (milestone 6) increased from zero to three during the year
under review. Having fallen short of its target for innovation grantsin 2009 to 2011 (with only one
grant made), EFInA has now exceeded targetwith 4 additional grants made in 2011.
Management: During the year EFInA was not able to increase its internal human resource capacity to
extend the ambit of its engagement beyond the sectors in which it is primarily engaged. Increasing
and retaining its internal capacity is now EFInA’s single biggest challenge to be a sustainable and
growing organization. Following a board retreat in November 2011, DFID was able to secure two GIZ
staff members for secondment to EFInA for a period of two years and EFInA recruited an
experienced Nigerian retail banking specialist. These three sector specialists will join EFInA in May.
An operations manager has also been recruited together with other staff. An external recruitment
firm is assisting with further recruitment. It is recommended that EFInA structures formal induction
programmes for its new staff members.
Governance: After a number of years of instability, EFInA’s governance arrangements were
regularised this year and a functioning board with a new chairperson is now in place. It is
recommended that two additional board members be recruited this year to increase the board to
four members.
Future strategy: A number of recommendations are made regarding EFInA’s future strategy. It
should retain its basic approach maintaining focus on the core sectors in which it has engaged to
date. However, it should deepen its engagement in these sectors. At the same time it should widen
its portfolio to new sectors. Based on the nature of EFInA’s expenditure trends over the past year, it
is recommended that DFID allocates £15m for EFInA’s activities for the period 2013 – 2015.
Support to CBN via IMF Trust Fund: It was found that the placement of three technical experts –on
banking supervision, monetary operations and bank resolution – had substantial impact on the
operations of the CBN including the establishment of a risk-based banking supervisory framework
(approved by the Governors’ Committee as the formal CBN banking supervision framework) and
setting up of the Asset Management Corporation of Nigeria which buys ‘toxic assets’ from troubled
banks, playing a key role in the recapitalisation of Nigeria’s banking sector. The expertise provided
addresses gaps at the heart of the CBNs role as banking supervisor and manager of monetary policy.
Although much has been achieved, it is clear that the reforms are not yet fully embedded in the CBN
practice and culture. The CBN requested that the support be continued, and given the huge value for
money provided by this support (calculated to be at least £68 per £1 spent by DFID) it is
recommended that the support continues.
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EFInA 2012 Review
Glossary
AFI
Alliance for Financial Inclusion
AIP
Approval-in-Principle
AMCON
Asset Management Corporation of Nigeria
BFA
Bankable Frontier Associates
CAC
Corporate Affairs Commission
CBN
Central Bank of Nigeria
DMB
Deposit Money Bank
DMO
Debt Management Office
EFInA
Enhancing Financial Innovation and Access
FGD
Focus Group Discussion
FIRS
Federal Inland Revenue Service
FMD
Financial Markets Department of the CBN
FSD
Financial Sector Development
IFC
Innovation Fund Committee
IMF
International Monetary Fund
KYC
Know Your Client
MFB
Microfinance Bank
NaiCom
National Insurance Commission of Nigeria
NDIC
Nigerian Deposit Insurance Corporation
NIRSAL
Nigeria Incentive-based Risk Sharing System for Agricultural Lending
NSE
Nigeria Stock Exchange
PenCom
National Pension Commission of Nigeria
POS
Point of Sale (devices)
RFP
Request for Proposals
RBS
Risk-based Supervision
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EFInA 2012 Review
SEC
Securities and Exchange Commission
1. Introduction
This report is the outcome of the 2012 independent review of the two components of DFID Nigeria’s
Financial Sector Development (FSD) Programme, i.e. the EFInA (Enhancing Financial Innovation and
Access) Accountable Grant as well as the IMF Trust Fund to provide support to the Central Bank of
Nigeria (CBN) through the placement of three experts. The independent review is intended to
support DFID’s Annual Review of the programme and assess progress against EFInA’s project
logframe.
The reviewer was provided with EFInA’s quarterly reports, most recent financial statements, board
retreat documents, project reports and evaluations as well as other relevant documents. He was also
able to meet with a number of parties in Lagos and Abuja from 19 to 23 March 2012. These included
the Deputy-Governor (Economic Policy) of the CBN, Mrs Sarah OmotundeAlade, the Chairperson and
CEO of EFInA, three recipients of EFInA grants, i.e. StanbicIBTC Bank, Diamond Bank and Pagatech,
the two IMF advisors who are currently stationed at the CBN (Kim Norris and Mike Rouswell), as well
as KPMG, EFInA’s auditors. Two DFID staff members, Patricia Seex (Private Sector Development
Advisor to the Economic Growth Team) and Karen Bello (Project Officer for EFInA) joined a number
of the review meetings. The reviewer was also able to meet Tony Burdon, DFID Nigeria’s Growth
Team Leader. It was fortuitous that the six monthly meeting of the Islamic Finance Working Group
took place in Abuja on 21 March and the MSME Supply-side Survey was launched at an EFInA
Breakfast on 23 March. The reviewer was able to attend both of these events and interact with
representatives from various financial sector regulators and supervisors as well as private financial
institutions.
The reviewer is most grateful to all those who generously gave of their time and views to enrich the
review. A special thank you is due to Patricia Seex and Karen Bello for their assistance with the
arrangement of the programme, and Modupe Ladipo, the CEO of EFInA who ensured that every
information request was promptly and efficiently dealt with.
This review comes at a critical time for EFInA. The current accountable grant comes to an end on 1
December 2012. EFInA’s funders – DFID Nigeria and the Bill and Melinda Gates Foundation - are
therefore looking ahead at the next five years of EFInA’s life. On 10 – 11 November 2011 EFInA
hosted a retreat with its Board of Directors and funders. The retreat assessed EFInA’s current
positioning and programme and sought to define its future strategic direction. A report on the
retreat was provided to the reviewer. The reviewer was similarly requested to make
recommendations regarding EFInA’s future work plans and strategy.
The report is structured into six sections. Sections 1 and 2 provide essential background, including
the most important financial sector developments in Nigeria over the past year that have impacted
financial inclusion. Section 3 assesses EFInA’s performance using the logframe purpose and outputs
as organizing principle. It also contains sub-sections on the performance of the IMF Trust Fund and
the cross-cutting issues of gender and communication. It concludes with a section on value for
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EFInA 2012 Review
money. Section 4 contains specific recommendations on future strategy and the revision of the
logframe. Sections 5 and 6 deal with management and governance issues respectively.
2. Background
EFInA is the major component of DFID’s FSD Programme, comprising £7.4 m of the total £9.3m
approved in July 2006. EFInA is registered under Nigerian law as a company limited by guarantee.
Effective 1 January 2009 DFID issued a two-year accountable grant to the company in the amount of
£7.4 m. The grant was extended until 1 December 2012 within any increase in the amount. As at 31
March 2012, DFID had disbursed £4.67m to EFInA amounting to just more than 63% of the total
grant value. The Bill and Melinda Gates Foundation awarded a grant of $3.5m (approximately
£2.2m1) to EFInA in June 2009.
Purpose and outputs: The purpose of EFInA, as captured in its logframe, is to increase access to
financial services for the people of Nigeria. In pursuit of this purpose EFInA has to generate four
outputs:
1. Generate credible information on financial inclusion and disseminate it;
2. Stimulate and identify opportunities for innovation that will extend access to financial
services;
3. Identify obstacles to innovation and address these with regulators and the private sector;
and
4. Identify and fund innovative projects.
Over the past three years EFInA has established itself as an integral part of the Nigerian financial
sector. It is the single most trusted source of market information on the composition of the retail
financial market and the usage of financial services in Nigeria. To achieve its purpose it has to
influence the decision-making of financial sector policy-makers and regulators on the one side, and
the providers of financial services on the other side. It therefore has no choice but to be steeped in
the political economy and market dynamics of Nigeria’s financial sector. The next section sets out a
few of broad brush stroke dynamics that characterised the sector, and impacted the current and
future course of financial inclusion in Nigeria, during the course of the year under review2.
Key developments in the financial sector
Bank resolution: During the past year the financial sector continued to be dominated by the
consolidation of the banking sector in the aftermath of the financial crisis and the dramatic
intervention by the Governor of the CBN in August 2009 when the CEOs of 8 banks were dismissed.
The CBN forced a process of recapitalisation of the Deposit Money Banks (DMBs) and established the
Asset Management Corporation of Nigeria (AMCON) to purchase non-performing loans. In June
1
Conversions from US$ to GBP are done at the average exchange rate for the 2011 calendar year of GBP1 =
US$1.60 as per www.oanda.com .
2
The EFInA Quarterly reports contain an introductory section on major developments in the financial sector.
These can be accessed on the EFInA website at http://www.efina.org.ng/publications/market-reviews/
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EFInA 2012 Review
2011, following the collapse of merger talks between the managements of some of the rescued
banks and potential investors, the CBN announced that it has given the 8 rescued banks until 30
September 2011 to fully recapitalise or risk being liquidated3. In August the CBN revoked the
operating licenses of 3 banks (Afribank, Spring Bank and Bank PHB) since they could not show the
ability to recapitalise before the 30 September deadline. The assets and liabilities of the 3 banks
were transferred to so-called bridge banks. During the last week of September 3 mergers between 6
banks were approved by their shareholders. Also in June the CBN’s Deputy-Governor: Financial
System Stability, Dr Kingsley Moghalu, announced that it would cost NGN1.7 trillion (equal to 5.85%
of GDP) to resolve the recent financial crisis and stabilise the Nigerian financial system. This would
not come from the federal treasury, but be contributed by the CBN and the banks over a period of
10 years4.
Cashless initiative: During the course of the year the CBN started a major initiative to move Nigeria
towards a cashless economy – with potentially far-reaching implications for financial inclusion. In
cooperation with the Bankers ‘Committee they moved to adopt policies to reduce the high usage of
cash, moderate the cost of cash management and encourage the use of electronic payment
channels. The CBN put in place measures to deploy 100 000 additional Point of Sale devices by 2012
and 350 000 by 2015. The POS devices will be biometric so that everyone, including those who
cannot read or write, can use them. In April the CBN announced that with effect from 1 June 2012 a
daily cumulative limit of NGN150 000 and NGN1 000 000 on cash withdrawals from DMBs by
individuals and corporate customers respectively will be imposed. Penalty fees will be imposed on
transactions above this limit. The policy will be launched in five locations – Lagos, Federal Capital
Territory, Port Harcourt, Kano and Aba – which account for 80% of the volume of cash in the
country. Subsequently the pilot focus was narrowed to Lagos. In June it was announced that the
DMBs had agreed to deploy 40 000 POS devices in Lagos by December 2011 to facilitate the CBN’s
cashless banking policy5. In August the Federal Executive Council endorsed the CBN’s proposal to use
Lagos State as a test case for the e-banking and cashless economy projects. Also in August the CBN
issued Guidelines on POS Card Acceptance Services which, amongst others, pegged the maximum
total fee to be charged for POS transactions at 1.25% of the transaction value with a maximum of
NGN2000. The CBN also required all POS terminals to be linked to the Nigeria Interbank Settlement
Systems on or before 15 November 20116. It also issued a number of other guidelines to ensure
interoperability between POS acquiring networks. Whereas the CBN Annual Report showed a sharp
increase in the value of e-card transactions (70.6% in the number of transactions and 66.3% in the
value of transactions in 2010), 95.2% of the transactions continued to be via ATMs with just 0.8%
going through POS networks7.
Mobile payments: The past year saw significant developments in the mobile payments sphere – a
key focus area for EFInA. In August the CBN issued operating licenses for mobile payments to 11
firms who had received Approval-in-Principle (AIP) licenses in December 2010. It also granted AIP
licenses to 8 new mobile money operators in addition to the 16 operators already granted similar
status in December 2010. The new operators were given 6 months to implement pilot schemes
3
EFInA Quarterly Review: January – March 2011, p.7.
EFInA Quarterly Report: April - June 2011, p.7.
5
EFInA Quarterly Report: April - June 2011, pp.8 – 9.
6
EFInA Quarterly Report: July – September 2011, p.8.
7
Ibid, p.13
4
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EFInA 2012 Review
before being considered for full licenses8.Further information on reforms in the mobile payments
sphere is contained later in this report.
Islamic banking: According to the CBN Governor, Nigeria aims to establish itself as the African Hub
for Islamic Banking9. In this regard they are trying to follow the example of Malaysia where Islamic
banking already has a market penetration of 20%. Islamic finance is estimated to be a $1 trillion
industry globally. To this end the CBN issued and revised their Non-interest Banking Regulations
during the course of the year and also issued two AIPs to banks to commence non-interest banking
operations.
