Prospects and Challenges of Mobile Money on Nigerian Economy

Amaka Eze examines the prospects of mobile money services on Nigerian economy and the challenges leading to the slow-adoption of the process.

Nigeria has an estimated population of 160 million people with a number of unbanked populations placed at about 70 per cent; despite the battle to improve on the number by the Central Bank of Nigeria (CBN).

The introduction of mobile money services, a viable tool to provide basic financial services, by the CBN was seen as a veritable tool to create payment access to these unbanked Nigerians in the rural areas, and also help drive financial inclusion in the country.

Analysts at Financial Derivatives Company (FDC) Limited stated that the high level of mobile telecommunications penetration, placed at over 105 million by data released by the Nigerian Communications Commission, in the country is expected to translate into an increase in bankable Nigerians if properly harnessed.

In August 2011, the CBN licensed 16 banks and other financial institutions to deploy the services across the states.

A year after, the operators of the mobile money services are yet to deploy the services across the states, a move that have led experts and other stakeholders to express worry over the slow-adoption of the process.

A number of challenges have been linked to the slow roll out of the process; some of which includes; lack of finance; lack of basic infrastructure; most importantly awareness; few agents, and the exclusion of mobile operators form leading the implementation of the service.

Models for mobile money service

There are three acceptable models for the implementation of mobile payment services across the globe. These include: the Bank led model; Operator led model, and the Non-bank led model – other financial institutions.

The decision by the CBN to exclude the mobile operators from leading the implementation of the service in Nigeria was said to have stemmed from the fact that CBN does not regulate the mobile operators.

Stakeholders also argued that if the mobile operators were allowed to drive the mobile payment scheme in Nigeria, it would create an unequal playing field for other mobile payment operators like the bank -led and non-bank -led in the country.

An assessment of the role of the mobile operators in the implementation of the mobile money service in other countries shows the opposite.

In countries like Kenya, Cameroon, Ghana and South Africa, which most analysts are quick to refer to whenever the stories of mobile money service in other countries are mentioned, the success stories of those countries were nurtured by mobile operators, who made the services and infrastructures readily available to subscribers.

A case for Mobile Operators

Making a case for the mobile telecoms, a stakeholder in the industry said at a recent event in Lagos that the telecom company’s would match the achievement of other countries if they were given the opportunity to roll-out the service.

“Don’t forget that the mobile money service is targeted at a particular group of people, the rural areas, the unbanked, who all have a mobile phone and believe in the mobile operators enough to keep their SIM cards active,” he said.

According to him, the mobile operators obviously have a greater access to a large percentage of the population as well as to infrastructure for the deployment of the mobile money service and should have been given an upper hand.

About 14 million users of mobile money services, represent 81 per cent of Safaricom’s customer base in Kenya, described by the GSM Association, a global body representing the interests of mobile operators, as the world’s most successful m-payment service.

THISDAY also learnt that one year after rollout of mobile money service in Uganda, MTN’s payment service exceeded that of M-PESA at the same stage. A key factor in the Ugandan success is marketing through 2500 representative.

“Direct contact and educating telecoms subscribers, easy access to cash remitted to users, amongst others are critical to growing the mobile payment service,” the stakeholder added.

Meanwhile, the Nigerian Communications Commission (NCC) recently said it would develop an all-inclusive regulatory framework geared towards supporting telecommunications operators in the deployment of mobile payment services in the country.

Stakeholders’ Position

Executive and Head of Payments and Mobility, Accenture Nigeria, a global delivery network focused on consulting, technology and outsourcing, Mrs. Henrietta Bankole-Olusinawho told THISDAY that mobile money operators and their regulators needed to show more commitment, in order to further attract investment and drive the industry.

According to her, one year after the providers gained the license, the mobile money sector is yet to understand the factors of the mobile money policy, and play on it with a view to win investments as well as users.

Bankole-Olusina stated that the success of mobile money services, acceptance of the services by the rural dwellers and investment in mobile payment infrastructure would only come when people realised the opportunities inherent in that industry.

“Capital would always go to where there is an opportunity; mobile money subscribers far outnumber Personal Computer users and the banked in Nigeria; a great opportunity the providers have failed to utilized,” she added.

Decrying the present approach of the operators, she noted that if they continued to target only the banked, then the unbanked that were the main crux of the initiative would not be captured.

Pagatech’s Chief Executive Officer, Mr. Tayo Oviosu, recently observed that in view of the poor and unbanked number of Nigerians today, the mobile money payment should have a wider coverage than it does now.

He however linked the inability of some mobile money companies to roll out services to poor funding, technology challenges and limited distribution channels, among others.

The President, Institute of Software Practitioners of Nigeria, Mr. Chris Uwaje, also said that certain loopholes must be addressed for the mobile money service to be successful.

“There are lots of things we cannot go to market and buy, one of those things are good policy and strategy instrument. We need them. We always find ourselves running without equipment, so we need to equip ourselves with what we need to run with,” he said.

Mobile Money Agent

Mobile money agents are small bank outlets where different services like utilities, remittances, Person –to- Person (P2P) payment, and banking services can be conducted. Their major role in the mobile money ecosystem is to do cash in and cash out.

A shortage of mobile money agents in the country is directly proportional to a slow roll-out of the service as is witnessed today.

The Programmes Director of One Network, an industry-focused organisation whose target is to deploy mobile money agents across the country, Mr. Sola Bickersteth, said for the Mobile money services to be successful, an estimated number of 250,000 as against the current 3,000 would be required.

Bickersteth explained that the mobile money service has not been fully expanded in the country; adding that this accounts for the slow adoption of the process.

He noted that a call for agents by One Network had been encouraging.

“We have a long list of interested agents, and following the successful completion of our Command and Control Centre in Abuja, One Network will soon map out locations in every region for the agents,” he said.

CBN’s Position

CBN’s Deputy Governor in charge of Operations, Mr. Tunde Lemo, at a recent mobile money round table which held in Lagos, said the main objective of the mobile money service was the delivery of financial services at affordable cost to the disadvantaged and the low income earners, as well as every member of the society.

“The Central Bank of Nigeria and other stakeholders intend to implement the National Financial Inclusion Strategy to decrease the number of Nigerians that are excluded from financial services from 46.3 per cent to 20.0 per cent by 2020 as committed to in the Maya Declaration,” he said.


Reiterating the apex bank’s position that the overall goal was to ensure the successful roll-out of the policy nationwide by 2013, Lemo explained that successful would imply evidence of increased usage of electronic payment channels, and a reduction of cash transactions by both urban and rural stakeholders.

“Until we come up with proper value propositions, we are not headed anywhere yet. Demand is slow now, but it would come only when the right challenges have being tackled. It is only a matter of time”, he said; adding that providers just need to unlock profitability, while creating value for the target market, the bottom of the pyramid,” he said.

Benefits of Mobile Money Service

The benefits of mobile money service cannot be over emphasised. Aside the fact that it’s a backdrop towards financial inclusion, it creates jobs, and access to rural areas. Also are the more technical benefits of absence of huge Cost of Transaction, as well as its ability to drive the nation’s economy by increasing business activities.

Source: This Day Live

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