Nigeria ranks top three in the world’s unbanked countries ratings, with 40 per cent of its population not having a bank account. Out of the 59 million unbanked adults, 73 per cent do not have the requisite documents to open a tier-three bank account. Financial technology (FinTech) is bridging the divide between technology and finance. It is a rapidly growing space with a lot of opportunities as finance cannot be dispensed with.
FinTech helps consumers throughout the world transact in financial services more quickly, easily, and conveniently. Nigerian FinTechs are primarily focused on payments and consumer lending. The FinTech sector in Nigeria is still young, expert says. However, so far, they have been able to bring up some innovative ideas that have benefited the public, such as addressing issues of unflexible savings, bringing up quick loan strategies and investments, providing online payment gateway and seamless payments, amongst others. In order to accept payments from clients, FinTechs must get one of the Central Bank of Nigeria’s (CBN) (the central bank and apex monetary authority of the country) banking licenses listed under “Lending” in order to receive deposits from customers. However, in reality, Nigerian FinTechs that provide personal finance applications often run through collaborations with reputable DMBs or MFBs.
A report from to PwC, a Company that offers business advisory services in Nigeria, indicated that investors are taking positions or stakes in the country’s growing tech ecosystem fuelled by attractive fundamentals like the country’s youthful and tech savvy population, increasing smartphones and internet penetration, large unbanked population, among other factors. Between 2011 and 2018, FinTech investments in Nigeria recorded more than US$200 million.
While the market’s largest segment will be Digital Payments with a total transaction value of US$14,250.00m in 2023. The average transaction value per user in the Alternative Financing segment is projected to amount to US$9,073.00 in 2023. The Neobanking segment is expected to show a revenue growth of 43.4% in 2024. In the Digital Payments segment, the number of users is expected to amount to 146.07m users by 2027, a leading provider of market and consumer data, Statista Market Forecast stated.
The largest country in the African continent by population, Nigeria, presents a future whereby it can bring financial inclusion to its population, with the ability to help its fellow neighbours too. Through Kiosk money point clusters, a special hybrid model provides financial service to customers wherever they go. In the current decade, POS solutions have evolved to keep pace with today’s increasingly demanding and well-informed consumers. If they are unsatisfied with the choices or the levels of services you offer, they can, with mobile devices in hand, instantly access a limitless set of alternatives. As a result of such extreme competitive pressures, modern POS has evolved far beyond a payment and accounting system to become not just point of sale, but also point of service, driving highly individualized interactions that consistently gratify customers in the moment.
Youth unemployment refers to the share of the labour force ages 15-24 without work, but available for and seeking employment. Unfortunately, as the youth population grows, so does the unemployment rate. The Nigerian youth unemployment rate for 2021 was 19.61%, a 0.06% decline from 2020 (National Bureau of Statistics). There has been emphasis on encouraging innovation and transforming youth from job seekers to job creators and employers, thus shifting responsibility for creating employment to the youth themselves.
Meanwhile, with advancement in FinTech, Nigerians are taking to the POS services subsector of the financial sector, also known as agency banking, to become self-employed while creating jobs for others. The POS machine is a mini ATM that does more than what most ATMs can do. Smart individuals who saw business opportunities in this small, but mighty machine have made and are making fairly good cash on a daily basis. POS machines can either be obtained from a commercial bank or any recognised financial institution like Paga, Paystack, Moniepoint, Interswitch, Opay, Flutterwave, Kuda, Remita, Carbon and Payvice.
While the quickest financial service would be the POS at the rural and urban communities, Central Bank of Nigeria (CBN) indicated that there were N6,500 bank locations, N900,000 POS terminals, N14,000 Automated Teller Machines (ATMs), across the country, and 1.4 million agents nationwide. The Central Bank of Nigeria is the apex monetary authority of Nigeria established by the CBN Act of 1958 and commenced operations on July 1st, 1959.
Statistical reviews have shown that the number of agency banking and POS operators has been on the rise since 2017, bringing to the fore, the gains being accrued to those behind the initiatives. A point of sale (POS), also known as a point of purchase, is a system that helps local debit cardholders to make withdrawal of money and pay for goods and services. This apparatus is mostly used in retail stores where consumers use their ATM cards to pay for goods or services. Any utility bills, such as power, airtime, cable or decoder subscriptions, are often paid using a POS device.