Agricultural lending: As part of its policy to ensure that the financial sector contributes to growth
and development in the real economy, the CBN announced in June that it had set aside NGN75
billion to support agricultural industrialisation to help reduce the estimated NGN600 billion spent
annually on importing food. The plan will be part of the Nigeria Incentive-based Risk Sharing System
for Agricultural Lending (NIRSAL). The programme plans to generate an additional NGN450 billion in
bank lending within the next 10 years by de-risking the agricultural value chain. Currently only 2% of
bank lending goes to the agricultural sector10.
National identity scheme: Another major initiative that will have far-reaching impact on the delivery
of financial services is the new identity scheme. In September the Federal Executive Council
approved NGN30 billion for the implementation of the first phase of the new national identity
scheme known as the Integrated National Identity Management System. It is scheduled to be
completed in 2013 and is intended to create a unified database of Nigerians who are 18 years and
older. Upon registration Nigerians will be issued with smartcards containing their data11.
3. Performance
This section sets out the performance of EFInA during the year under review (up to March 2012)
using its logframe as organizing principle. Performance is evaluated at the purpose and output
levels. Each section starts with a summary table setting out the relevant purpose or output
description, the indicators used together with the 2012 and 2014 milestones, as well as the
performance. Full details on performance are included in a summary table in Annexure 2. Where
relevant, and because the logframe use cumulative targets, the performance section also includes
brief reference to performance during previous years. This is appropriate, since this will be the last
annual review before the expiry of the current grant and the commencement of a new grant period.
3.1 Purpose level
Table 1: Purpose level performance March 2012
8
Ibid, pp. 16-17.
EFInA Quarterly Review: January – March 2011, p.14.
10
EFInA Quarterly Report: April - June 2011, pp.11-12.
11
EFInA Quarterly Report: July – September 2011, p.5.
9
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EFInA 2012 Review
Purpose
Indicator12
2012 Milestone13
Performance
To increase
access to
financial
services
2. Number of Nigerians that have
access to formal financial services
(50% of the increase in access
numbers are women) - (2008
baseline of 20.5 m)
35 m (2014
milestone: 40.6 m)
30.7m in 2010 (36.3% of the
total adult population of
84.7m). A2F Survey for 2012
not yet completed.
EFInA’s purpose level indicator relates to the number of Nigerians with access to formal financial
services. Progress with the indicator is measured through the Access to Finance (A2F) Survey. EFInA
has already conducted two A2F surveys – in 2008 and 2010. The 2008 A2F Survey measured formal
access at 19.7 m. The 2010 milestone was accordingly set at 21.7 m and the end of programme
target at 24.7 m, i.e. targeting an increase of 5 million. The 2010 EFInA A2F Survey measured formal
access at 30.7 m. This was a far more dramatic increase than expected. However, the 2010 survey
used a different methodology than the 2008 survey, notably in the sampling method used: the 2010
survey sampled respondents in each state in proportion to the recorded population of that state,
whereas the 2008 survey sampled equally between the different states. The 2012 survey will use the
same sampling methodology as 2010 and the outcome should therefore be much more reliable.
Recommendations 2011 Review: The 2011 Review recommended that the purpose-level target be
increased from 24.7 m to 40.6 m in 2014, assuming anextension of the programme beyond
December 2012. The logframe was adjusted accordingly. The primary increase was seen to be in the
area of payments, especially mobile payments.
Performance: The quantitative component of EFInA’s 2012 A2F Survey has not yet been conducted
and should be completed at the end of the year. It is therefore not possible to evaluate the purpose
level indicator for the 2012milestone
3.2 Output 1: Generating and disseminating information on financial
inclusion
Table 2: Output 1 performance March 2012
Output
Indicator
Credible information on
the state of financial
inclusion in Nigeria
3. Number ofinstitutions who
use the Access to Finance
Survey data or request
2012Milestone
16 (2014
milestone: 25)
12
Performance
56
For easy reference, the indicators are numbered according to their sequence in the revised DFID logframe.
Indicator no 1 is the Goal-level indicator – ‘increase in private investment in selected states’ - which is not
evaluated as part of this annual review.
13
Note that the current EFInAlograme sets the baseline against which performance is to be measured as at
March 2008. It then sets three targets, one for March 2010, one for March 2012 and one for March 2014. This
evaluation is done as at March 2012 and against the March 2012 milestone. In the tables in this section we
depict both the March 2012 milestone as well as the March 2014 milestone which is given in brackets and bold
type.
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EFInA 2012 Review
generated and
disseminated
tailored presentations. How
often EFInA data is quoted in
the dailies/CBN publications
4. Number of additional
surveys or scoping studies
completed and disseminated
414 (2014
milestone: 6)
5. Requests received from
financial institutions for
assistance with the analysis
of EFInA A2F surveys or other
EFInA datasets to develop
product and market
propositions.
5 (2014 milestone
10)
8
1.
1
Recommendations of the 2011 Review: The 2011 Review contained 3 relevant recommendations:
(1) Cost of A2F dataset: That consideration should be given to reducing the purchasing cost for
the full EFInA A2F Survey dataset following receipt of a number or complaints that the cost
of the full dataset (at NGN 1 million - £4 042) was too expensive. The cost for the survey was
not reduced and for commercial entities still stands at NGN 1 million for either of the 2008
or 2010 datasets and NGN1.5 m for both datasets. During the year under review only one
institution purchased the full dataset. It is clear that most institutions use the key findings
available on the EFInA website as well as the brochure titled Access to Financial Services in
Nigeria 2010 survey: Key Findings. It is recommended that consideration again be given to
reducing the cost for private institutions of purchasing the entire dataset. If EFInA is to
syndicate the A2F Survey in due course (as is the case for example in South Africa), banks
and other commercial financial institutions will have to realise the value of the full dataset.
Measures should therefore be taken deliberately to get them to start using the detailed
rather than just the summary data.
(2) Expertise to mine A2F datasets: It was recommended that EFInA source international
expertise to assist financial institutions to mine the A2F datasets and distil useful product
and market propositions. EFInA contracted the services of Ms Dayo Forster, a Kenya-based
consultant who worked closely with FSD Kenya in its demand-side research, to assist with
this function. It was also recommended that a new logframe indicator be included
measuring the number of requests received for such support and the instances of actual
support provided. The indicator was included in the revised logframe. Although it is difficult
to keep track of such requests, particularly within the context of Innovation Fund
applications, one specific request was dealt with by Ms Forster.
Performance: During 2011 EFInA undertook and participated in extensive activities to disseminate
the findings of the 2010 A2F Survey. They completed and disseminated four additional scoping
studies. The EFInA website was completely revamped into a well populated and user-friendly virtual
access point to EFInA’s growing body of research and information.
14
All the logframe milestones are cumulative, i.e. the milestone for 2012 includes performance in 2010
milestone.
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EFInA 2012 Review
A2F 2010 Survey: The A2F Survey remains EFInA’s flagship research project and the one most
widely used in the industry. Although no formal survey was done (similar to the 2010 Project
Mirror) of current and potential users of EFInA’s data, the CEO of Pagatech described EFInA as the
“go to for defensible data15” on the demand for financial services in Nigeria. The new product
development team at Diamond Bank had the following to say: “I do not know where banks would
be without them (EFInA)… our entire retail team uses their information”16.
During the year EFInA presented the A2F 2010 Survey findings at six conferences/dissemination
events hosted by both regulators and private institutions and, in conjunction with FinMark Trust,
wrote an article for CGAP’s Blog titled, From Data to Action: Using Finscope in Nigeria.
A2F 2012 Survey: The 2012 A2F Survey has already commenced and the report of the qualitative
phase is completed (March 2012). This phase consisted of 10 Focus Group Discussions (FGDs)
hosted in February and March 2012 in Lagos (3 FGDs), Kano (2), Kaduna (1), Enugu (2) and Port
Harcourt (2). The objectives of this qualitative phase were to provide insights into changes in the
financial services landscape since 2010 when the last survey was conducted. The FGD results will
then be used to inform the design of the questionnaire for the 2012 survey which will be
undertaken during the second half of the year.
MSME Supply-side survey: The most recently completed research project was the MSME Survey.
MSMEs have very limited access to formal financial services in Nigeria and the objectives of the
research were therefore threefold: (1) to identify the challenges faced by financial institutions
(especially deposit money banks) to provide finance to MSMEs; (2) to review current and past
(over the last five years) government policies (such as dedicated funds and guarantee schemes)
aimed at increasing access to finance for MSMEs; and (3) to assess the impact of these policies on
increasing access to finance for MSMEs. The report was completed in February and disseminated
at a breakfast series meeting in Abuja on 23 March 2012 (during the review). The report is
primarily targeted at regulators and policy makers as input to policy revision in this space. The
breakfast meeting was attended by the government’s key policy makers in this area with limited
attendance from the private sector.
Increasing access through agent banking: Agent banking, i.e. the provision of banking services by
a third-party agent to customers on behalf of a licensed, regulated financial institution with
whom the customer has a direct contractual relationship, has the potential to extend access to
financial services in Nigeria. However, Nigeria has no agent banking regulations and there has
been limited interest amongst DMBs to take financial services down market. To assist with the
development of agent banking regulations for Nigeria, EFInA commissioned a desk study that
evaluated agent banking models in Columbia, Brazil, Peru, Kenya and India. The study also
assessed the impact of agent banking on promoting financial inclusion in these countries and
provided suggestions on the most effective way to develop an agent banking network in Nigeria.
The study was completed in October 2011 and recommended a “test and learn” approach. It was
disseminated at a Breakfast Series event on 25 October. EFInA utilised the event to obtain
feedback from those present on the key elements that should be incorporated into Nigeria’s
forthcoming agent banking regulations.
15
Interview with Jay Alabraba on 20 March 2012
Interview with Daniel Akumabor and his team on 3 March 2012.
16
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EFInA 2012 Review
Opportunities in the Nigeria insurance sector: EFInA’s 2010 A2F Survey revealed that only 1%
(0.8m) adults had insurance. During 2011 EFInA accordingly commissioned research to use data
from the 2010 survey to identify and highlight opportunities for expanding insurance in Nigeria.
The report, Opportunities for insurance inclusion in Nigeria, was published in September 2011
and presented at an Innovation Forum during that month. The report found that given the low
insurance penetration and myriad of challenges facing insurance distribution in Nigeria, itmay be
more prudent to adopt a phased approach whereby insurers focus first on expandinginto the rest
of the middle to higher income formally employed and banked market, rather thantrying to reach
those who are banked but not formally employed (mostnotably the entrepreneurial class). Only
then is the market likely to move on to market segments requiring moreinnovative distribution
channels. This means that microinsurance for the low-income marketbecomes a second priority
over the short-term.
Understanding the needs of low-income savers: In February 2011 EFInA commissioned qualitative
research to better understand the savings habits of the low income population. A total of 28
FGDs were conducted with a gender focus of 75% women and 25% men. The research found that
most respondents were not satisfied with the services rendered by banks (with the exception of a
few such as GT Bank and First Bank). The research also identified a number of steps that banks
could take to attract the patronage of low-income clients, for example not making unreasonable
deductions and collecting savings street by street similar to the traditional method of daily
contributions. The research was disseminated at an Innovation Forum titled Promoting Financial
Inclusion through Effective Savings Mobilization on 22 March. At the Forum EFInA launched its
third call for proposals for the Innovation Grant – this RFP was focused exclusively on innovation
in the savings sector. This research was also published in a hard copy brochure titled
Understanding the low income population in Nigeria.
EFInA website: EFInA’s website was completelyrevamped and relaunched in December 2011 into
an easy to navigate and accessible tool. The most recent figures for the total number of hits on
the website is contained in EFInA’s Q3 report. It showed a total number of hits in Q3 2011 of
70 554 compared to 47 561 in Q3 2010.
3.3 Output 2: Identify and stimulate opportunities for innovation
Table 3: Output 2 performance March 2012
Output
Indicator
2012milestone
Opportunities for
innovation in access
to financial services
stimulated and
identified
6. Number of
Innovation Fora hosted
6 (2014
milestone: 9)
9
7. Number of
Innovation Fora that
result in a new
initiatives (e.g. working
group, new product) or
new way of working.
3 (2014 target: 4)
3
13
EFInA 2012 Review
Performance
1.
8. Percentage of
technical assistance
grants (formerly seed
grants) that are
launched
9. Number of
institutions met with to
provide guidance on
business model
development for the
low income segment
(including workshops,
roundtable and 1-1
meetings)
25% (2014
milestone: 25%)
8 (2014 target:
15)
Indicator unclear. See below.
