Thursday, April 30, 2020 / 02.00PM /Henry Chukwu, EFINA / Header Image Credit: Medium

COVID-19 has been a major global disrupter, with surginginfections, city lockdowns, closure of businesses, travel restrictions andstaff layoffs becoming staple features of the new global economy. Forbes report the impact in four basic ways.First, supply chain failures because of the impact of the pandemic onChina. The second harm results from direct effects of illness in lost work bythose who are sick or attending to the sick. The third and biggest impact todate is the indirect effect of quarantines, travel restrictions, restaurant andstore closures, and so forth. These are weighty and trigger the fourthimplication which is a surge in demand shocks as the incomes of many peoplediminish. According to a recent reportby the United Nations Development Programme, the socioeconomic impact of COVID 19 on poor and developingcountries will take years to recover from, with income losses in developing countriesforecast to exceed $220bn. It estimated that nearly half of all jobs in Africacould be lost.

In Nigeria, peoplebegan the year 2020 with high hope ofmeasuring increased financial inclusion by the end of the year.  The effect of the pandemic has hithard on the federal government as the country is now facing U.S dollarshortages due to the crash in oil prices. It has also impacted low-incomehouseholds and businesses due to government measures to curb the spread of thevirus. Most states have banned all public gatherings and closed major marketsand schools. The federal government recently announced lockdowns in commercialhubs, including Lagos, Ogun State and the nation's capital, Abuja. These measures are having sweepingimplications on the low income and financially excluded population with highreliance on their informal day-to-day business transactions for survival. According to the EFInAAccess to Financial Services in Nigeria 2018 survey, 44.3 million adultsown businesses and about 23 million adults earn their income daily or weekly.

Understanding How COVID-19 AffectsFinancial Services Agents?

Financial services agents are also affected byeconomic disruptions as they experience declining transactions and incomes dueto the closure of several businesses and low economic activity. Otherchallenges faced by agents as a result of the pandemic include limited supportfrom the financial service providers that hired them, as most financialinstitutions have implemented working remotely. Agents now rely on rebalancingthrough ATMs where they face cash withdrawal charges, increasing their cost toserve. They are also coping by rebalancing through accessing funds from familyand friends, a method that can be unreliable. Financial services agents arefaced with more threat of harassment by law enforcement agents including thepolice and local council officials who lack knowledge of agent banking duringthe lockdown. Upon this realisation, some providers have offered specialbanners which read 'Approved Essential Financial Institution' to minimise agentharassment during this crisis.

The Central Bank of Nigeria in its recentpress release excluded super agents from the list of financial institutionsexempted from government lockdown restrictions. This has triggeredconversations among industry stakeholders about whether agents should operateduring this period. Because transacting at an agent location requires somein-person engagement, some suggest that allowing agents to continue to operateis not worth the risk. On the other hand, agents can serve as critical accesspoints for financial services that are essential, such as sending money tofamily members whose income has suddenly been interrupted due to restrictedmovement. Countries such as the U.S., UK, Italy, Spain, China and South Koreaare opting to quarantine potentially contaminated cash to reduce the risk ofspreading the coronavirus. The WorldHealth Organizationhas not said that coronavirus can be transmitted through cash; however,they are advising consumers to switch to contactless payments to reduce risk.It is important for the financial services agents to be enlightened onprecautionary measures to protect themselves, customers and reduce the risk ofspreading the virus.

A Call to Action

Agency banking is an important rail for providingfinancial services, especially in hard to reach areas. Both the federal andstate governments are coming up with various palliative stimulus measures suchas cash transfers and distribution of foodstuffs to cushion the effect of thepandemic. Agent networks should be a veritable channel to distribute thesepalliatives to households. Although exact figures are difficult to determine,there may be approximately 300,000 financial services agents spread across thecountry. The Nigerian government can use financial services agents to driveaccount opening among beneficiaries of cash transfer programmes, which will notonly cushion the effect of the pandemic but also contribute to Nigeria'sfinancial inclusion drive.

Financial service providers (FSPs), on the other hand,should come up with measures to support agents during this pandemic period.This could be through provision of soft loans, equipping agents with personalprotective equipment (PPE), and online training on precautionary measures thatagents can take to reduce the risk of infection. FSPs also need to seekbusiness collaboration that can stimulate transaction flow at agents' locationsto help agents remain active and profitable.

For years, financial services agents have played animportant role in their communities by extending access to financial servicesto underserved Nigerians. They can now play a critical role in helping thosecommunities through the COVID pandemic. We must work together to support agentsin operating safely and to identify ways in which agent networks can help usweather the coming storm.

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