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Introduction to Agent Banking in Nigeria

Agent banking is a delivery channel for financial services and involves using third-party agents like retail shops to assist financial institutions in carrying out basic financial transactions. The agent banking emergence has revolutionized the operation of the Nigerian banking system and brought banking services closers to customers in rural areas with little access to the banks.

The emergence of Agent Banking in Nigeria

Paga was an early pioneer of agent banking in Nigeria and has been instrumental in the promotion of financial inclusion providing easy access to financial services for the unbanked and underbanked population.

Since its launch in 2009, Paga has grown to become one of the leading mobile payment platforms in Nigeria, with over 21 million registered users and a network of over 24,000 agents spread across the country and started its agent banking operations in 2012, which was a year before the Central Bank of Nigeria (CBN) introduced the regulatory framework for agent banking.

The CBN discovered how difficult it is for a lot of Nigerians, particularly those living in rural areas to access traditional banks and launched the framework to enhance the adoption of agent banking and has since then been driven by factors like advancement in mobile technology, market demand, and partnership opportunities among fintech companies, banks, and other financial stakeholders reaching and serving more individuals and expanding customer base.

How Agent Banking works in Nigeria

Third-Party agents are able to provide basic financial services ranging from opening an account, cash deposits and withdrawals, payments of bills, and funds transfers.

Here’s how agent banking works in Nigeria:

  1. Agent recruitment: Banks and FinTech companies recruit agents who are usually individuals or small business owners from remote areas. These agents have to undergo a screening process including background checks and training on basic banking operations.
  2. Agent setup: They are provided with equipment, such as point-of-sale (POS) devices, smartphones, and other banking materials that are necessary for setting up businesses in their local communities.
  3. Customer onboarding: These agents can assist unserved individuals from local communities to create their accounts. The agents are provided with the necessary information and verify the customer’s identity using the bank’s approved means.
  4. Banking transactions: They assist their customers to perform basic banking transactions, including deposits, withdrawals, fund transfers, and bill payments.
  5. Agent commissions: The agents are paid in commissions for carrying out transactions on behalf of the banks and Fintech companies. The rate defer depending on the bank or company as well as the type of transaction and account. Oftentimes, agents also charge their customers a certain fee depending on transaction type and volume.
  6. Supervision: Banks and Fintech companies ensure the operations of these agents are monitored and that they compile with regulatory requirements and support agents where necessary.

Advantages of Agent Banking in Nigeria

The Major advantage of agent banking in Nigeria is how it drives financial inclusion for all. It makes carrying out basic financial transactions possible for Nigerians in remote and rural areas that were previously unavailable to them.

Agent banking also serves as an extra income source for business owners as they earn commissions for the services they provide and for some individuals, their major source of income.

Agent Banking often makes banking services more affordable to low-income earners and offers more flexible options and requirements for creating accounts and performing transactions.

Challenges faced by Agent Banking in Nigeria

Agent Banking in Nigeria has experienced a great deal of success but there are also a few challenges.

One of the major challenges is the lack of trust between agents and customers. Customers are not always familiar with these agents are will often not want to give their money to them and the lack of proper awareness about agent banking in local communities contributes to this challenge.

The cost of setting up in remote areas can also be a challenge as Financial institutions are required to invest in Mobile devices, internet connectivity, and security features that allow agents to carry out effective services.

Regulatory Framework for Agent Banking in Nigeria

The Central Bank of Nigeria has a regulatory framework that outlines the requirement for financial institutions and agents to participate in Agent Banking. Agents are expected to adhere to anti-money laundering laws and regulations and Financial Institutions must also ensure the agents are properly trained and meet the legal standards for operation.

Here are some of the key regulatory guidelines for agent banking in Nigeria:

  1. Licensing Requirements: Banks and fintech companies must obtain a license from the CBN to operate agent banking services. The license outlines the scope of service, terms, and conditions of the operations.
  2. Agent Eligibility: Agents must be registered business entities, have a fixed address, pass certain background checks, and undergo service training among other eligibility criteria to be met.
  3. Customer Due Diligence: Banks and Fintech companies must ensure that the agents are not being used to carry out transactions that are linked to money laundering or terrorist financing.
  4. Transaction Limits: The amount and frequency of transactions that can be carried out through agent banking services are limited to prevent money laundering and other illicit activities.
  5. Security Measures: Banks and Fintech companies operating agent banking must ensure that their security measures are adequate to protect customers’ transactions and information from fraud and other cyber threats.
  6. Complaints Handling: Banks and fintech companies must have effective mechanisms for handling customer complaints and resolving disputes in a timely and efficient manner.

Future of Agent Banking in Nigeria

Agent Banking in Nigeria has a future filled with possibilities as it is a key driver in achieving financial inclusion for all Nigerians. The mobile money industry has experienced rapid growth since the adoption of agent banking.

The COVID-19 pandemic had a bright side to it for digital financial services in Nigeria, since it encouraged the adoption of agent banking in providing financial services to underserved and unbanked Nigerians.

The services offered through agent banking are expected to increase as more agents learn more and become better familiar with the financial system and its operations, and they will be able to provide a wider range of financial services to their customers.

Also, more innovative methods of performing digital financial services will be created by financial institutions enhancing how agents are able to serve their customers.

There are a lot of challenges that need to be addressed and Financial institutions to research, surveys, and data collections are able to profer solutions that tackle these issues.

Nonetheless, The future of agent banking in Nigeria is promising.


  • Agent banking has helped the general populace to access financial services irrespective of their location. It’s been an easy way of conducting financial transactions.

    Thank for sharing this information.

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