35
Recommendations of the 2011 Review: The 2011 Review contained three recommendations that
relate to output 2:
(1) That the logframe be adjusted to include the new recommendation 9 (done) and that the
pipeline development activities for TA and innovation grants be included in output 2 whilst
the procedures for allocation innovation grants as well as the subsequent implementation,
monitoring and evaluation of such grants be measured under output 4. The outcome of the
logframe revision produced something in-between with the actual number of TA grants now
measured under output 4 (indicator no 15) while indicator 8 is a mixture between the
previous indicator (“number of seed grants that develop into commercially viable projects
which the organizations are willing to invest in”) and a new pipeline-oriented indicator.
Unfortunately the new indicator 8 was scrambled in the amendment process and cannot be
evaluated. It is recommended that it be deleted and that the performance for TA grants be
measured entirely under output 4, indicator 15. For the record, EFInA has awarded 3 TA
grants as at March 2012, one of which (Pagatech) also received an Innovation Grant. The
25% target on the previous indicator was therefore achieved.
(2) Flowing from the Agent Banking Forum held in 2010, it was recommended that EFInA
investigates the applicability of the cash merchant concept (notably implemented in Kenya)
to Nigeria and develop an appropriate strategy for its promotion. The Agent Banking Study
completed in October 2011 (see section 3.2 above) investigated the various agent banking
models, including that implemented in Kenya. The regulatory proposal emanating from the
Breakfast Series meeting at which the study was presented, placed strong emphasis on the
cash handling functions to be part of the agent model being developed in Nigeria.
(3) The third recommendation emanated from the award of the first two TA grants to two
entities who received pilot licenses for the conduct of mobile payment schemes – Mkudi
Mobile Money and Pagatech. It was recommended that EFInA, in cooperation with the
monitoring and evaluation function established by the CBN for the purpose of evaluating the
pilots, undertakes evaluations of the two TA grants, the evaluations to focus both on the
14
EFInA 2012 Review
efficacy of the TA grant process and the implementation of the business models being
pursued. In the circumstances, EFInA was requested by the CBN to conduct the audits of the
mobile payments pilots. No separate evaluation of the TA grants was undertaken. However,
Pagatech’s business model was carefully evaluated as part of the application process for an
Innovation Grant. Both Pagatech and Mkudi received full commercial mobile payments
licenses in August.
Performance: During the year EFInA hosted two Innovation Fora and launched a new format to
interact with stakeholders – the Breakfast series. The latter is a more informal-type gathering over
breakfast intended to solicit free flow discussion and feedback.
Promoting Financial Inclusion through Effective Savings Mobilisation: This Innovation Forum was
hosted on 22 March 2011. The research on low-income savings was presented (see section 3.2
above).
Microinsurance: opportunities, challenges and innovation in product design for the mass market:
This Innovation Forum was hosted by EFInA on 22 September 2011. The keynote speaker was
Israel Muchena, Technical Director for Hollard Insurance Group responsible for Mozambique.
Hollard Insurance is South Africa’s largest independent and privately owned insurance group and
known for their innovation in the microinsurance space. They presented opportunities for the
insurance sector to develop microinsurance products for the low income mass market and to
discuss their own experience in rolling out innovative microinsurance products in Africa. The
consultant, who undertook the study Opportunities for insurance inclusion in Nigeria, presented
their findings. Participants included senior executives from insurance companies, heads of retail
banking and strategy from DMBs, mobile payments operators and representatives from the CBN.
Retail Banking Strategy Breakfast: The first Retail Banking Strategy Breakfast was hosted by EFInA
on 15 June 2011. The Heads of Retail Banking and Strategy of the DMBs were invited to a
roundtable discussion to evaluate how the CBN’s recent policies on remittances, over-thecounter withdrawal limits and mobile payments will impact the payments system and advance
financial inclusion. Specific discussion points included how alternative channels (mobile, POS and
agent banking) can support financial inclusion and key features of an enabling environment for
retail banking to thrive in Nigeria. The event included a presentation on market opportunities for
retail banking as identified by the 2010 A2F Survey.
The breakfast was attended by 32 representatives from 17 DMBs. Key issues highlighted by
participants as challenges to developing an inclusive retail banking system included the lack of a
uniform national identification system, onerous Know Your Customer requirements, the high cost
of doing business, requirements for effective risk management and the lack of skilled human
capital17.
Second retail banking breakfast (agent banking): EFInA hosted the second meeting of its retail
banking series on 25 October to evaluate how agent banking can advance financial inclusion, and
identify key success factors to develop and sustain a viable agent banking model in Nigeria. The
key findings of the Agent Banking Study were disseminated. The roundtable discussion was
17
EFInA Quarterly Report: April – June 2011, p. 21.
15
EFInA 2012 Review
attended by 39 representatives from all major banks, payment service providers and the CBN.
The keynote speaker was Ms Jennifer Barassa, CEO of Top Image, one of the leading consumer
outreach and promotions companies in Kenya. Ms Barassa is a mobile money agent management
expert. She presented key facets of agent management and critical success factors for developing
and managing a viable agent banking network18.
Innovations precipitated (indicator 7): The innovation fora hosted by EFInA have proven a rich
seam for new ways of doing things within the private sector19. Most innovation processes
triggered by EFInA are still in progress and for some, such as the agent banking, no regulatory
framework has yet been issued to enable financial institutions to roll out new models. However,
some concrete results are already visible:




EFInA’s participation in the first branchless banking forum and its consistent support for
the evolution of mobile payments have already resulted in the granting of 14 commercial
licenses for mobile payments and the implementation of a variety of business models.
This sector is but in its infancy and offers many opportunities to advance financial
inclusion in Nigeria.
EFInA remains as the chairperson and host of the Nigeria Islamic Finance Working Group
which meets twice a year. Two AIP licenses have already been issued in terms of the new
Non-interest Banking Guidelines – to Jaiz Bank and Stanbic IBTC and a third bank has
applied for a license. Products are being issued by these institutions. Lotus Capital (in
terms of guidelines issued by the SEC) has launched Islamic Investment Funds. The 2010
A2F Survey indicated that 22.8 m adults (26.9% of the total adult population) would be
likely to use Islamic/Shariah compliant banking products if they were introduced in
Nigeria.
The third area in which EFInA was able to trigger distinct private sector responses was
savings. As a result of EFInA research on low-income savings and following a RFP, a TA
grant was approved for Diamond Bank in September. Diamond Bank, with the assistance
of Women’s World Banking, is seeking to develop and pilot innovative savings products
targeting unbanked and under-banked women. With the TA grant they are testing three
products: a basic savings account, a variant for women (piloted in Kano) and a savings
certificate linked to a reward scheme. They will test different models and channels,
including the mobile channel, with a dedicated sales force. Two Innovation Grants are
also supporting new innovative savings products.
The fourth area in which EFInA is likely to have substantial impact is agent banking. This is
likely to take off in the course of 2012 following the publication of agent banking
regulations by the CBN.
3.4 Output 3: Obstacles to innovation identified, communicated and
addressed
18
EFInA Quarterly Report: October – December 2011, p. 22.
The 2011 Review (p.14) pointed out that the scope of output 2 is to trigger innovation through advocacy to
private financial institutions. Indicator 7 is therefore interpreted to refer exclusively to private sector
responses to EFInA activities and initiatives. The public sector responses are dealt with under indicator 10.
19
16
EFInA 2012 Review
Table 4: Output 3 performance March 2012
Output
Indicator
2012Milestone
Performance
Obstacles to
innovation identified
and brought to the
attention of both the
regulators and private
sector
10. Changes in discrete areas of
financial sector regulations effected
mainly due to EFInA’s intervention
3 (2014
milestone: 5)
3
1.
11. EFInA supports workshops to
highlight obstacles and potential
resolutions (interface by public and
private sector)
4 (2014
milestone: 5)
7 workshops supported
1.
12. Maintain relationships with public
institutions, industry associations,
regulators and other relevant NGOs
5 (2014
milestone: 10)
Relationships maintained with 8
public institutions
1.
13. Number of institutions and
persons benefiting from EFInAsponsored training and capacity
building initiatives
15 (2014
milestone: 20)
31 institutions

Recommendations of the 2011 Review: The previous Review contained three recommendations
relating to output 3:
(1) It recommended three logframe revisions which were subsequently implemented.
(2) Two recommendations related to EFInA’s support for the development of mobile payments.
The first one was that EFInA should offer to undertake the evaluation of the pilots
authorised through the granting of 16 AIPs in November 2010. In the event, EFInA made the
offer and was requested by the CBN to conduct audits and evaluate the pilots to ensure that
their technology and business operations were compliant with CBN regulations. EFInA
contracted BFA to undertake the audits. In June 2011 audits were conducted for 15
providers who received AIP licenses in 2010 - 11 of these passed the audits. In December
2011 audits were done for 5 additional pilots - and three passed. All the audit
recommendations were approved by the CBN's Committee of Governors and by February
2012 commercial licenses had been issued to 14 operators to provide mobile payment
services.
(3) The third recommendation was to consider creating a short term incubator space that could
provide technical assistance and other support to the mobile payments pilots being
implemented. This could include a series of round table discussions focusing on detailed
technical aspects. The pilot phase has now almost run its course and with the limited human
resources at its disposal, EFInA probably contributed as much as it could in the
circumstances, including a dedicated Innovation Fund RFP for the mobile payments pilot
operators. The round table discussions found expression in a slightly different format and
with a different purpose in the Breakfast Series.
Performance: EFInA’s greatest successes to date have been in the area of policy and regulation. It
has already achieved significant change in three discrete areas of financial sector regulation (mobile
payments, Islamic Finance, and card and ATM fraud), two of which (mobile payments and Islamic
17
EFInA 2012 Review
Finance) saw marked progress during the past year. Three additional areas saw significant progress,
two of which bear EFInA’s unmistakable stamp.
Mobile payments: The background to EFInA’s engagement in the mobile payments space up to
the award of the 16 AIPs in November 2010 are covered in the 2011 Review and not repeated
here. During the past year EFInA supported the award of full commercial licenses through the
audit process referred to above. Following the award of the licenses, EFInA’s focus has shifted to
the agent space – a critical element of successful mobile payments business models – and direct
support to mobile payments operators. Two of the three TA grants awarded by EFInA supported
mobile payments pilots and two of the four innovation grants awarded in 2011 support mobile
payments models. It is recommended that the approach of leveraging external international
expertise to guide regulatory decisions should be deployed as much as possible.
Islamic Finance: EFInA is without doubt the catalytic force behind the regulatory reforms that has
opened up the Islamic Finance sector in Nigeria. It continues to play the critical role as
chairperson, facilitator and funder of the Nigeria Islamic Finance Working Group. Its funding of
the participation of the UK Islamic Finance Council has been invaluable. Six financial sector
regulators/supervisors are members of the working group – the CBN, SEC, FIRS, NaiCom, NDIC
and DMO. The CBN promulgated the Non-interest Banking Guidelines in January 2011.In February
the SEC released Rules on Islamic Fund Management. In June 2011 the CBN re-issued the
Guidelines on Non-Interest Banking to distinguish between non-interest banking based on Islamic
principles and non-interest banking based on other established principles. The Working Group
also produced a Master Deck, which is a document providing information on various categories of
Islamic finance products, how they are structured, tax implications, and highlighting accounting
and regulatory issues that need to be addressed.
Card and ATM fraud: EFInA’s role, through a ground-breaking innovation forum hosted in
November 2009, to trigger CBN action to issue measures to impose greater responsibility on
banks for the elimination of card payment and related fraud in the banking system was
highlighted in the 2011 review.
Agent banking: EFInA’s research and support for the development of agent banking guidelines
has been described in a number of places above. New regulations by the CBN to provide a
framework for agent banking in Nigeria are expected within the next few months.
Financial Inclusion Strategy: In August 2011 the CBN commissioned Roland Berger and EFInA to
develop a National Financial Inclusion Strategy. The project is co-funded by EFInA and the Alliance
for Financial Inclusion (AFI) and EFInA’s data is used as the baseline data for the project. The
project comprises several phasesmost of which have been completed. The first draft of the
strategy was presented to a meeting of the CBN Committee of Governors and the Bankers’
Committee in February 2012. Significant focus areas for EFInA are dealt with in this Financial
Inclusion Strategy. They include consumer protection (with the CBN considering setting up a
consumer protection unit within the CBN), financial literacy and KYC requirements, especially the
need for tiered KYC requirements to accommodate low-income clients and those who struggle to
produce the requisite client identity verification documents. Even the agent banking guidelines
are included within the ambit of the Strategy. Once the strategy is formally adopted, it will
present EFInA with a ready policy platform to pursue these issues.
