With an adult population of 84.

7million in Nigeria, of which only 30% of them are banked, and with
more than 88.3 million mobile phone subscriptions as at December 2010, there is great potential for
agent banking and other remote access financial service that will increase financial inclusion. In addition
to this, increasing financial inclusion is high on the agenda of the regulator being the CBN (CBN, 2012).
There is therefore, great potential for agent banking in Nigeria to increase access to finance.

The CBN has categorized agents into 3 simple categories

1. Super Agent – one who has other agent in a location directly under him.

2. A Sub Agent – an agent that is registered under a Super Agent.

3. Sole Agent – a stand alone agent

An agent bank relies on technology such as Card reading Point Of Sales (POS) terminals for real
time transaction processing.

Functions of an Agent Bank.

1. Collect cash deposit from customers of both their principal FI and other banks

2. Pay cash on behalf of customers of their principal FI and other banks.

3. Make cash transfers to customers of their FI and other banks

4. Make cash transfer from customers of their principal FI and other banks.

5. Make bill payments and purchase airtime on behalf customers of their principal FI and other
banks.

6. Act as correspondence and pick up point for customers of their principal FI.

There are existing bank customers in remote areas who already use banking services and those
that are yet to use any form of formal banking services (unbanked). The agency banking strategy
is meant to bring banking close to them through the use of agents to provide branchless bank
services in their neighborhood thereby reducing travel time and expenses

The agents are under the direct supervision of the FIs that appoints them. The FIs has the power
to set limits on their transactions, approve all allowable charges for them and also delist them
when they are seen to be involved in illicit activities. The banks are also obliged to deploy
appropriate technologies for the agent use.

Other role of the Financial Institutions includes:

1. Ensure that agent location is viable and profitable.

2. Provision of adequate Liquidity and Security Risk Management.

3. Adequate branding and awareness creation to ensure the agent success.

4. Provide effective planning and communication.

5. Provide life and property insurance for Agent.

6. Develop innovative products that will drive the adoption and sustainability of agency banking.

7. Provide competitive pricing mechanism.

Information Required by Financial Institutions for Agent Structure:

1. Name of Agent

2. Location of activity

3. Terms of engagement with Financial Institutions. Itemizing activities the agent is currently
engaged in and all proposed responsibilities.

4. Signed declaration by agent.

5. Banks are expected to carry out due diligent on prospective agent

Agent Eligibility:

1. Must have been in commercial activities for at least 12 months and must be a going concern.

2. The prospective agent must be a registered entity, public entity or a trust

3. A non profit making establishment cannot be engaged in agency banking

4. An organization subject to regulation under any law will need the approval of the regulatory
authority to engage in agency banking.

5. A business entity that has been classified as a non performing borrower by any financial
institution in the last 12 months cannot be engaged in agency banking.

6. The prospective agent is to provide appropriate infrastructure and human resources to

provide the service required.

7. The prospective agent should not have any record of criminal activities.

Some banks are already adopting agency banking as a channel for conducting financial
transactions to attract existing customers as well as acquire new customers in semi urban/rural
areas where banking activities are not available. Other reasons banks are adopting Agent
Banking strategy includes:

1. Reduction in the cost of ATM services to their customer. Remote on Us (RoU) ATM cost has
been a major concern for most old generation banks especially one that pioneered ATM service
in Nigeria. The bank spent over #4billion in 2014 in settling other banks on who’s ATMs their
customers cards are used. The figure reduced to #3billion in 2015 as a result of CBN policies.

2. Support for CBN financial inclusion strategy

3. Substitute for loss making branches or low profitability locations or support for virgin and
unbanked locations.

Bank targets for agency banking are businesses that physical cash handling is already part of
their business, these type of business can easily accommodate Agent Banking within their
existing space as no additional equipment is required. Some level of literacy is also expected
from the would be Agent. Targeted businesses are, but not limited to:

1. Supermarkets

2. Retails outlets

3. Distributors of mobile network operators products

4. Petrol filling stations that has a supermarket or sales room

5. Dealers in FMCG

6. Other high traffic business locations like markets and motor parks
Indications For Viability/Profitability Of An Agent – Questions

Where is the agent located? What is the physical address and structure? What is the
demographic profile of the population within the area? What social & economic facilities do
they have in the area? What is the spread of banking services within the area? How secure is
the retail outlet? How long has the existing or potential agent been operational in that location?