Accelerating financial inclusion for Sub-Saharan Africa’s 1 billion emerging consumers

35 0 m+

Verve Cards & Tokens

41,000 0

Agent Network

858 0

Full-time staff

Interswitch is a leader in payments technology in Africa, dedicated to developing world-class technology to make payments faster, safer and more dependable.

The company’s range of innovative products target underbanked and underserved consumers by leveraging mobile technology and enabling transactions through an extensive agent network. LeapFrog believes Interswitch can continue to scale its businesses ethically and accessibly to be the champion of the movement towards greater financial inclusion.

Nigeria, like most of sub-Saharan Africa, has low financial inclusion rates. Only 39% of adults have a formal financial account, compared with 67% in South Africa1.

Government efforts to lift the rate of financial inclusion and move to a cashless economy have shown progress in recent years, with an additional 5% of the population now financially included compared to 2018. However,this remains well short of the country’s revised target to reach 80% financial inclusion by 20302. Critically, the poorest parts of the population continue to lag behind, with only 24% of the poorest 40% holding a bank account3. Rural populations and women continue to make up a large portion of the underserved, with 38 million adults still financially excluded.

As a consequence, the majority of transactions in Nigeria continue to occur through cash4, with low penetration of formal lending, insurance and other investments products. An average Nigerian is over five times more likely to borrow money from family and friends (28.3%) versus a bank (5.3%) and only 2.6% of the population have a home loan5.

The reasons for these low rates of financial inclusion are numerous. Recent surveys have found that most Nigerians do not know of a mobile money service point within a bus ride of their house while 37% cited broken ATM machines as a barrier6 . In the same survey, 21% of Nigerians said they didn’t have the necessary documents to open a mobile money or bank account, and only 16% were considered financially literate.

At the same time, financial inclusion is key to modernising Nigeria’s economy, lifting savings rates, stamping out worker exploitation in the informal economy, and creating more opportunities for women and girls. Nigeria continues to score poorly on corruption (149 out of 180 countries)7 , has one of the poorest tax collection rates in the world (159 out of 190 countries)8, and low access to electricity (169 out of 190)9 .

Nigeria’s transition to cleaner, decarbonised technologies also relies on improved financial inclusion. In Kenya, where financial inclusion is greater, mobile money products have helped drive a spike in pay-as-you-go renewable energy usage. M-Kopa, a utility built around the M-Pesa system, has financed, and delivered over 1 million home solar kits to low-income households. Meanwhile, 80 million Nigerians lack access to electricity10, and almost $14 billion annually is spent on small diesel generators to supplement grid power11 .

Nigeria's low financial inclusion compared with peers Nigeria's low financial inclusion compared with peers
Source: World Bank Population Data; Centre for Financial Inclusion Review of Nigerian Financial Inclusion Strategy 2021.
Nigeria's low financial inclusion compared with peers

Interswitch is a leading player in Africa’s rapidly-evolving financial ecosystem, providing a full suite of payment solutions in its home market of Nigeria and to neighbouring markets in sub-Saharan Africa where 1 billion emerging consumers live. The company has two major consumer-facing brands, Verve and Quickteller, which work together to drive financial inclusion and support MSME growth.

Verve is the first and only pan-African payment scheme certified to the international Europay, MasterCard, Visa (EMV) standard and to date has 35 million+ activated cards and tokens across its network. Verve offers traditional debit cards, payment tokens and mobile money accounts to Nigeria’s increasingly digital-focused consumers. Transactions using these products have grown significantly over the last five years, and Verve now serves 49% of the card and payment token market.

Quickteller is Interswitch’s online payments platform for consumers and businesses. It enables payments to be made across ATMs, online and through Point Of Service (POS) terminals with the use of debit or prepaid cards issued by any member bank on the Interswitch network. Quickteller also utilises a network of 41,000 agents to increase digital payment touchpoints for bill payment, funds transfer, cash deposits, cash withdrawals, insurance, and airtime recharge. With close to half of the country’s population classified as rural or periurban, the agent network makes transactions easier to access for harder-to-reach consumers, with local stores, salons and other agent businesses able to provide many traditional banking services. This distributed network of agents can dramatically reduce the time and costs that customers incur travelling to a bank branch and provides services outside of regular banking hours.

The agent network also provides significant opportunity for employment and job creation, empowering Nigerians to take an active role in running their own business, and increasing income for Nigerians no matter where they live. Partnerships between Quickteller and innovative businesses like Nigerian pay-as-you-go solar providers also bridge the payments gap for consumers to access previously out of reach services. Using the POS, customers can make simple mobile payments for off-grid solar equipment to replace kerosene lamps, coal, or diesel power in their homes.

Monthly volume of POS transactions (millions) Monthly volume of POS transactions (millions)
Source: NIBSS, BusinessNews, 2022.

LeapFrog invested in Interswitch in 2022, recognising the enormous potential of the company’s suite of products to enhance financial inclusion across Africa.

The majority of Nigeria’s financially excluded population live in the northern regions of Nigeria, where Interswitch’s agent coverage is relatively low. In the north-west of the country, 73% of the country is financially excluded, compared with 36% in the south-west near the capital Lagos. Northern regions of Nigeria also suffer from low mobile network coverage compared to the south, making some mobile money solutions a frustrating experience for customers, merchants, and agents. To overcome these barriers to access, LeapFrog plans to support Interswitch to enhance its agent network in these regions, as well as evolve offline payments-enabling infrastructure to support users with poor network coverage.

LeapFrog’s Customer Experience Launchpad program can support improvement in the retention and incentivisation of agents and merchants, identifying and removing pain points and aligning agent needs with bank services. Areas of potential improvement include handling failed transactions and providing liquidity management.

Exploring ways to increase the percentage of female agents through the network will be a key focus for LeapFrog’s Talent Accelerator program, which helps portfolio companies evolve their organisational development. This strategy has been instrumental at other LeapFrog portfolio to help attract more female customers, and target financial inclusion amongst women and girls.

Nigeria also has a huge untapped pool of around 41 million micro SMEs operating businesses such as kiosks, salons, restaurants and market stalls across the country. While the majority of current merchants using Interswitch POSs are major retail stores, marketing and CX design directed towards micro SMEs could also deliver rapid expansion of this platform and improved penetration of digital payments infrastructure.

Together, LeapFrog’s work with Interswitch will ensure the company can continue to scale ethically and accessibly, and champion greater financial inclusion in Nigeria and sub-Saharan Africa.

Nigeria's financial exclusion is more severe in Northern states Nigeria's financial exclusion is more severe in Northern states
Source: EFINA 2018 Survey, USAID Nigerian Payments Landscape 2019. Notes: Excluded population is inclusive of informal financial access & fully excluded customers (mutually exclusive).
Nigeria's financial exclusion is more severe in Northern states