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EFInA 2012 Review
Due to its limited resources, EFInA’s engagement with the development of the Financial Inclusion
Strategy has been limited quality assurance. However, more extensive input will be provided later
this year. It seems obvious that EFInA’s proposed scenario building exercise (see section 4 below)
will explore similar issues to those being considered as part of the Financial Inclusion Strategy
process. Assuming that the strategy process will run its course before EFInA is able to launch and
pursue its scenario process, the very least that it should do is to appraise the CBN of its scenario
building intentions and secure the buy-in of the CBN and those responsible for approving the
Financial Inclusion Strategy, to the scenario building process. It is thus recommended that EFInA
proactively engages with the Governor and those responsible for overseeing the National
Financial Inclusion Strategy process regarding its own scenario-building intentions and potential
cross-pollination between the two processes.
Microfinance regulation: EFInA is an active member of the CBN’s Microfinance Advisory Board. In
this capacity it provided inputs to the revised regulatory and supervisory framework and
guidelines for the operation of MFBs that were issued in June 2011.
Relationships maintained: EFInA maintains strong relationships with at least 8 public institutions.
Of these, the CBN remains the anchor relationship and EFInA’s interaction with the CBN has, if
anything, strengthened over the year under review. EFInA does not have any significant
relationship with industry associations, probably because the bankers’ industry body is somewhat
weak and very reliant on the convening power of the CBN governor. EFInA’s relationships with
relevant NGOs are even more limited. During the consultations and document review, the
potential of the Nigeria Post Office (NIPOST) to play a significant role in the distribution of
financial services came up time and time again. It is recommended that EFInA engages with
NIPOST to scope and explore its potential role in the distribution of financial services in Nigeria.
Capacity building: EFInA sponsored representatives from no less than 31 institutions to undergo
various forms of training and capacity building during 2011. The relevant institutions or
categories of institutions are listed in Table 4 above.
3.5 Output 4: Innovative projects identified, funded and monitored
Table 5: Output 4 performance March 2012
Output
Indicator
2012
Milestone
Performance
Innovative projects
identified, funded and
monitored
14. Number of innovation grants
approved by Innovation Fund
Committee (IFC)
4 (2014
Milestone:
6)
5 innovation grants approved
1.
15. Number of technical assistance
grants approved by Innovation Fund
Committee
6 (2014
Milestone:
10)
Three TA grants totally $578 000
awarded during 2011.
1.
16. Percentage of grantees M&E
quarterly reports completed to a high
standard
100%
19
EFInA 2012 Review
100%
Recommendations of the 2011 Review: Following the restructuring of the Innovation Fund flowing
from the Lene Hansen recommendations in 2010, the 2011 Review contained only one
recommendation regarding output 4, i.e. that EFInA considers a number of options to extend its
capacity to foster its Innovation Fund pipeline. As a symptom of its general paucity of resources, this
recommendation was not implemented.
Performance: Having awarded only one innovation grant and no TA grants between 2008 and 2011,
EFInA’s Innovation Fund finally took off in 2011. Two RFPs were launched in 2011 resulting in 4
innovation grants totalling $5.6m being approved by the Innovation Fund Committee (IFC). One of
the innovation grants was preceded by technical assistance worth up to $100 000, effectively
amounting to a TA grant. A full TA grant of $250 000 was also awarded in September bringing total
Innovation Fund commitments for the year to just under $6m (£3.75 m) – just more than half of
EFInA’s total accountable grant excluding the contribution from the Gates Foundation.
Innovation Grant RFP Round 3: RFP Round 3 was launched in March to coincide with the hosting
of the Promoting Financial Inclusion through Effective Savings Mobilisation Innovation Forum.
The RFP invited proposals for the development of innovative and effective formal savings
products.A total of 32 applications were received following targeted marketing including direct
emails to the EFInA database of stakeholders and one-on-one meetings with two banks. Two of
the applications came from microfinance banks that EFInA sponsored to participate in the
Boulder Microfinance Training programme in 2010. Of the 32 applications 12 were shortlisted to
the second phase and were invited to make presentations to EFInA regarding their proposed
projects. The IFC approved innovation grants to two applicants – Hasal Microfinance Bank and
AfriPayLtd/UBA.
Hasal Microfinance Bank proposed to implement their branchless banking proposition using POS
devices and agents. The applicant had conducted a pilot prior to applying for the grant which will
support the full launch. The IFC approved $500 000 for the project as well as up to $100 000 for a
first phase of technical assistance for scenario planning and business model development. The
technical assistance report was received in November 2011 and the applicant revised their
findings to incorporate the recommendations from the report. The grant agreement was
subsequently signed in January 2012 and first disbursement made in February.
AfriPay Ltd/UBA proposed to launch their mobile payments service and a savings account linked
to the mobile payments account. The IFC approved $1 206 800 for the project subject, amongst
others, to receipt of their mobile payments license from the CBN – which was subsequently
awarded. The grant agreement was signed in January 2012 and the first disbursement also made
in January.
Innovation Grant RFP Round 4 was solely focused on supporting the launch of mobile payment
services as a channel for expanding access to formal financial products. The eligible applicants for
this round were the 11 mobile operators who had received licenses to operate mobile payment
services from the CBN in August 2011. Notification of the funding round was emailed to all 11
operators and EFInA held one-on-one meetings with 7 institutions who had requested such
meetings. EFInA received 8 applications and in November the IFC pre-approved two applicants –
Pagatech (who had also received a TA grant) and Monitise.
20
EFInA 2012 Review
Pagatech’sgrant will be used to support the roll out of a savings account with insurance and
credit features. To do this they will utilise their existing agents network and engage in
partnerships with financial service providers. The grant will be utilised to strengthen their agent
network and to develop the Paga Credit Rating System. Pagatech already has an agent network of
more than 650 agents and a customer base in excess of 57 000. Pagatech was also one of the two
mobile payments operators who benefited from an EFInA-sponsored study tour to Kenya. The
grant agreement was signed in January 2012 and the first disbursement also made in January.The
total value of the grant is $2 million.
Monitise: In contrast to Pagatech who delivers their own service, Monetise provides a fully
managed mobile money service to financial institutions such as banks and MFBs. This includes the
provision of virtual accounts (m-wallets) to address the needs of the unbanked population who
does not hold an account at a financial institution. The m-wallet solution is based on pre-paid
account principles with much simpler account opening than for a formal bank account. It thus
gives the unbanked access to formal payments and remittance services. The applicant met all the
preconditions set by the IFC. However, at their request the grant agreement was delayed until
the restructuring of Monitise Nigeria is complete. The total value of the grant is $1 873 000.
Technical assistance grant: In September the IFC approved the provision of a TA grant worth
$250 000 to Diamond Bank Plc. A second application for a TA grant is still being reviewed.
Diamond Bank with the technical assistance of Women’s World Banking is seeking to develop
and pilot an innovative savings product designed for the unbanked and under-banked women of
Nigeria. They intend to pilot the feasibility of offering savings products through two delivery
channels – physical branches and mobile phone technology and field agents. The pilot will be
conducted in one rural and one urban area. The grant agreement was signed and the first
disbursement made in November.
It is worth reflecting on the success achieved by the Innovation Fund during the past year – the first
two RFPs yielded only 1 grant and during 2010 no grants were approved;the two RFPs launched in
2011 yielded 4 grants. Although the restructuring of the Innovation Fund during 2010 contributed
substantially to the success, some other factors also seemed to have played a role. Firstly, the RFPs
were targeted as opposed to being broadly based invitations for proposals that will advance financial
inclusion. That allowed EFInA to target the marketing much more carefully and to interact directly in
one-on-one meetings with potential applicants. In the case of RFP4, the most targeted of the RFPs to
date, they could meet with more than 60% of total number of institutions eligible to apply.
Subsequently 8 out of the 11 institutions that could apply did so and 2 were awarded grants – a
conversion rate of 25% which is best practice for mature challenge funds. The conversion rate for
RFP 3 was just over 6%, still not bad.
The second factor that played a role, was that EFInA targeted the RFPs at two of their priority sectors
within which they had done substantial work and established relationships. Playing in familiar
territory enables them to better evaluate both the proposed business models and the capacity of the
applicants, their leadership and management. For the first time also the recipient of a TA grant
(Pagatech) also received an innovation grant. A third factor, related to this, is the EFInA decision to
interview shortlisted applicants personally rather than just relying on paper-based applications. Inperson interviews not only allow more in-depth evaluation of the proposal and the proposers, but
21
EFInA 2012 Review
also allows the parties to identify shortcomings that could be rectified through appropriate
conditions being imposed by the IFC. Rather than just saying no, a deficiency in the application can
be rectified through contractual pre-conditions.
EFInA’s priority and second order sectors over the next two years (see section 4 below) present
ample opportunity for focused RFPs, particularly the interplay between the development of the
retail payments environment on the one hand, and the delivery of savings, credit and insurance
products through these new channels, on the other hand. As successful models emerge, the
Innovation Fund should be flexible enough to not only fund the development of new products, but
also to support operators to take successful models to scale. The requirement of additionality (which
is essential for the spending of public donor money on projects for private profit) is wide enough to
accommodate applications that purely support scaling-up processes that would otherwise be
delayed by years due to the applicant’s lack of internal funding.
It is therefore recommended that (1) EFInA continues with targeted RFPs in those priority sectors
where it engages at multiple levels with multiple stakeholders; (2) the eligibility criteria for the
Innovation Fund be adjusted to incorporate projects that will scale up innovative products and
services once their viability is tested. Deeper engagement in its priority sectors will offer EFInA new
opportunities for TA grants as was the case with mobile payments and savings during the past year.
No further restructuring of the Innovation Fund is recommended at this stage.
3.6 Support to IMF experts at CBN
The second component of the FSD program consists of an IMF administered trust fund utilised to
provide technical support directly to the CBN. The IMF placed three technical experts at the CBN:



Mr Kim Norris, a Canadian financial sector supervision expert, was placed as a Special
Advisor to the Governor on Banking Supervision as from January 2008. His term expires at
the end of 2012 after 5 years.
Mr Daryl King, a Reserve Bank of New Zealand expert in monetary operations, acted as
Special Advisor to the Governor on Monetary Operations. His placement commenced in July
201020and ended in December 2011. His placement was an extension of support to the CBN
in the form of a resident monetary policy advisor over the previous three years.
Mr Michael Rouswell, a US expert in bank resolution and corporate restructuring, was placed
at the CBN as a resident long-term expert to assist the CBN with the implementation of its
on-going bank resolution program. He joined the CBN in July 2010.
The annual cost for one long-term expert to be placed at the CBN is in the order of $345 000
(£215 625).
Performance
Banking supervision expert: The purpose of Mr Norris’ placement was to build capacity within the
CBN to effectively supervise banks through the introduction of a consolidated and risk-based
supervisory (RBS) framework. Instituting a more effective and risk-based approach to banking
20
The first MOU with the IMF in respect of the three adviser positions was signed on 18 June 2010.
22
EFInA 2012 Review
supervision (as opposed to the previous “tick box” approach) is foundational to the reform of the
Nigerian banking system.
During his term Mr Norris has had substantial impact. He developed the road map document to
guide the implementation of risk-based and consolidated supervision - the Supervisory Framework
for Banks and Other Financial Institutions- which was approved by the Committee of Governors. The
Supervisory Framework has been published on the CBN’s website. He has subsequently developed
various templates and supervisory guides to assist with the implementation of the Framework. He
developed a two week training course and accompanying examination on the practical application of
the methodology and the use of the various documents and templates. The Banking Supervision
Department permits staff two opportunities to pass this examination, failing which they are sidelined from performing core banking supervision tasks. Mr Norris has already presented 18 weeks of
training in total, including for other supervisory agencies. He has also assisted NaiCom (the Nigeria
Insurance Commission), PenCom (the Pensions Commission), the NDIC (Nigeria Deposit Insurance
Corporation) and the SEC (Securities and Exchange Commission) with the development of their RBS
frameworks. This includes both the development of methodologies and documents as well as
training of staff in RBS methodologies.
In terms of institutionalising and operationalizing the new supervisory framework, Mr Norris was
responsible for the hands-on assistance and quality control with the onsite examination of 14 banks
utilising the new RBS framework. To undertake the onsite supervision, he worked closely with four
staff members of the Banking Supervision Department, the intention being to create a core RBS
capacity within the CBN that would be able and competent to continue the process once he leaves.
