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What is Agent Banking in Nigeria? All You Need to Know

Agent banking provides  small-scale banking and financial services to the unbanked community by engaging agents under a legal agency agreement rather than a teller/cashier. As such, the owner of the business is the person who conducts banking operations on behalf of a bank.

Several developing nations have embraced and implemented agent banking with varied degrees of success. Brazil was an early adopter of the model and has now grown a mature network of agent banks that covers more than 99% of the nation’s municipalities, earning its recognition as a global pioneer.

Similarly, countries like Nigeria, South Africa, Kenya, Uganda, Argentina, India, and whatnot have adopted agent banking to ensure a boost in the financial inclusion of the country’s teeming population.

Understanding Agent Banking In Nigeria

Agent banking has enabled full financial inclusion in Nigeria, such that financial inclusion for adults increased from 21.6% in 2010 to 70% in 2020. Therefore, agent banking is one of the tools that the Central Bank of Nigeria (CBN) uses to reduce the poverty index of Nigerians, thereby increasing the purchasing power of the populace of different cohorts.

Kunle was a farmer in a village far from Abeokuta, Ogun State. His son started his tertiary education study at an institution in Abeokuta. One day, his son was seriously ill and needed some cash for urgent medical care. Kunle wanted to send money to his sick son, but there was no bank in his village to achieve that.

Moreover, Kunle did not have extra cash besides the one he wanted to send to his ailing son in Abeokuta. The lack of a bank in the village made Kunle helpless and disappointed. However, there was a glimmer of hope when one of Kunle’s friends told him that his bank had introduced agent banking in the village, which is available near the village market. Kunle visited this agent and successfully transferred money to his sick son in Abeokuta.

This is how agent banking served as a lifesaver for Kunle and his son. So in a simple context, agent banking enables easy access to the financial services of banks without the banks necessarily being available in that locality.

What Is The Need For Agent Banking In Nigeria?

1. High Operations

Traditional banks are tough to establish everywhere. This is because the cosank sank branches and their operations are expensive, and it might not be cost-effective in some instances. But agent banking in Nigeria has relieved the banks of this responsibility, as these agents can function instead of commercial banks.

2. Low Profitability

Traditional banks can only offer financial services to customers that visit the physical locations of banks in Nigeria. When internet banking was introduced, they could serve customers who were already familiar with traditional banking and had bank accounts, albeit online. Hence, only those customers visiting banks can benefit from profit.

However, the introduction of agent banking in Nigeria has further increased the profit reach of bank customers.

3. Limited Scaling Capabilities

There is a limitation to traditional banks’ services in places with no bank. Inaccessibility to banks has made some banks lose out on a huge customer base in Nigeria, which, in turn, hampered the optimum performance of the banks for the enormous potential customers.

But, agent banking has brought about a significant financial inclusion that has helped to expand financial services to the large population of the country.

Services Provided By Agent Banking In Nigeria

1. Cash Withdrawals

Bank customers can request a specific amount of money to withdraw, and the agents supply the customer with the same amount.

2. Cash Deposits

Customers pay the agent in cash, and the agent deposits the money into the customer’s account.

3. Utility Bill Payment

Customers can pay utility bills such as power, water supply, and gas supply, among others.

4. Registration For Different Financial Services

When banks have new schemes or services to offer, bank customers can readily take advantage of them by registering with an agent banking service.

5. Account Transfer

Customers must enter their basic account information or the recipient’s phone number, which agent banking can help you to do.

How Agent Banking Works In Nigeria

  1. The retailer is authorized as a banking agent by their bank or financial institution, and the two parties sign a contract to provide banking or financial services.
  2. The bank will create a wallet for the agent. This wallet enables the agent to deposit and handle funds electronically. Once the wallet is made, the banking agent deposits a prepaid balance to provide customer services.
  3. Customers can open a bank account and use essential services such as cash deposits and withdrawals by visiting a nearby banking agent with a valid ID.
  4. A bank customer can visit the agent to initiate any type he wants to make. The agent can use your cash or card, as the case may be, to proceed with transactions.
  5. The bank handles and facilitates the transaction for the customer when the agent initiates it through his system. After successful processing, the agent confirms it by providing the consumer with a transaction receipt.

Parties Involved In Agent Banking In Nigeria

1. Agent Banking Service Providers

Agent banking service providers are at the helm of enabling agent banking in Nigeria. They are also in charge of operational services, marketing, cash handling, branding, etc. These agents are likened to retailers authorized to conduct various banking services on behalf of banks and financial organizations.

2. Banks/Financial Institutions

Banks and financial institutions serve as hosts for both agent and customer accounts. These entities act as the pipe through which actual cash flow takes place.

3. Super/Sub Agents

Banking agents contain their discretion, organise other agents under them and earn an additional commission on each transaction they complete. They can be referred to as either super or sub-agents.

4. Customers

The end users of agent banking are the customers. These people may not have a bank account but have access to mobile phones or live in essentially unchanged places.


Agent banking has brought many opportunities to people in Nigeria, especially in improving financial inclusion. You can easily access these agents in any part of Nigeria as they tend to fill the lacuna created by traditional banks.

However, it is essential to do your transactions with a trusted agent to avoid being exposed to scams that could lead to a possible loss of your money.






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