AFEX to Deepen Financial Inclusion in Rural Communities
AFEX Commodities Exchange Limited, which enables the transition from production to transaction for agricultural commodities, has revealed plans to deepen the commodities exchange market through the financial inclusion drive.
It said there was a need to deepen financial inclusion in rural communities as commercial banks had little to no presence in the communities, leaving a bulk of the populace unbanked and financially excluded.
AFEX, in a market bulletin on Tuesday, said rural communities were often reliant only on cash availability and that physical assets formed the basis of their payments and savings, leaving them subject to risks like losses and robberies. It said even worthy of further consideration was the fact that physical assets were unable to earn interest and were susceptible to losing value over time.
The bulletin read in part, “Money is passed around by hand and travels long distances with the help of expensive, insecure and inefficient systems. Emergencies come with steep consequences like an inability to gather enough resources or a reliance on moneylenders that charge incredibly high rates.
“Rural dwellers can also be stopped from accessing opportunities due to a lack of financial history records that cause formal institutions to deny them credit facilities. In these ways, financial exclusion, defined as the inability of individuals, households or groups to access necessary financial services in an appropriate form, is incredibly expensive – contributing to the inability of a huge chunk of the populace to rise out of poverty and create better lives for themselves.”
According to a study published by the Enhancing Financial and Innovation Access, 63.3 per cent of Nigeria’s 99.6 million adult populations live in rural areas. AFEX said the significant portion of the population found it harder to utilise the most basic financial services and often stayed below the poverty line.
It said “This is the lived experience of many of the farmers whom we have encountered in our work in rural, agrarian communities. A vast majority of farmers in northern Nigeria are unable to increase their productivity because they cannot access credit, quality agricultural inputs, extension services or even good storage facilities to keep their produce viable for longer periods after harvest.”
It added that farmers also found it difficult to weather setbacks like poor harvest outcomes or serious illnesses. It said the exchange was committed to being part of innovative technologies and solutions that would create new ways for more people to be financially included.
“Recent data is promising with the Central Bank of Nigeria (CBN) setting a 20 per cent exclusion rate target for adults for the year 2020. We are licensed as an aggregator within Nigeria’s financial inclusion ecosystem, which allows us to register farmers and issue Bank Verification Numbers (BVN), open bank accounts, and also facilitate transfers, receipt of cash and bills settlement.” It said the initiatives would go a long way in boosting the commodities exchange.