> Posted by Carmen Paraison, Senior Program Associate, Africa, the Smart Campaign

Nigeria has an ambitious target of including 70 percent of its population in the formal financial services fold by 2020, from a baseline of 44 percent with access to an account in 2014. But financial inclusion involves a lot more than account access. The Center for Financial Inclusion defines financial inclusion as a state in which all people who can use them have access to a full suite of quality financial services at affordable prices delivered by a range of providers in a competitive market with convenience, dignity and consumer protections, to financially capable clients. Protection for consumers is an important part of that definition, and I recently had the opportunity to visit Lagos to learn more about consumer protection challenges in the country. In particular, I wanted to see how Smart Certification can help Nigeria reach its financial inclusion goals in a way that provides benefits to customers.

For those who aren’t familiar, Smart Certification is an independent, third-party evaluation to publicly recognize financial institutions that meet adequate standards of care in how they treat clients. In Lagos, I interviewed staff members and clients of Grooming People for Better Livelihood Centre, or Grooming Centre. Don’t be misled by the name – Grooming Center is one of Nigeria’s most established microfinance institutions. Founded in 2006 in Lagos, Grooming Centre has an impressive network of 530 branches in 23 of the country’s 36 states. To date, it has served over 5.3 million clients. The institution was awarded Smart Certification in February 2016, following a certification mission from MicroRate, one of the Smart Campaign’s licensed certfiers. Grooming Center, along with Fortis Bank, are the two financial institutions in Nigeria that have so far qualified as Smart Certified.

As I interviewed the staff close to the institution’s certification process, I learned that although client-centricity was already a core value for Grooming Centre, it sought certification to go a step further in ensuring the wellbeing of its clients. Grooming Centre described Smart Certification as eye-opening and humbling. Practices the institution had originally described as aligned with the client protection principles and standards turned out to need improvement.

Since inception, the Smart Campaign has noted that most inclusive finance institutions operate under the impression that they are already carrying out superb client protection practices. However, the Smart Certification process typically reveals that an institution’s practices need to be strengthened in one way or another to ensure that it is treating clients fairly.

One of Grooming Centre’s governing council members, Noel Ihebuzor, emphasized the paradigm shift in staff mentality that resulted from Smart Certification. The certification process required the institution to assess in detail how its policies and operations affected clients at every step of the credit process. He noted that the certification exercise improved Grooming Centre’s conception of client protection in areas including complete disclosure and clients’ understanding of product terms and conditions. The institution had originally assumed that these product aspects were self-evident to clients.

The main beneficiary of Smart Certification and improved client-centric practices, of course, is the client. My interviews with three clients revealed their satisfaction with their interactions with Grooming Centre. The entrepreneurs favored Grooming’s interest rates compared to competitors, and they liked that their savings are reliably available, and how the staff don’t ‘stress’ clients if they fell behind on loan payments.

To make the Smart Certification process work well for an institution, Grooming Centre’s staff stressed the need to secure widespread buy-in, from management to lower-level staff. Most importantly, Grooming Centre’s staff emphasized that any institution considering certification should pursue it for the right reasons, and should recognize that working to strengthen client-related practices shouldn’t end upon obtaining certification.

Government-led plans like those of Nigeria to include a large swath of the population into the formal financial sector stir a feeling of aspiration in a nation. And they should. However special attention must not only be made to increasing the number of accounts at financial institutions, but also the quality of financial services. The Smart Campaign looks forward to continuing to work with actors in Nigeria’s financial services ecosystem to bolster consumer protection, through Smart Certification and other means.

Click the video above or here to watch Grooming Centre’s certification journey. See www.smartcampaign.org for more information on Smart Certification, including the full list of Smart Certified financial institutions.

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