Nigeria’s NICTIB Project Drives Rural Financial Inclusion, but Inter-Bank Transfers Remain a Challenge

The Nigeria National Information and Communication Technology Infrastructure Backbone (NICTIB) Project has been instrumental in advancing financial inclusion in rural communities across Nigeria through enhanced broadband penetration. However, persistent issues with inter-bank transfers continue to pose challenges.

Before the NICTIB project, traders like Maureen Pam in Ganawuri, Plateau, faced arduous journeys to reach distant banks at the close of market days. Robbery incidents during these treks added to their fears and concerns. Due to the lack of nearby banks in rural areas, traders often had to return home with their cash earnings and wait for a chance to access the nearest bank, which could be over 60 kilometers away.

To address this issue, agency banking, where customers can deposit and withdraw money without visiting a physical bank branch, was introduced. Currently, there is one agency banking agent for every 80 Nigerians, offering an alternative to traditional banking methods. Despite this progress, the World Bank reported in 2008 that only 2 percent of rural households in Nigeria were financially included, despite rural communities comprising 53 percent of the country’s population.

The Solution: The National ICT Backbone Project

To bridge the connectivity gap in Nigeria, the government partnered with Huawei Technologies through its public enterprise Galaxy Backbone Limited to implement the NICTIB Project. The first phase, completed in August 2018, covered 13 states, including Abuja and other southern states. The second phase, valued at $328 million and funded through an Export Buyer’s Credit by the Export-Import Bank of China, extended to 19 states in Northern Nigeria.

The NICTIB Project has facilitated telecommunication companies like MTN, GLO, and Airtel to enhance their connectivity into rural communities by renting portions of the fiber, thus driving further progress in broadband penetration. Agency bankers in rural areas, such as Vwang, now utilize hotspot access through phone or routers, including MTN 5G routers, to power their machines. The improved internet speed, which averages 26Mbps in Vwang, has transformed their operations.

Prior to the commencement of NICTIB’s phases, broadband penetration in Nigeria stood at 19.8 percent. However, as of May 2023, the Nigerian Communications Commission reported that the penetration rate has increased to 48.18 percent, showcasing the project’s impact.

Inter-Bank Transfer Challenges

Despite the significant advancements in internet penetration and financial inclusion, issues with inter-bank transfers persist, eroding confidence in internet banking services. High transaction volumes during weekends and public holidays, coupled with inadequate infrastructure, contribute to delays in inter-bank transfers.

Residents like Bulus Weng and Joyce Pius in Vwang have experienced transfer failures and delays, leading to their reluctance to use banking services. In response to such challenges, the Central Bank of Nigeria (CBN) issued directives to banks and financial institutions to resolve customer refund backlogs within two weeks. The CBN also revised timelines for handling errors and refund complaints.

Future Prospects and Mobile Banking

Despite the obstacles, financial inclusion in rural communities continues to grow. The demonetization policy in Nigeria earlier this year led to increased use of digital banking services, especially among companies like Opay and Palmpay, which have emerged as the most downloaded finance apps on the Google Play store. Telco-owned banks like MTN’s Momo Payment Service Bank Limited have further expanded financial services to their subscribers, notably in rural areas.

With ongoing efforts to improve internet connectivity and address inter-bank transfer challenges, Nigeria aims to achieve a target of 70 percent broadband penetration by 2025. By leveraging initiatives like the NICTIB Project and embracing mobile banking, the country can drive financial inclusion even further in its rural communities.

This story was produced with support from the Centre for Journalism Innovation and Development (CJID) and funding from the Centre for International Private Enterprise (CIPE).