Part of the implementation of the onsite supervision, was to provide extensive feedback to the
banks involved on the process and approach used as well as the significant weaknesses uncovered in
their internal processes.
Monetary operations expert21: The objective of Mr King’s placement was to assist the CBN with the
implementation of several reform measures aimed at enhancing the effectiveness of its monetary
policy implementation. These included strengthening institutional arrangements for monetary policy
implementation, improving data availability for effective decision-making, and strengthening
operations in the domestic money market and foreign exchange market.
Significant progress was made. The Liquidity Forecasting and Analysis Office was established to
strengthen the liquidity forecasting framework for monetary operations. On the recommendation of
the Special Advisor a new Data Analytics Office was established which is responsible for all data
issues within the Financial Markets Department (FMD) of the CBN. The advisor worked with the CBN
to finalise the introduction of the Nigerian Master Repurchase Agreement providing a basis for
transactions conducted by the CBN and between counterparties in the money market. He also
assisted with the implementation of auctions of forward foreign exchange which commenced in
March 2011. However, progress in designing and implementing a framework for the practical
implementation of monetary policy was “somewhat limited owing mainly to major financial data and
IT problems at the CBN; inconsistency in the formulation of monetary policy; and structural rigidities
among the various operational departments of the Bank. This in turn adversely affected the
21
The reviewer was not able to meet Mr King since he already left his position at the CBN in December 2011.
This section therefore relies on information contained in the IMF Project Assessment dated March 2011.
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EFInA 2012 Review
development of financial markets, particularly the interbank money and foreign exchange markets
and hampered the effective transmission of monetary policy signals. The advisor spent the bulk of
his time, therefore, assisting the authorities to improve financial data collection, storage and
analysis, and removing the technological impediments to monetary policy decision-making”22.
Bank resolution advisor: Mr Rouswell was placed at the CBN to assist them with the implementation
of their on-going bank resolution program. This follows the CBN’s direct intervention in the banking
system in June 2009 following the dramatic drop in the stock market and the resultant increase in
defaulting loans. Amongst others the CBN commissioned an audit of Nigeria’s banks to identify the
extent of non-performing loans, and then dismissed the CEOs of eight banks representing 40% of
banking system assets and replaced them with new CEOs whilst injecting N620 billion (US$4.1
billion) into these institutions to compensate for expected losses . The CBN also set up the Asset
Management Corporation of Nigeria (AMCON) to boost the liquidity of troubled banks by buying
their non-performing loans thus assisting with the recapitalisation of the banks. At the same time a
number of banks were instructed to merge to improve their viability. Mr Rouswell was appointed to
assist the authorities with (1) the establishment and operations of AMCON, (2) structuring funding
options for the recapitalization of banks, and (3) establishing a monitoring and reporting framework
for the bank resolution process.
AMCON has been successfully established – its board of directors and senior management were
already in place at the end of December 2010. Since then the focus has shifted to systems
development and specialised training. Key systems still need to be put in place and Mr Rouswell
works directly with the AMCON management - both in Lagos and Abuja - to secure this. The
restructuring of banks are essentially over and the funding devices for purchasing non-performing
loans were agreed. As at March 2012, AMCON had already purchased 12 457 marginal loans. The
advisor has established an open and cooperative relationship with the AMCON senior management.
CBN view: At a meeting on 22 March 2012, the Deputy Governor: Economic Policy at the CBN who is
responsible for the external experts, Dr (Mrs) Sarah Alade, indicated her appreciation for the three
positions and expressed a firm desire for the twoexperts to continue in their positions and the
monetary policy expert to be replaced by a new one. She also made it very clear that the CBN does
not need more policy advice, but rather support with implementation of policy. She described these
three areas – banking supervision, monetary policy implementation and banking resolution - as “our
positions of need”.
Value for money: The technical areas in which the three long-term advisors assist the CBN cut to the
heart of the CBN’s role as banking supervisor and manager of monetary policy. The bank resolution
advisor assists with the resolution of the 2009 financial crisis and the prevention of any escalation in
that crisis. The introduction of RBS is intended to prevent future systemic crises from arising.
Monetary policy reforms seek to introduce predictable and effective monetary policies that will
ensure the protection of the value of the Nigeria currency.
Whereas the value of more effective monetary policy is hard to quantify, it is easier, based on
established research, to quantify the value added by the banking supervision and bank resolution
experts – both of whom contribute at the heart of the CBN to the mitigation of systemic risk and the
22
IMF Project Assessment, pages 1 – 2.
24
EFInA 2012 Review
prevention of future financial crises in Nigeria. The median estimate for GDP loss resulting from a
serious financial crisis is around 60% of annual GDP23. Even though the crisis was to some extent preempted in Nigeria, GDP loss was still estimated to be in the order of 5%. Since no other expertise on
the critical areas addressed by the experts exist in the CBN, it is assumed (for the sake of making a
conservative value for money calculation and recognising that it will always be difficult to pinpoint
causality in a project of this nature) that their contribution to the prevention of a future financial
crisis would be in the order of 1%. Given the estimated 2011 GDP for Nigeria of $414.5 billion24
(excluding the informal sector) the impact of the two experts (excluding the monetary policy expert)
would vary between £68 (at a 5% impact on GDP) and £818 (at a 60% impact on GDP) per DFID£1
pound spent25, assuming a total spend of £1.9 million for this entire component of the FSD Program.
This value excludes any impact from the monetary expert. At 1:68 – 1:818 this represents extremely
good value for money. It would still be good value for money if the contributions of the experts are
assumed to be substantially less than 1 per cent.
Even though the implementation of policy reform is slow and will invariable be confronted with
practical difficulties, the activities in which the three experts are engaged constitute the substance
of reform – not developing polished policies captured in elegant prose, but encountering many
obstacles to change and being able to overcome them. The IMF Project Assessments for the three
CBN positions indicate that, whereas there are more than enough staff members in the CBN
responsible for these functions, their capacity is limited and there is some way to go to reach the
level of professionalism and rigour required of a bank supervisor for an economy the size of Nigeria.
From the interviews and reports it is also clear that the reforms and initiatives supported by the
three experts are not yet embedded in the CBN practice and culture and could simply stall if not
continued.
The process of banking reform is likely to continue under the aegis of the current governor whose
term expires in 2014. Through the wider process of reform in which the CBN is currently engaged, he
is able to amplify the reforms proposed by the technical experts within the CBN. It is therefore
recommended that DFID continues to support technical experts in these three areas to assist the
CBN with policy implementation. In terms of reporting, and to the extent that it is not yet done, it is
further recommended that the quarterly reports compiled by the technical experts for the IMF be
shared with DFID in Abuja.
3.7 Gender
The 2011 revision of the logframe changed the Purpose-level indicator to include a gender
dimension: 50% of the targeted increase of 4.3 million adult Nigerians with access to formal financial
services (as at 2012) should be women. The 2010 A2F Survey revealed that 44% of the increase in
banked adults were women.
232323
Cecchetti, Stephan G., Strengthening the financial system: comparing costs and benefits, Bank of
International Settlements, September 2010, p.2.
24
According to the CIA Factbook.
25
This calculation does not take into account the time factor. Cecchetti’s research, referred to above, found
that serious financial crises occur every 20 – 25 years.
25
EFInA 2012 Review
Recommendations of the 2011 Review: The 2011 Review made three recommendations regarding
EFInA’s activities to increase the proportion of women with access to formal financial services:
(1) Firstly, to generate more information that will assist with the development of financial
products suitable for women. EFInA did targeted FGD research on savings behaviour with a
primary focus on women (75% of the participants in the FGDs were women). The research
was released at an Innovation Forum in March (see section 3.2 above).
(2) Secondly, it was recommended that EFInA address any regulatory obstacles to the usage of
financial services that relate to women in particular. No progress has yet been made on this
front and no obvious obstacles have yet emerged.
(3) Thirdly, it was recommended that specific support can be targeted at product innovations
that will be particularly suitable to women. In this regard, the Innovation Fund RFP Round 3
targeted savings products that will be particularly suitable to women. It yielded two
innovation grants. In addition, one of the TA grants (Diamond Bank) will fund the
development of a pilot which includes a savings product that exclusively targets women.
Besides these specific activities, the general EFInA focus on mobile payments is intended to create a
retail payments environment which does not require movement to bank branches and will allow
clients to make small value payments from the comfort of their homes. These innovations should
assist with the overcoming of the doorstep barrier that keeps most low-income clients, especially
women, out of bank branches.
3.8 Communication
As a “merchant of ideas” communication is at the heart of EFInA’s existence. The 2011 Review
accordingly recommended that EFInA should urgently increase its capacity in the communications
area, either through appointing a communications manager, or outsourcing the function. In the
circumstances, EFInA secured the services of Africa Practice to assist them with public relations and
communications. This has proven valuable. During 2011 EFInA (which monitors its media coverage)
received 70 mentions in the print media, of which 36 were editorial rather than advertisements.
Since its inception, EFInA has published 8 hard copy brochures including a corporate profile and
basic information on the Innovation Fund. Most publications relate to published research and two
relate to financial literacy.
Website: EFInA revamped its website in December 2011, making it much more user-friendly and
informative. A useful addition to the website, is the market report sections of the EFInA Quarterly
Reports, which were recommended to be published on the website in an earlier review.
Unfortunately, though, as at the end of April 2012 the most recent market review on the website
was for the third quarter: July – September 2011. Neither was the website updated with the
presentation and other information regarding the MSME Breakfast hosted on 23 March. Keeping the
website up to date would add a sense of immediacy and draw more people to visit. It is
recommended that a dedicated person, probably at Africa Practice if the skills are not present inhouse, be tasked to update the website on a monthly if not weekly basis. EFInA should commit to
upload presentations and documents distributed at stakeholder meetings within 24 hours of the
event.
26
EFInA 2012 Review
3.9 Value for Money
EFInA targets increased access to formal financial services measured in number of Nigerian adults
who starts using such services, having not used them previously. The impact logic works through
various activities designed to stimulate private financial institutions to deliver these services on a
commercially sustainable basis. The key interventions include (1) removing those regulatory
obstacles that prevent financial institutions from delivering financial services to those excluded or
underserved, and (2) stimulating financial institutions to move into new market segments by:
 changing their perspectives on the low-income market,
 stimulating them to develop new products and new distribution channels suitable to the
low-income market, or
 facilitating the marketing of existing and new products more cost-effectively.
Effectiveness indicator: EFInA’s overall impact (or effectiveness), i.e. increases in the population with
access to formal financial services, is measured through the two-yearly A2F Survey, the most reliable
survey on financial service usage in Nigeria. The most recent survey, conducted in 2010 indicated an
increase of 11m people in those with formal access – from 19.7 m in 2008 when the first A2F survey
was conducted, to 30.7 m. The reliability of the 2008 baseline figure is in question due to the
methodology used, i.e. sampling was not done in proportion to the population numbers of the
various states. The possibility of an undercounting in 2008 is thus quite likely26. The 2012 A2F survey
should provide the most accurate data to date, as well as information that is fully comparable to
2010. For the purpose of this review, and for the sake of setting a benchmark for future reviews, we
calculate the effectiveness indicator (total expenditure by DFID on the program divided by total
number of persons (beneficiaries) who gained access to formal financial services) as at 31 March
2012 utilising the 2010 A2F data. DFID’s total expenditure on EFInA since its inception up to 31
March 2012 amounts to£4.67 m. If we consider the 2008 A2F survey as fully reliable, the cost per
beneficiary will be £0.42. If we consider the 2008 A2F survey figure as an understatement of the
number of persons with formal access, and assume that the increase in access to 2010 should be half
of what the 2010 survey indicated the cost per beneficiary doubles to £0.85. Note that both of these
figures are inherently conservative, since they include the EFInA expenditure for 2011 which was
incurred after the survey was done and which should strictly be taken into account for the 2012
achievement only. A further level of analysis could estimate the welfare benefit per beneficiary of
having access to formal financial services. Research to provide credible information for this
calculation has not yet been done in Nigeria.
In EFInA’s case it is also possible to calculate effectiveness indicators at the micro level, i.e. in
relation to money spent on Innovation Grants and TA grants. One Innovation Grant (to StanbicIBTC)
and one TA Grant (Pagatech) have already run their course. In the case of StanbicIBTC it was
indicated that the number of active customers as at the date of this review for the product funded
by the EFInA grant was 86 00027. Based on a grant value of $1.5 m (£937 500) the cost per
26
EFInA should explore whether the 2008 A2F dataset can be utilised to recalculate the access figure by using
different weightings for the access figure in each state. If this is possible, a more accurate baseline figure for
the purpose-level indicator will be available.
