Reducing Poverty in Africa – Businessday NG

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The Sub-Saharan Africa (SSA) region has nearly half of the world’s uncultivated land – around 200 million hectares, which is vastly underutilized.

According to The United NationsAfrica holds around 30% of the world’s mineral reserves, 12% of the world’s oil and 8% of the world’s natural gas reserves.

However, when conversations about poverty arise, SSA is a region that comes to mind. Indeed, many people in this region are deprived of the resources, opportunities, income and food they need to lead fulfilling lives.

According world Bank According to the data, SSA accounts for two-thirds of the world’s extremely poor population, despite having abundant mineral and land resources. Africa is rich in mineral resources of enormous value.

While Sustainable Development Goal (SDG) 1 aims to halve the number of people living in poverty and to ensure that the poor and vulnerable have equal rights to economic resources and access to basic services, the Covid-19 pandemic made these aspirations appear elusive as large numbers of people lost their livelihoods at the height of the pandemic. It is estimated that the Covid-19 pandemic has plunged between 30 and 40 million people into extreme poverty.

Proper market segmentation and understanding of each segment will help government, development agencies, organized private sector and other financial service providers to develop customized solutions such as insurance…

Income poverty has existed in Africa for a long time, as records show that half of the world’s extremely poor people live in rural areas in SSA and work in the agricultural sector.

About 400 million of these people practice subsistence agriculture that produces insufficient produce and offers meager incomes below the poverty line of $1.90 a day. Nigeria occupies an area of ​​923,768 kilometers, thus providing vast land for agricultural production.

However, less than 50% of available agricultural land is cultivated by smallholder farmers who have limited knowledge, skills and tools to improve crop productivity and yields on their agricultural land. These smallholder farmers manage 80 percent of agricultural land in SSA, according to FAO estimates.

Also read: How Nigeria, others can avoid chronic food insecurity – IMF

One strategy that can certainly help farmers and other poor Africans break out of the poverty trap is to encourage the widespread use of financial tools and services.

A survey conducted by EFINA in 2017 showed that around 37.6% of farmers do not have a bank account and are financially excluded. Being one of the largest groups of unbanked people, farmers can improve agricultural production, grow their businesses and become successful if they have unlimited access to financial tools and education.

Across the SSA region, governments, development agencies and financial institutions are constantly making efforts to move the needle of financial inclusion forward. However, issues such as illiteracy, gender discrimination, means of identity and account opening requirements have been obstacles.

The Nigerian government has been working to reduce barriers to the formal financial sector and the Nigerian financial inclusion story cannot be complete without acknowledging the crucial role played by the Central Bank of Nigeria (CBN), which through different policies and guidelines, reduced the barrier for the unbanked, opened the sector to new investors who extended financial services to the last mile and created innovative products.

For example, documentation requirements for account opening have been reduced; the means of identification have been streamlined. In addition, the Shared Branch Network Expansion (SANEF) facilities have increased the licensing of Microfinance Banks, Mobile Banking Agents and recently the licensing of Payment Service Banks (PSBs) to telecommunications operators and other non-banking operators.

These efforts are expected to increase financial access points while expanding payment, savings and credit services to the unbanked and will also boost digital financial services, agent banking and other innovative business models.

With increased access points, smallholder farmers and other unbanked groups can embrace the culture of savings and use their transaction history to access loans, insure their farms or businesses, procure inputs and benefit from government incentives such as the anchor borrowers program to improve their livelihoods to a large extent.

A prime example of this model is Verve Card’s partnership with credit unions in Uganda, particularly with the Buyanja Savings and Credit Cooperative Societies (SACCOs) in Rukungiri District, South West India. Uganda. Working with Future Link Technologies (FLT), Verve International has extended financial services to Buyanja SACCO members, issuing ATM cards that allow them to access their funds from over 600 Interswitch-enabled ATMs and to purchase goods and services from stipulated outlets. terminals (POS) across the country.

Additionally, Fintechs and digital financial service providers are constantly innovating digital products that address the challenges of the unbanked and underserved, providing them with convenient ways to save, send and receive payments online. online and offline, creating mobile wallets, facilitating wealth management and easy lending. .

Payments and lending-focused solutions have been a focus of fintechs in Nigeria as they are more acceptable to all customer segments – consumers, SMEs and enterprises.

Fintechs such as Interswitch have been able to solve payment problems faced by SMBs with improved products that are cost-effective, driving SMB payments at a compound annual growth rate of 28% over the past three years. years.

While innovative solutions around insurance, merchants, and personal finance solutions are also available, they are limited and not as widely adopted as payment and lending solutions.

To spread economic prosperity among Nigerians, the government has revised its financial inclusion target to 95% by 2024, which is currently below 70%. According to a survey by EFINA, while the difficult economic situation may have caused a downturn, the situation has led to the emergence of around 5 million new micro-enterprise owners, particularly in the service sector.

Proper market segmentation and understanding of each segment will help government, development agencies, organized private sector and other financial service providers to develop customized solutions such as insurance, retirement, estate planning , low interest loans, equipment financing, flexible savings, last mile logistics and transportation that will capture and meet the financial aspirations of critical groups such as women, rural dwellers , farmers and other Nigerians who are largely unbanked.

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