Hence, with the growing use of advanced innovative electronic technologies for e-funds round the world, the introduction of POS into the Nigerian economy has facilitated the ease of doing business without having to carry large sums of cash in one’s wallet. “With POS machine- Terminal, you can pay Electricity bill, recharge GOTV, DSTV, buy data, sell airtime, top recharge cards, receive deposits, withdrawals and transfer to any Bank in Nigeria,” Adeleke Hafees, a POS Aggregator in Ibadan, Oyo State told Susa Africa.
Unlike most other enterprises, the POS industry does not require a huge initial investment. To get started, you’ll need a minimum balance of N50,000. The fact that you don’t need a nice shop to host the business, lowers the startup costs even more. In Nigeria, many of these companies are as simple as a table and chair set up in a prominent area or a wooden shack. Adeleke noted that, “It is cheaper to get a space than rent a shop for POS business if you are on low budget and you mean business. To run POS business you need two chairs, one table and one umbrella or Kiosk if you can afford it, plus bulk money ranging from N100,000-N200,000 depending on your financial capacity.”
On investigating the POS business, we have found that its invention in Nigeria has created employment opportunity for many unemployed Nigerians. The increasing rate of economic recession had worsened the unemployment rate in Nigeria, and had led many of its citizens into penury.
However, the introduction and availability of POS in Nigeria has in the long run brought smiles to people’s faces and provided income opportunities for many jobless Nigerians. As a result, there has been an increase in the number of individuals who ventured into POS businesses, owning up to three or even more POS business outlets, thereby employing workers to manage the outlets.
A POS Machine distributor and Merchant in South western Nigeria, Adejumo Muhammad, who is a higher institution graduate also shared his experience on how lucrative the business is. Adejumo said, “No matter how small it is, POS is still a business you can start with just N50,000. Just look for good business area, get a banner like N5,000, get your POS machine at N20,000 from people like me and use your remaining N25,000 to run the business. “Talk to small business owners around who gets cash often, like food vendors, traders and retailers, some of them will turn you to their bank. If you have like three big business persons, you won’t be short of cash to transfer.”
“If you have small money, start with what you have. No matter how crowded a POS business is in Nigeria, every one has his or her customer, and yours is coming. Don’t get threatened by the saying that many people are already doing it. POS business never cast. And many job seekers in Nigeria have been engaged through this. It is cheaper to get a space than rent a shop for POS business if you are on low budget and you mean business. To run POS business you need two chairs , one table and one umbrella or Kiosk if you can afford it, plus bulk money ranging from N100,000-N200,000 depending on your financial capacity,” Adeleke explained.
While, examining the extent to which the availability and use of POS has served as a source of income for the owners of business centers. Adeleke noted that, “POS business can make you at least N3,000-N5,000 daily depending on your location and budget. To make mega money , you have to look for busy and strategic locations.” “You can do ten to twenty transactions at start and you can do more as people continue to know you. You can make at least N1,000 here daily and N20,000 in twenty working days in a month. Don’t mind those who will tell you how much is N20,000, if not poverty. None of them can give you N20,000 easily monthly without feeling too important, or overusing you even if you are to work for it. Ask how much domestic staff in some houses dey earn.”
The POS business is competitive, alike with other business sectors in Nigeria. Aside from the direct attraction POS business pulls on unlicensed armed men, the business is fast becoming too common lately as more and more individuals keep activating their ‘mini banks’ to meet up with life’s demand. This reality makes the business more competitive and less juicy than it was in the beginning. Walshak kos who lives in Enugu said “POS is a me too business.” Narrating his observation Walshak added, “There is a woman that is into POS business in my street. The woman was doing well, she was having customers but suddenly other people in the street started their own POS business because they saw how she was making money. Now we have like 14′ POS business in one street alone.”
Prior, banking business operations required only the physical manifestation of the customers or their agents in the Nigerian banking sector. However, we are now in a period where banking undertakings can also be carried out from home, within a business premises or even on the road with the aid of an electronic payment system. With the increasing use of advanced electronic technologies for e-funds worldwide, the introduction of POS into the Nigerian economy has created employment opportunities for youths and facilitated the ease of doing business. Moreover, it has created a modernized payment system, wherein persons do not need to travel around with huge bulks of cash in their wallets, whilst at the same time solving to a slight degree our country’s unemployment problem.
This work also includes contributions from Mahmoodah Oyeleye.
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