27
Interview with Ada Phil-Ugochukwu from Stanbic on 22 May 2012.
27
EFInA 2012 Review
beneficiary was £10.90. Note that this figure does not include the indirect benefits (Stanbic indicated
that they are already implementing this product in at least one other country and will roll it out in
more countries in Africa). Neither does it include the benefits that accrue to the agents employed in
this product channel. The comparative figure for the Pagatech TA grant is £5.45 based on total grant
value of £85 877 and 15 770 customers at the end of the pilot (August 2011). In Pagatech’s case the
grant was for a pilot that the CBN deliberately limited to 5000 customers and 100 agents. During the
interview conducted with Pagatech as part of this review, they indicated that their current customer
base had increased to just more than 57 000 and their active agent cadre to more than 650. Since
successful pilots are intended to produce implementation at scale, the current cost per beneficiary
for the intervention would reduce to £1.51. A full evaluation of the impact of the Pagatech grant
would generate a figure for income benefits that would include both users of the service and agents.
Note that the mobile payments intervention is significantly cheaper than the banking agent
intervention – which is to be expected even if we correct for the unknowns.
Efficiency indicators: In EFInA’s case it is very difficult to isolate a particular category of expense for
the purpose of calculating an efficiency indicator since its activities are intended to be mutually
reinforcing. The FSD trusts established by DFID in a number of African countries also tend to rely
heavily on their staff and consultant cadre to achieve impact through personal engagement with
numerous stakeholders. To take a measure of EFInA’s efficiency we should therefore consider to
totality of impact against the totality of expenditure. Even though March 2012 is still relatively early
in EFInA’s impact cycle, this review reveals extensive impact which can be directly attributed to
EFInA’s intervention. Or put another way, without EFInA’s activities, these changes would not have
occurred, or would have occurred later or in a different form:




The promulgation of the mobile payments regulatory framework and the issuance of 14
commercial licenses for operating mobile payment services in Nigeria. The provision for both
bank-led and non-bank led models is a particular achievement, given the earlier resistance of
the CBN to the non-bank led model.
The establishment of Islamic Finance as a sector in Nigeria can directly attributed to EFInA.
More important though, is the world –class expertise and experience which EFInA has
sourced since 2009 to ensure that a highly complex and specialised sector is developed a
technically coherent and systematic way. The Islamic Finance Working Group has succeeded
in drawing in no more than 6 regulators which have either already issued guidance or is in
the process of developing regulatory guidelines for this sector.
EFInA has generated and disseminated - for the first time in Nigerian financial sector history
- reliable market information on the entire spectrum of current and potential retail clients.
This has provided a map for financial institutions at a time when they are being forced, for
the first time, to enter the retail banking space. As such EFInA is oiling the wheels improving
the efficiency of a process that would have generated significantly more commercial losses
without EFInA’s intervention.
EFInA’s impact on other areas, such as agent banking, the cashless environment and savings
is not yet evident, but will certainly evolve over the next 2 – 3 years.
All of this was achieved for £4.67 million. It must be added that DFID’s timing was fortuitous. EFInA’s
impact would not have been the same if a reformist CBN Governor and financial management team
28
EFInA 2012 Review
was not in place and if the global financial crisis did not expose the weakness of Nigeria’s traditional
corporate-focused banking model.
Economy indicator: As far as economy is considered, the outputs and outcomes set out in this report
were achieved with a very limited staff complement, significantly less than other FSD Trusts. Already
in 200928, EFInA had 8 staff only compared with the 15 of FSD Kenya and the 8 of FinMark Trust.
Whereas the staff complements of these other trusts have grown since then, that has not been the
case for EFInA, without influencing EFInA’s impact at national level relative to the other two
programmes.
2. Logframe revision and five year strategy
The looming end date for the current EFInA grant (1 December 2012) requires attention to the next
phase of its evolution. This was the purpose of the board retreat which took place on 10 – 11
November 2011. The board retreat considered EFInA’s operational experience over the past three
years and made the following suggestions/recommendations:
(1) Sector focus: EFInA should continue to pursue its activities in the payments, savings, agent
banking, non-interest (Islamic) banking, agricultural finance and credit to the MSME sectors.
Future consideration could be given to housing finance, cooperatives as a financial
distribution channel, financial literacy, gender and large-scale monitoring and evaluation.
Following the retreat, EFInA undertook a Financial Sector Overview which suggested a sector
priority framework as set out in Table 6 below.
Table 6: Priority framework for EFInA sector engagement over next 5 years
High priority
Medium priority
Low priority
Payments – policies & regulations Cooperatives
Conditional cash transfers
Mobile payments
MSME finance
Housing finance
Agent banking
Microinsurance
Microfinance banks
Savings
Non-interest banking
Agricultural finance
Cross cutting themes
Financial literacy
Gender focus on women
Monitoring and evaluation
(2) EFInA’s basic tools: The board affirmed EFInA’s mandate and the purpose of the institution
(expanding access to financial services) and the pursuit of this objective through the three
tools of information (research), advocacy (regulatory development) and the funding of
innovation.
(3) Scale: There was much emphasis on the need to take extension of financial services to scale,
i.e. beyond piloting and experimentation.
28
See EFInA 2010 Annual Review, p. 17.
29
EFInA 2012 Review
(4) Scenario planning exercise: It was recommended that the question of EFInA’s strategy over
the next 3 – 5 years should be explored in a scenario planning exercise. Through the building
of concrete scenarios a picture can form of the initiatives that would be most productive in
helping to accelerate financial inclusion in Nigeria. The scenario planning exercise should be
undertaken during the course of 2012.
(5) DFID logframe: It was proposed to review the DFID logframe following the scenario exercise
to build in some stretch targets.
(6) Innovation Fund: It was felt that the criteria for the making of grants limit the fund’s
effectiveness and that it should be restructured.
(7) Organization: A number of organisational recommendations were made (see section
5below).
The annual reviews over the past three years have revealed a particular EFInA dynamic which has
tended to manifest in each of the sectors in which EFInA has engaged:
Phase 1, the scoping phase, consists of forming a basic understanding of the sector, its demand
and supply potential as well as the fundamental regulatory, infrastructure and other obstacles to
its development. This information is then widely disseminated while EFInA decides on the most
promising set of interventions.
Phase 2 consisted of engagement with the policy-makers and regulators to ensure a conducive
regulatory framework for the development of the sector. In both the mobile payments and
Islamic finance sectors, EFInA played a leading role toleverage external expertise to design the
regulatory framework and create the platforms for the regulator to consult with industry on the
proposed framework. In both cases this involved more than one regulator.
Phase 3 saw the licensing of private providers to launch products in the particular sector. The
level of EFInA’s involvement in this process was quite remarkable to the point of EFInA
undertaking the audits on which the Committee of CBN Governors based their licensing decisions
for mobile payments.
In Phase 4, EFInA shifted to supporting private institutions to roll out products, most notably
through the Innovation Fund. In this regard EFInA is deliberately agnostic regarding the business
models most likely to succeed in the newly opened sectors.
As indicated this cycle was most fully witnessed in the mobile payments and Islamic Finance space
and to a lesser extend in the savings environment. A comparable cycle is under way in agent
banking. EFInA’s key proposition in all these areas is its independence (being trusted by both public
and private stakeholders) and professionalism. It is recommended that this basic approach, utilising
the three basic tools of information, advocacy and business model funding, be retained. There is no
reason to change a winning formula.
However, there is ample opportunity, provided that EFInA can resolve its internal human resource
challenges, to deepen and widen EFInA’s portfolio:
Deepening the portfolio: The most important strategic imperative is that EFInA should stay with the
sectors in which it is currently engaged, but at the same time deepen its engagement in those
sectors. Four areas can be pursued:
30
EFInA 2012 Review
Mobile payments and cashless society initiative: Firstly, in mobile payments and agent banking
(both being essential elements of the larger move towards branchless banking) multiple business
models and product/distribution channels are being rolled out. EFInA needs to stay on top of
these developments and support them through targeted research, industry roundtables (such as
the newly launched breakfast series), TA grants and Innovation Grants. It is not wise to try and
pick winners – an attempt that has failed in most other markets going through this type of
financial services revolution. From the review it is clear that the CBN is putting great stake (and
forcing banks to put substantial resources) into the cashless society initiative, initially being rolled
out in Lagos state. EFInA’s apparent lack of engagement with this process is surprising. The
obvious point is that the CBN is forcing major investment in POS technology. While POS
technology has greatly enhanced cashless transactions in advanced economies with widespread
financial sector infrastructure, there are limited cases of POS devices paving the cashless road in
economies with less developed infrastructure. Mobile payments may be far cheaper and
acceptable to clients than card-based POS networks. This issue is immediate and very strategic
and it is recommended that EFInA engages with it. The scenario exercise provides the ideal
platform to explore the options and likely course of events.
Awareness and financial literacy: Interviews undertaken during the review revealed strong
demand amongst private sector players for EFInA, as an independent party, to launch generic
awareness campaigns – in cooperation with regulators and private players – of the new products
being launched following the opening of these new sectors by the regulator. Some providers
went as far as offering to contribute funding to EFInA to launch such campaigns without requiring
any branding recognition. Consumer awareness is a major challenge in all evolving financial
services markets. Experience to date29 has shown that awareness campaigns/ financial education
are most effective if linked to the distribution of products rather than as cross-cutting or generic
campaigns. It is recommended that EFInA should consider extending its awareness campaigns
not as a cross-cutting activity, but as an integral part of its support for the development of mobile
payments (linked to small value savings accounts), Islamic Finance and agent banking.
Scale: EFInA should support proven business models in its core focus areas to reach scale. This is
discussed more comprehensively in section 3.5 above.
Cooperatives: The potential of cooperatives as a distribution channel is mentioned as a second
order priority in EFInA’s sector analysis. In some countries (notably Brazil) cooperatives were
incorporated as banking agents. This could be explored as part of the agent banking reforms.
Widening the portfolio: The sector assessment suggested extending EFInA’s focus to agricultural
finance as a top priority and MSME finance and microinsurance as secondary priorities. Housing
finance, MFBs and conditional cash transfers are mentioned as areas for lesser attention. The
following is recommended:
Agricultural finance: The CBN governor is putting a lot of emphasis on reforming Nigeria’s
agricultural sector and rightfully so. However, EFInA’s focus cannot simply be on growing finance
for the agricultural sector for then the bulk of the new finance is likely to reach established large
scale farmers. It must of necessity have a smallholder focus. This raises a number of moral hazard
29
Refer the work done by the DFID- funded Financial Education Fund.
31
EFInA 2012 Review
and technical farming issues that EFInA is not at all geared to deal with. Successful agricultural
finance requires a good match between financial instruments and financial institutions with
appropriate skills, on the one hand, and agricultural know-how and technical services, on the
other hand. Whereas EFInA is well geared and connected in the first space, it will have to partner
with institutions knowledgeable in agriculture to bring the agricultural expertise or at least
sensitivity to these issues. In this regard a partnership with the successor program to PropCom is
advisable.
MSME: The demographic realities of Nigeria (rapidly growing population with rapid urbanisation
– likely to be 75% by 2050) suggest that the current unemployment rate (49% of Nigerians
between the ages of 15 and 24 in urban areas30) will get worse unless the economy’s
employment absorption capacity can be dramatically increased. Small and medium enterprises
are the largest job creators in most countries. Finance for MSMEs must therefore be a priority.
EFInA has commenced engagement in this area – notably in the regulatory space. However, other
donors, notably the World Bank and IFC, may be better suited to develop this area. EFInA’s
contribution may be to harness its data gathering (A2F Survey) and analysis functions to provide
basic market intelligence that will inform other programs.
Housing finance: EFInA has done some exploratory work in this area and concluded that problems
in other sectors, such as the limited housing supply and land ownership issues, are prohibitive for
its engagement in this sector. Yet, this is one of the sectors with the highest potential to spur
growth in Nigeria’s non-oil sector trying to meet a housing shortage of 14 million units. Between
1960 and 2009 the mortgage sector generated fewer than 100 000 transactions31. It is
recommended that the housing finance sector receives ample attention in the scenario exercise
and that regulators and institutions that control sticking points for the development of the sector
be included in the scenario process. Scenario planning poses the best immediate opportunity to
engage with non-financial sector regulators.
Other sectors: It is agreed that microinsurance (currently the subject of a comprehensive
diagnostic funded by GIZ) and the MFB sector should receive less attention at this point.
