Poverty has been for a long time, one of the major challenges mankind has been plagued with. It has been a challenging issue in many African countries. However, the situation is transforming, as we adopt new systems and technologies. The emergence of financial technology, for example, plays a vital role in eradicating poverty in Nigeria and Africa as a whole.
Read more about FinTech
People suffering from poverty face poor access to financial services, due to high costs, lack of credit, and perceived high risks and costs of financial institutions to service these persons. But fintech is changing the landscape by reducing the cost to acquire and serve clients.
There is no doubt that financial development plays a great role in poverty alleviation, including helping the less privileged to borrow money, so they can start mini enterprises, which would help to increase their income and reduce poverty.
FinTech has emerged as an alternative source of finance which people would rather use. This is because Fintech helps magnify the prospect of SMEs, which usually experience challenges in getting cash from banks, basically because of inadequate collateral security, and also because the banks would rather offer loans to state-owned enterprises, which are better capitalized. This problem of moral hazard and adverse selection associated with the traditional banking system is now solved. Fintech also doesn’t require a bank to serve as an intermediary during the process of lending and borrowing.
Agriculture plays an important role in providing food security and sustainability for the people in any country. Agriculture’s sustainability can be strengthened by allowing an innovation of services such as Financial Technology and digital marketplace. Digital lending and rural e-commerce have enabled farmers to get loans and secure higher prices for their produce. With this support farmers get from fintech, they can now grow an inclusive global recovery.
Sign up to the Connect Nigeria daily newsletter
Digital marketplace with Fintech transforms agriculture’s business into a more sustainable process in terms of funding and distribution, by offering farmers convenient ways of getting sources of funding through crowdfunding and digital payment systems. Thus, a digital marketplace can act as a platform for FinTech to integrate innovative financial solutions into the agricultural ecosystem. The model connects farmers, landowners, investors, and consumers with a platform that can promote transparency, empowerment, resourcefulness, and public engagement in agriculture.
Fintech also complements economic growth to reduce poverty, by providing many opportunities for the government of Nigeria, from making their financial systems more efficient and competitive, to broadening access to financial services for the under-served populations. It is acknowledged that economic growth reduces poverty, thus, provided that fintech influences economic growth, it can also influence poverty. Finally, provided that fintech drives financial development, it can similarly influence poverty.
Every day, many financial service business models evolve, from peer-to-peer lending, mobile payments, nano deposits, insurance comparison, etc. and the greatest beneficiaries have been those with meagre means.
Featured Image Source: Compliance Week
Got a suggestion? Contact us: firstname.lastname@example.org