Rethinking the Approach to Designing DFS Solutions in Northern Nigeria

Rethinking the Approach to Designing DFS Solutions in Northern Nigeria

How do you build a Digital Financial Solution (DFS) for a woman who primarily saves money by buying beans with her excess cash, and storing it at home as her savings, then selling it (or parts of it) when she needs cash?

This approach may seem crude at the surface especially with the high susceptible risk such as  loss of beans via pests like weevils, or theft, and the friction and time it might take to liquidate beans.  But on further interrogation, what comes to mind is how the woman’s ability to experience ease, no-bank charges and the fact that the price of beans will at the very minimum keep track with general inflation being at 17.71% and food inflation which is at 19.50% (according to the Central Bank of Nigeria). In comparison, a Savings account currently offers just around 1.3% in interest per annum (i.e 10% of the prevailing Monetary Policy Rate (MPR)), making beans a justifiable and sensible way to store value from her standpoint. 

A simplistic argument is that if you stored the same amount of money in beans at home and in a bank account over the last year, you will have more money in beans than in your account. So what are the incentives for a woman like that to use a bank account or any DFS solution? 

The scenario above is a real one, and an actual excerpt from a Focus Group Discussion (FGD) captured as part of the research phase of the Building an Inclusive Digital Ecosystem in Kaduna Project by DFSLab and Colab and funded by the Bill and Melinda Gates Foundation. It not only illustrates the disconnect between formal financial services and the lived realities of many of the unbanked and underbanked, who constitute a majority of the population, ironically at a time where Nigeria is experiencing a Fintech Boom; but also – at least for us at the lab– is reshaping the way we think about designing financial products.

We don’t have all the answers yet, and we will continue to evolve as we continue to learn, but here are some of the questions we are currently asking while thinking around designing solutions.

  • What non-digital solutions currently exist? How can we make them more transparent to the formal financial sector without altering their effectiveness?
  • What gaps exist? How can we fill those gaps with contextually relevant solutions that will enhance financial inclusion.
  • What behaviors can we observe that are relevant to more financial inclusion? How can we design incentives to encourage or discourage these behaviors as the case may be?
  • How does a proposed solution better serve the unserved and underserved groups, particularly women?

Our approach to developing possible solutions or experiments as we refer to them internally, follows a documented decision gate process that is designed to help us reflect on the process and quickly figure out what is working and what isn’t.

The goal of this process is to help us quickly identify and stop projects that aren’t working, identify and accelerate the ones that are working and cycle on the projects where we need further testing. The process also helps us achieve a number of goals including:

  • Enabling good decision making.
  • Help record decision rationale.
  • Help communicate projects internally and to partners.
  • Make us rigorous in project implementation and delivery

The graphic below is a visual representation of our gating process. 

You will find the actual process document here if you’re interested.

The gating process helps us focus on delivering experiments that are actually useful to the end user and cost effective to build.

We also typically have six (6) considerations when thinking about the design of a DFS product. These considerations are direct outputs from the gender lens research mentioned at the beginning of this post.

A summary of the learnings from that research is summarized in the graphic below:

These considerations essentially help us to consider the blindspots that we have identified in the course of our research that typically put women at a disadvantage when designing DFS products. Typically, each experiment will have one or more of these considerations solved for in its approach to a solution.

To get a better sense of all this and all the other ideas discussed in this post, kindly visit our experiments page to see all our experiments.

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