Conditional cash transfers will in all likelihood beaddressed in the mobile payments sector.
Funding: EFInA’s total spend to the end of 2011 amounted to £4.3 m – well below budget. However,
this spending is distorted by two factors: the Innovation Fund only took off in 2011 and in the second
semester of 2011 grants equal to £3.75 m were made. Disbursement of these grants only
commenced in 2012. Assuming that TA grants and Innovation grants of the same magnitude will be
made annually over the following 3 years (a realistic assumption given the acceleration in product
development and distribution occurring in EFInA’s core focus sectors), that would amount to a spend
of £11.25 m.
The second factor was the significant underspend on staff resources. Previous reviews pointed out
that EFInA requires substantially more human resources to expand its activities to scale. Staff and
30
EFInA Quarterly Review: January – March 2011, p.5.
EFInA Financial Sector Overview, March 2012, p. 24.
31
32
EFInA 2012 Review
administrative expense increased from £370 000 in 2009, to £640 000 in 2010 to £1 180 00032 in
2011. It is therefore reasonable to anticipate staff and administrative costs in the order of £1.25 m
per annum for the next three years. That leaves expenditure on other projects. This amounted to
about £500 000 in 2011. The assumption is that increased technical resources will lead to increased
spending in this area – estimated at only £1m per annum (which was also the budgeted figure for
2011).
Table 7 below sets out the projected expenditure for the 2013 – 2015 based on these assumptions.
Assuming further that the Bill and Melinda Gates Foundation is prepared to contribute a further
£3m, it would leave a DFID requirement of £15m. It is recommended that DFID considers making
£15m available for EFInA over the next 3 years and enters into discussions with the Gates
Foundation regarding their potential contribution.
Table 7: Projected EFInA expenditure 2013 - 2015
Expense category 2013
2014 2015
Total
Staff and admin
1.25
1.25 1.25
3.75
Projects
1.00
1.00 1.00
3.00
Innovation Fund
3.75
3.75 3.75
11.25
Total
6.00
6.00 6.00
18.00
Gates Foundation
3.00
DFID
15.00
Please note that this figure of £15m is for EFInA only, and does not include any potential
contribution to the IMF Trust Fund for supporting experts to be placed in the CBN (see
recommendation in section 3.6above).
Logframe revision: The logframe has served EFInA well and no radical changes are recommended.
Obviously, a revision will have to be made once the strategy process and scenario planning has run
its course. However, some specific recommendations flowing from this review are made below:
(1) Overall structure: Maintain the four outputs (information generation and dissemination;
stimulating and supporting private sector innovation; removing regulatory obstacles to
innovation; and direct funding to innovative projects), but draw a clearer distinction
between the private sector focus of output 2 and the public sector focus of output 3.
(2) Output 2: Indicators 533 (output 1) and 9 are similar and should be collapsed into one
indicator dealing with the level and intensity of support provided to individual financial
institutions. Indicator 8 does not make sense and should be deleted. That should leave two
indicators for output 2 – one dealing with the collective engagement events with the private
sector and public sector jointly (innovation fora, breakfast series and the like) and the other
indicator for one-on-one support provided to financial institutions. This should be a stretch
indicator.
32
According to the draft management account contained in the Quarterly Review: October – December 2011. It
is not certain whether these figures are exactly comparable to those in the 2010 audited financial statements
from which the other two figures are taken.
33
Indicator numbers are the same as those used in tables 2-5 above.
33
EFInA 2012 Review
(3) Output 3: Indicator 10 is the main and most significant indicator here. The milestone should
be kept at 5 for the foreseeable future. Indicator 11 overlaps with the events indicator under
output 2 and should be deleted. Indicators 12 and 13 should be maintained, but the target
figure for indicator 13 should be an annual capacity building target of 20 institutions.
(4) Output 4: The current indicators should be maintained with the same milestones until the
end of 2012.
3. Management
Recommendations from the 2011 Review: The 2011 review noted the critical importance of growing
EFInA’s internal capacity and made a number of recommendations in this regard. These included
bringing the human resources function, including recruitment, back into EFInA and recruiting a
competent person to fulfil this function. It was also recommended that the CEO takes the lead to
recruit technical staff since she has to work with them. A further recommendation was that EFInA
should strengthen its finance, administration and operations function through recruitment or
secondment. Finally, it was recommended that EFInA finds appropriate service providers to fulfil the
communication and data analysis function until suitable staff members can be recruited. There was
some progress with the implementation of these recommendations, but at the same time EFInA also
lost some internal capacity through the resignation of the Operations Manager who commenced
service in February 2011,but left within a month or two, and the Programme Manager who left in
December 2011. The Finance Manager who was recruited at the beginning of 2011 never took office.
More information on the implementation of the recommendations is given below.
Performance: As at the date of this review, EFInA had 8 staff members of whom 3 were permanent
employees (the CEO, grant administrator and driver), 3 were temporary employees (operations
manager, research assistant and front desk assistant) and 2 were on probation (research associate
and research officer). At the same time EFInA retains the services (on an on-going basis) of 5 external
service providers:





Sense – who provides its human resources function
PWC – responsible for financial management
KPMG – acting as auditors
Human Capital Partners – responsible for recruitment (and appointed following the board
retreat in November 2011)
Africa Practice – public relations, advertising and communication.
At the same time EFInA retains the services ofMs Dayo Forster to fulfil the Research Manager
function (including data analysis as was recommended in the 2011 Review) and Bankable Frontier
Associates (BFA) to provide general technical support. The Programme Manager (who was also
responsible for the Innovation Fund pipeline) left towards the end of 2011.
Whereas EFInA makes good use of external service providers, it is clear that it was not able during
the course of 2011 to find and retain full time staff to fulfil its operations function, finance and
administration function or any of the technical roles that need to be filled. Increasing its internal
capacity is now EFInA’s single biggest challenge to be a sustainable organization.
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EFInA 2012 Review
The Board Retreat held on 11 – 12 November 2011 similarly concluded that “through the coming
year, there is no greater priority than recruiting the necessary new staff”. The Board Retreat
recommended that EFInA’s activities and thus staff requirements should be organised around three
areas: operations, sector development (which encompasses its technical work in specific financial
sub-sectors) and research and analysis. It recommended that an Operations Manager be recruited to
improve the efficacy of EFInA’s stakeholder support functions, and three sector specialists to
develop EFInA’s engagement in specific sectors, including the identification of opportunities for
investment in each sector through the Innovation Fund. The intention is also that one of these sector
specialists could act as a kind of deputy-CEO. In the research and analysis area the Board
recommended that the current outsourcing arrangement continues.
Significant progress has been made with the implementation of these recommendations since the
board retreat:
Technical capacity/sector specialists: GIZ has agreed to second two staff members to EFInA for a
period of two years to be funded by EFInA. Patricia Seex assisted with the selection process and
two suitable persons were identified – Mr Stefan Martinaic, who has substantial experience in
agricultural finance, and Ms Gabriela Rossario who has experience in SME finance. Both have
accepted the placements and will join EFInA as from May 2012. Mr Martinaic visited Abuja during
the week of the review to familiarise himself with the new environment. The CEO also recruited a
third technical resource in the person of Ms Ada Phil-Ugochukwu, who will also join in May and
be posted in Abuja. Ms Phil-Ugochukwu was responsible for overseeing the StanbicIBTC project
funded through an EFInA Innovation Grant. With these three placements, EFInA’s technical
capacity will increase dramatically and will provide it with the opportunity to allocate
responsibility for specific sectors to each of them. It will also create the opportunity to enter new
sectors. A cautionary note must, however, be added. EFInA has experienced substantial churn in
its human resources, much of this due to the exacting standards maintained by the CEO. It is
therefore strongly recommended that EFInA, in cooperation with DFID’s PSD Advisor based in
Lagos, Patricia Seex, prepare a formal induction period and programme for the three new sector
specialists. The induction programme should include at least an offsite session with the CEO,
Gates Foundation and DFID staff, as well as a number of meetings with key public and private
stakeholders in which the relevant sector specialist is introduced by the CEO. There will also be
substantial value in exposing the new staff to EFInA’s sister organisations in Africa as well as the
Africa Enterprise Challenge Fund in Nairobi to prepare them for their pipeline development
functions in the Innovation Fund. Given the importance of this recruitment, there must be
substantial investment in embedding them in the EFInA network and culture and ensuring that
strong relationships are built internally. It is further recommended that one of the sector
specialists be designated as deputy-CEO to assist the CEO with her wider responsibilities and also
to assume responsibility in the absence of the CEO.
Operations: During February 2012 EFInA also recruited a new Operations Manager, Ms
TaslimahEmiabata, who is currently appointed on a temporary basis. Ms Emiabata is a Nigerian
by birth and spent the past 10 years working for T-Mobile in the United States. It is hoped that
she would be able to fill the position on a permanent basis.
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EFInA 2012 Review
Research and analysis: The current position where the research function is overseen by Ms Dayo
Forster is satisfactory and will continue. A new Research Officer was recruited and joined in
October 2011.
Further recruitment: Following the Board Retreat, it was decided to employ Human Capital
Partners (formerly part of KPMG) to undertake recruitment on behalf of EFInA since it is
considered that they have a larger network of potential recruits. As at the time of the review,
they were recruiting for five positions including a Finance Manager, Communications Officer,
Finance Officer, Program Management Officer and a Personal Assistant to the CEO. Three
positions were already shortlisted. It is recommended that the CEO participates in as many of the
final interviews for placements as she is able to accommodate in her program.
Given the history of staff churn at EFInA, it is recommended that dedicated attention be given to the
induction and training of all new staff members. This has to be a formal process through which all
new recruits go. A solid induction buttresses the substantial investment made in recruitment.
CEO contract: The CEO’s four year contract came to an end in January 2012. At the time of the
review (March 2012), the contract had not yet been renewed. This constitutes a serious oversight on
DFID’s side and should be rectified forthwith. It is therefore recommended that DFID completes
negotiations with the CEO, in conjunction with the Chairperson of the Board, to renew the contract,
giving due consideration to her performance over the past 4 years.
Financial performance
The most recent set of EFInA’s audited financial statements are for the year ended 31 December
2010. The statements were audited by KPMG and reveal a deficit of NGN 555 000 for the year,
absorbed by the surplus during the previous year. The reviewer met with KPMG to discuss the audit.
They did not have any significant concerns. KPMG’s management letter for the year ended 31
December 2010 revealed a few management deficiencies. The most important ones were that the
company had only one signatory to their bank account – the CEO. This was rectified at the board
meeting in November 2011 when one more signatory was designated. The second material
deficiency was that the company’s VAT registration with FIRS was not regular. KPMG has been
instructed to regularise the registration.
The management accounts for the year ending 31 December 2011 revealed total DFID expenditure
of £1.51 m, equivalent to an underspend of 47% on the budget for the year. Whereas the staff cost
and administrative expenses were just slightly under budget, the major underspending was in
respect of the output 1 (mostly the delayed spending on the 2012 A2F survey) and output 4
(Innovation Fund). Disbursement under the new innovation grants only commenced in January 2012.
Expenditure is therefore likely to increase substantially in the first quarter of 2012.
No material deficiencies in or concerns regarding financial management came to light during the
review.
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EFInA 2012 Review
4. Governance
Recommendations from 2011 Review: Both the 2010 and the 2011 reviews highlighted substantial
deficiencies in EFInA’s governance arrangements. The 2011 Review contained three specific
recommendations:
(1) Firstly, that the company’s new membership arrangements be formalised and a new board
appointed. Two new members – partners of Lagos law firm Aluko&Oyebode – have been
appointed to act on DFID Nigeria’s behalf as members of the company. However, their
registration with the Corporate Affairs Commission (CAC) is yet to be completed. Two board
members – the CEO and Mr Yemi Cardoso – have been appointed and the appropriate
documents filed with the Corporate Affairs Commission. That means that EFInA’s
governance arrangements are almost regularised. Two board meetings were held during the
course of 2011 – on 6 July and 11 November.
(2) The second recommendation was that the new board implements the necessary changes to
EFInA’s governance documents to give effect to the detailed recommendations in the 2011
Review. These changes have been approved by the board, but must yet be filed with the CAC
by the company secretary.
(3) The third recommendation is that DFID maintains pro-active engagement with EFInA both at
management and board level. The level of engagement has increased substantially with the
placement of the new PSD Advisor in Lagos. EFInA has indicated that they would appreciate
more regular interaction with the DFID Programme Officer based in Abuja.
