Improving Access to Financial Services in Niger
Project Development Objective ( PDO )
This project aims to contribute to greater financial inclusion in Niger by (i) Strengthening the supply side, specifically through improving supervision of financial microfinance institutions and developing new service offering (e.g., savings) which would serve the needs of customers; (ii) Improving the access to and usage of financial services expanding the access points through the postal network, improving mobile financial services (e.g. adding savings for mobile money), and switching Government payments from cash-based to digital channels; (iii) Strengthening the M&E system to help the Government effectively monitor and implement the National Financial Inclusion Strategy (NFIS); and (iv) Improving access to agriculture finance.
Background
Access to financial services remains limited in Niger. As of 2014, about 6.7 percent of the population has formal accounts –one of the lowest rates in the WAEMU region - while it amounts to 34 percent for the SSA region. Due to prohibitive costs, perceived cumbersomeness of banks with high documentation requirements and lack of proximity, only 3 percent of the population have access to commercial banking services. The microfinance sector has a better outreach than the banking sector. In 2014, the number of people with a bank account was 438,170 compared to 722,322 adult people with a microfinance account, thus confirming the strong role microfinance institutions (MFIs) play in providing financial services in Niger.
The proposed program responds to a request from Government of Niger to implement key actions previously identified such as:
(i) Low oversight of Microfinance Sector Regulation Agency (Agence de Regulation et Supervision de
Microfinance - ARSM), weak capacities of medium and small MFIs, MFIs’ inadequate offering
financial products (for example limited offer of saving products) and MFIs’ limited access
to affordable funding;
(ii) Low access to and usage of mobile finance partially due to limited access points, lack of
well-designed products (e.g., no savings or product features not meeting people’s needs)
and poor awareness. The large and recurrent payment and collection streams such as G2P is
still cash-based;
(iii) The low coordination of the implementation of the 2014-2019 national financial sector
development strategy (FSDS);
(iv) The unconducive environment for warehouse receipt financing and leasing which are impeding
the development of agriculture finance.
Activities / Output
The expected activities include the following:
• Strengthening supervision of microfinance institutions (including financial cooperatives)
• Improving the access to and usage of financial services by expanding the access points through the
postal network, improving mobile financial services (e.g. adding savings for mobile money), and
switching Government payments from cash-based to digital channels
• Introducing an M&E framework for financial inclusion
• Improving access to agriculture finance
Expected Outcomes
The main expected outcomes of the project are as follows:
1. MFIs adopt a strengthened governance and risk management practices and supervisory authority
(ARSM) has tools in place to conduct effective supervision and resolution as needed for MFIs;
2. New savings products are successfully introduced to the market;
3. Options for Microfinance Fund are approved, helping MFIs to access to affordable and longer-term
funding for growth;
4. Government adopts policies to digitalize its payments through “transaction accounts” which
replaces the current “cash-based” payments
5. New mobile money products are introduced, addressing the needs of mobile money holders and
help increase the “usage” of financial services
6. Increased availability of access points
7. The implementation of NFIS is monitored and communicated effectively
8. Policies for developing agriculture finance are established, helping to farmers including women
farmers to access to more financing products such as warehouse receipts financing and leasing.