Business
A Bank at Every Corner Store: Agency Banking is Transforming Nigerian Business By ABUBAKAR IDRIS
IN NOVEMBER 2019, Taiwo Iredeji Adedotun had a difficult decision to make. After a few months of working as an auditor at a microfinance bank in Lagos, Nigeria’s commercial capital, he wanted a change. Just 23 years old at the time and earning a net salary of $85 (35,000 naira) per month, Adedotun wanted to increase his income. “I started asking contacts about business ideas,” he told Rest of World. One of his older colleagues introduced him to the world of agency banking. Agency banking, also called agent banking, delivers essential financial services to customers through a network of third-party agents on behalf of a licenced financial institution or a mobile money operator. So instead of traveling to far-off metropolitan areas to withdraw money, users can reach out to an agent banker, deputized by a large financial institution or phone company, to provide access to cash withdrawals, deposits, and transfer funds. Adedotun raised $340 (140,000 naira) in startup capital to launch his own agent banking business. He registered and paid around $50 for point-ofsale (POS) devices and started his first shop — a tiny 1 meter by 2.1 meter kiosk. Location is key to being an agent, said Adedotun. He located his first shop off the busy IdirokoSango highway in Ota, a commuter town less than 20 kilometres from the outskirts of Lagos. A few minutes down the road is the Faith Tabernacle, headquarters of Living Faith Church Worldwide, a 21
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megachurch with a sitting capacity for over 50,000 people, promising regular foot traffic past his shop. Everything was set. In the first few months in operation, his business grew gradually, he said. His younger sister worked at the shop in the morning and afternoon, while Adedotun split his time working his day job and spending the evening at the shop. His small shop helps people send and receive money while he earns a commission between 25 cents (about 100 naira) and $2.50 (about 1,000 naira) as an operator. On average, before the pandemic, the shop completed around 25 customer transactions per day, worth collectively over $120 (50,000 naira). At the end of December 2019, his first month in business, he was making slightly more money just from commission revenue than he was from his day job’s salary. By March 2020, an excited Adedotun quit his banking job, opened a second shop, and started working full time as an agent. Then the pandemic hit. By the start of April 2020, Nigeria’s confirmed Covid-19 cases spiked to 139 cases with two fatalities, prompting new health measures and an extension of the initial two-week long lockdown that crippled formal businesses in three Nigerian states, including Ogun, home to Adedotun’s agent banking operation. The new health measures limited bank opening hours and capped the number of customers. This led to longer queues see page 22 DAWN
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