DFID has moved decisively during the past year to place EFInA’s governance on a firm footing, and
this has already yielded good results. The new chairperson of the board is engaged and interacts
with the CEO on a regular basis. The board retreat held in November gave clear leadership to chart
EFInA’s course over the next 5 years. A two-person board is however not optimal. The 2011 Review
recommended that the board be reconstituted in two phases: in the first phase a functioning board
with two members should be established (now done) and in the second phase two additional board
members, recruited for their expertise and active interest in EFInA’s purpose, should join the board.
It is recommended that DFID now proceeds to take the lead to recruit two new board members.
37
EFInA 2012 Review
Annexure 1: Consolidated recommendations
Consolidated recommendations from EFInA 2012 Annual Review
Activity area
Recommendation
Output 1
That consideration again be given to reducing the cost for private institutions of
purchasing the entire A2F dataset. If EFInA is to syndicate the A2F Survey in due
course (as is the case for example in South Africa), banks and other commercial
financial institutions will have to realise the value of the full dataset. Measures
should therefore be taken deliberately to get them to start using the detailed
rather than just the summary data.
Output 3
(1) That, given the experience with mobile payments licenses, the approach
of leveraging external international expertise to guide regulatory
decisions should be deployed as much as possible.
(2) That EFInA proactively engages with the Governor and those responsible
for overseeing the National Financial Inclusion Strategy process regarding
its own scenario-building intentions and potential cross-pollination
between the two processes
(3) That EFInA engages with NIPOST to scope and explore its potential role in
the distribution of financial services in Nigeria.
Output 4
That
(1) EFInA continues with targeted RFPs in those priority sectors where it
engages at multiple levels with multiple stakeholders;
(2) the eligibility criteria for the Innovation Fund be adjusted to incorporate
projects that will scale up innovative products and services once their
viability is tested. Deeper engagement in its priority sectors will offer
EFInA new opportunities for TA grants as was the case with mobile
payments and savings during the past year.
(3) No further restructuring of the Innovation Fund is recommended at this
stage
IMF Trust Fund
(1) That DFID continues to support technical experts in these three areas to
assist the CBN with policy implementation.
(2) In terms of reporting, and to the extent that it is not yet done, it is further
recommended that the quarterly reports compiled by the technical
experts for the IMF be shared with DFID in Abuja.
Communication That a dedicated person, probably at Africa Practice if the skills are not present inhouse, be tasked to update the EFInA website on a monthly if not weekly basis.
EFInA should commit to upload presentations and documents distributed at
stakeholder meetings within 24 hours of the event.
Logframe
revision
Strategy for
next five years
The proposed revised logframe is attached hereto as Annexure 3.
(1) That the basic approach of utilising the three basic tools of information,
advocacy and business model funding be retained.
(2) That EFInA engages with the CBN’s cashless society initiative. The scenario
planning exercise provides the ideal platform to explore the options and
likely course of events.
(3) That EFInA should consider extending its awareness/financial literacy
38
EFInA 2012 Review
Funding
Management
Governance
campaigns not as a cross-cutting activity, but as an integral part of its
support for the development of mobile payments (linked to small value
savings accounts), Islamic Finance and agent banking.
(4) That EFInA considers expanding into agricultural finance, but with a
primary focus on smallholder agriculture. It will have to partner with
institutions knowledgeable in agriculture such as PrOpCom’s successor
program.
(5) That the housing finance sector receives ample attention in the proposed
scenario exercise and that regulators and institutions that control sticking
points for the development of the sector be included in the scenario
process. Scenario planning poses the best immediate opportunity to
engage with non-financial sector regulators
That DFID considers making £15m available for EFInA over the next 3 years and
enters into discussions with the Gates Foundation regarding their potential
contribution.
(1) It is strongly recommended that EFInA, in cooperation with DFID’s PSD
Advisor based in Lagos prepare a formal induction period and programme
for the three new sector specialists recruited to EFInA. The induction
programme should include at least an offsite session with the CEO, Gates
Foundation and DFID staff, as well as a number of meetings with key
public and private stakeholders in which the relevant sector specialist is
introduced by the CEO. There will also be substantial value in exposing
the new staff to EFInA’s sister organisations in Africa as well as the Africa
Enterprise Challenge Fund in Nairobi to prepare them for their pipeline
development functions in the Innovation Fund
(2) That one of the sector specialists be designated as deputy-CEO to assist
the CEO with her wider responsibilities and also to assume responsibility
in the absence of the CEO.
(3) That the CEO participates in as many of the final interviews for new staff
placements as she is able to accommodate in her program.
(4) That dedicated attention be given to the induction and training of all new
staff members. This has to be a formal process through which all new
recruits go. A solid induction buttresses the substantial investment made
in recruitment.
(5) That DFID completes negotiations with the CEO, in conjunction with the
Chairperson of the Board, to renew the contract, giving due consideration
to her performance over the past 4 years.
That DFID takes the lead to recruit two new members to the EFInA board of
directors.
39
EFInA 2012 Review
Annexure 2: Performance by output
EFInA: Performance against logframe indicators as at 31 March 2012
Purpose
Purpose
Indicator
2012 Milestone
Performance
To increase
access to
financial
services
2. Number of Nigerians that have
access to formal financial services
(50% of the increase in access
numbers are women) - (2008
baseline of 20.5 m)
35 m (2014
milestone: 40.6 m)
30.7m in 2010 (36.3% of the
total adult population of
84.7m). A2F Survey for 2012
not yet completed.
Output
Indicator
2012Milestone
Performance
Credible
information on
the state of
financial
inclusion in
Nigeria
generated and
disseminated
3. Number ofinstitutions who use
the Access to Finance Survey data
or request tailored presentations.
How often EFInA data is quoted
in the dailies/CBN publications
16 (2014 milestone:
25)
Total: 56
Output 1
14 applicants to Innovation
Fund utilised A2F data to
develop business models and
applications
36 press mentions
5 documents on CBN website
mention EFInA
1EFInA A2F Survey data the
benchmark for the CBN
Financial Inclusion Strategy
434 (2014
milestone: 6)
4. Number of additional surveys
or scoping studies completed and
disseminated
Total: 8
2. MSME Supply-side survey
(February 2012)
3. Increasing Access through
Agent Banking (October
2011)
4. Opportunities in Nigerian
Insurance Sector (July 2011)
5. Understanding the Needs of
Low Income savers (March
2011)
6. Financial services landscape
in Nigeria (September 2010)
7. Overview of housing finance
34
All the logframe milestones are cumulative, i.e. the milestone for 2012 includes performance in 2010
milestone.
40
EFInA 2012 Review
in Nigeria (August 2010)
8. Scoping study on payment
services in Nigeria (August
2010)
9. Scoping study on informal
savings in Lagos (March
2010)
5. Requests received from
financial institutions for
assistance with the analysis of
EFInA A2F surveys or other EFInA
datasets to develop product and
market propositions.
5 (2014 milestone
10)
Total: 1 (verified0)
Output 2
Output
Indicator
Opportunities
for innovation
in access to
financial
services
stimulated and
identified
6. Number of Innovation Fora
hosted
2012milestone
6 (2014
milestone: 9)
Performance
Total: 9
Innovation Forums hosted in
2011-12:
1. Promoting Financial
Inclusion through Effective
Savings Mobilisation (March
2011)
2. Microinsurance:
opportunities, challenges
and innovation in product
design for the mass market
held in (September 2011)
Breakfast series hosted:
3. Retail Banking Strategy
Breakfast (June 2011)
4. Presentation of findings of
Agent Banking Report
(October 2011)
Previous forums hosted:
2. Branchless banking forum
(2009)
3. Islamic Banking forum and
working group (2009 and
2010)
4. ATM Card Working Group
(2010)
5. Agent Banking Forum
(2010)
6. “Global Perspectives on
Financial Inclusion” forum
(2010)
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EFInA 2012 Review
7. Number of Innovation Fora
that result in a new initiatives
(e.g. working group, new
product) or new way of working.
3 (2014 target: 4)
3
8. Percentage of technical
assistance grants (formerly seed
grants) that are launched
25% (2014
milestone: 25%)
Indicator unclear.
9. Number of institutions met
with to provide guidance on
business model development for
the low income segment
(including workshops, roundtable
and 1-1 meetings)
8 (2014 target:
15)
Total 35
Conservatively a total of 4
institutions are estimated for
2010.
31 institutions met with in
2012:

6 in person meetings were
requested following the
Retail Banking Strategy
Breakfast on 15 June 2011

11 further institutions
attended the breakfast

4 institutions are members
of Islamic Finance WG and
receive product guidance
there

1 institution
(conservatively) is
estimated to have taken
guidance from the Savings
Forum although it was
attended by a number of
institutions.

2 institutions requested
and had one-on-one
meetings following
Innovation Fund RFP
Round 3.

7 of the 11 institutions who
qualified for Innovation
Grant RFP Round 4 (mobile
payments) requested and
had one-on-one meetings
with EFInA.
Output 3
Output
Indicator
2012Milestone
Performance
Obstacles to
innovation
identified and
brought to the
attention of
10. Changes in discrete areas of
financial sector regulations
effected mainly due to EFInA’s
intervention
3 (2014 milestone:
5)
Total: 3
2. Mobile payments
3. Islamic Finance
4. ATM & card fraud
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EFInA 2012 Review
both the
regulators and
private sector
In the process of securing
regulatory change:
5. Agent banking
6. Financial inclusion strategy,
which incorporates
consumer protection,
financial literacy and
guidelines for tiered KYC.
Each of these can result in
its own discrete set of
regulatory changes
Lesser contributions:
7. Revision of regulations for
MFBs
11. EFInA supports workshops to
highlight obstacles and potential
resolutions (interface by public
and private sector)
4 (2014 milestone:
5)
Total: 7 workshops supported:
4 workshops hosted during
previous years met this target
(see 2011 Review)
During current year three
events fall into this category:
2. Retail Banking Strategy
Breakfast;
3. Presentation of findings of
Agent Banking Report
4. Inputs provided at events
for the development of the
National Financial Inclusion
Strategy.
12. Maintain relationships with
public institutions, industry
associations, regulators and
other relevant NGOs
5 (2014 milestone:
10)
Relationships maintained with
8 public institutions:
2. CBN
3. PenCom
4. NaiCom
5. NDIC
6. SEC
7. FIRS
8. NSE
9. DMO
13. Number of institutions and
persons benefiting from EFInAsponsored training and capacity
building initiatives
15 (2014 milestone:
20)
Total: 31 institutions 
2 – Pagatech and Afri-Pay –
went on mobile payments
study tour to Kenya

5 - 4 MFBs/MFIs and one
from CBN – participated in
annual Boulder
Microfinance Training
Program
1 – Chairman attended AFI
Global Forum
12 – members of Islamic
Finance Working Group
underwent dedicated
training



43
EFInA 2012 Review
9 – representatives from 9
media institutions
participated in Finance for
Finance Journalists
Workshop to enhance
journalists’ professional
competence in the
fundamentals of financial
inclusion

2 – EFInA sponsored
representatives from SEC
and CBN to attend Financial
Education Fund hosted
conference in Nairobi in
July to discuss impact,
benefits and challenges of
financial education
programs across Africa, Asia
& Latin America.
Output 4
Output
Indicator
2012 Milestone
Performance
Innovative
projects
identified,
funded and
monitored
14. Number of innovation grants
approved by Innovation Fund
Committee (IFC)
4 (2014 Milestone:
6)
5 innovation grants approved:
 StanbicIBTC (2009 - $1.5m)
– for Esusu savings product
targeted at extending
financial services to the
unbanked traders using
Point of Collection devices
and agents.
 Pagatech (2011- $2m) – for
rolling out branchless
financial services.
 HasalMFB (2011 - $500 000
with prior technical
assistance up to $100 000) –
branchless banking/POS and
savings.
 Afri-Pay/UBA (2011 - $1 206
800) – targeting mobile
payments and savings
 Monitise (2011 – $1 873
000) for providing mobile
money services to financial
institutions.
15. Number of technical
assistance grants approved by
Innovation Fund Committee
6 (2014 Milestone:
10)
Three TA grants totally $578
000 awarded during 2011.
 MKudi Mobile Money ($191
000) – approved in January
2011 and paid in February.
Funded by DFID.
 Pagatech ($137404) –
approved in March and paid
in April. Funded by Gates
Foundation.
 Diamond Bank ($250 000) –
for branchless banking and
savings that targets women.
100%
16. Percentage of grantees M&E
quarterly reports completed to a
high standard
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EFInA 2012 Review
100%
Annexure 3: Proposed revised logframe
(See separate document)
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EFInA 2012 Review