Mobile money in a slow start
It was a sign of relief when the Central Bank of Nigeria (CBN) released guidelines for mobile money in 2009 as part of strategies to achieve financial inclusion which has been a mirage in the country.
The launch of full services on Mobile money platform in 2010 raised hope in the financial sector to bridge the gap between the banked and the unbanked individuals within the economy.
Nigeria with the population of over 170 million people and 22 banks, the banking industry could only boast of 25 million bank accounts with potentials to extend financial services to all nooks and crannies of the country through mobile money.
Financial inclusion is achieved when adults have easy access to a broad range of formal financial services that meet their needs and are provided at an affordable cost.
Such services include savings, payments, transfers, credit and insurance among others.
All over the world, study shows that access to financial services contributes both to economic growth and wealth creation and was identified as key to tackling the poverty trap in Nigeria.
According to Enhancing Financial Innovation and Access (EFInA) survey, high levels of financial exclusion pose major threats to the economy.
EFInA statistics indicated a total of 39.2 million adult Nigerians amounting to 46.3 per cent of the adult population are financially excluded in 2010.
About 80.4 per cent of those who are fully excluded from formal and informal financial services live in rural areas.
Using mobile telephony for financial services become relevant with the growth rate and the level of available active mobile lines since the liberalisation of the Nigerian telecoms sector in 2001.
The industry with less than 450,000 telephone lines before deregulation now boasts of 134.5 million active lines at the end of September 2014, according to official industry data.
As Nigeria’s cash-less policy gains momentum across the states of the federation, another big thing that would have brought about additional transformation is the mobile payment platform which is currently not achieving the purpose of financial inclusion and cashless society status as majority of Nigerians still carry cash around while huge number of people are still lacking access to financial services.
Mobile payment, also referred to as mobile money, mobile money transfer, and mobile wallet, is a payment services method operated under financial regulation and performed from or via a mobile device.
Mobile money entails the use of mobile phones as a banking tool both for the banked and the unbanked.
With the mobile phone, people can open accounts, transfer funds, pay bills, purchase goods and services, etc.
This means that rather than paying with cash, cheque, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods.
Today, mobile payment is being adopted all over the world in different ways. Reports indicate that in 2008, the combined market for all types of mobile payments was projected to reach more than $600 billion globally by 2013, which would be double the figure by February 2014.
Under this platform, mobile network operators engage with each other, the banks, financial institutions regulators, governments and ecosystem partners to identify and implement solutions that will successfully allow more mobile financial services to be delivered to a broader range of people.
Nigeria’s regulatory framework allows three models, which the Central Bank of Nigeria (CBN) describes as; Bank-led, Nonbank-led, and Bank-focused.
It specifically excludes telecom operators from providing mobile payments services, limiting their role to merely the provision of the channel (infrastructure) through which other providers’ services can be offered.
With 23 licenced mobile money operators, the industry is estimated at N150billion and monthly transactions valued up to N819million.
Some of the licensed operators include Afri PAY; GT Bank; First Monie; Pocket Moni; Paga Tech; Fortis Mobile Money; Stanbic IBTC; Monitize; FETS; Ecobank; Eartholeum; Teasy Mobile; Mkudi - Mimo; Zenith Bank with Eazy Money; PIDO (Payment Irrespective of Distance or Obstacles); VT Network; Cellulant; Glo Xchange among others.
The operating licence allows the companies to provide products such as electronic payments through mobile phones.
With Kenya being the leading mobile money country in the world based on its telecoms led model for deploying mobile payment services, the country has recorded tremendous success in terms of financial inclusion.
Statistics shown that about 17million Kenyans now use mobile money for all sorts of financial transactions.
According to GSMA data, in March 2014 the values and volumes transacted reached KES 192.69 billion and 73.98 million transactions respectively, representing an increase of 43.32% in value and 41.20% in volume from the previous year.
The “financial access strand” shows how this has contributed to deepening financial inclusion and the efficiency of the financial sector in Kenya.
In Nigeria, uptake of mobile money was initially hindered by lack of supporting infrastructure, education and awareness as well as non availability of agent networks to drive the initiative.
Today, while stakeholders believe that the mobile money has began to grow in Nigeria with the volume of N430billion within three years, issues of security of transactions and public trust and confidence remain major factors causing setback.
The Executive Secretary/CEO, E-Payment Providers Association of Nigeria (E-PPAN), Onajite Regha said CBN as the regulator is not doing bad with the way mobile money is being introduced to the Nigerian economy however there is need for review of mobile money guidelines.
The EPPAN CEO said, “With the way the system is going, I will say we are getting it right. One thing that I want you to note is that there will always be a change or tweak in policies in order for them to suit best usage. It is good to know that Nigeria’s total mobile money transaction has increased to a good level. I wouldn’t say we are there yet but at the same time, I must tell you that we are progressing at an unexpected rate.”
She stressed the need for the CBN to work with the Nigerian Communications Commission (NCC) to streamline the initiative.
Regha said, “I don’t believe banks should run to ride on telcos, I believe it should be a partnership. These banks have a regulator- the CBN and the Telcos also have a regulator- the NCC, now what should be done is a review of policies. I believe new policies can be introduced to accommodate the bankstelcos partnership that will give subscribers the best service rendered. The CBN should meet with the NCC on how the partnership can be carried out. It is good to note here also that mobile transaction is an infrastructure based service which has some heavy dependency on the telcos.”
According her, for Nigeria to achieve progress in mobile money like Kenya, a lot of deliberate dependency on mobile transaction should be done.
She said for instance Kenya’s M-Pesa is not only being used for standard money transfers and airtime purchase, but also to pay salaries, utility and other bills, to buy goods and services at both online and physical merchants.
Regha maintained this will aid the achievement of the financial inclusion of a large number of citizens because in one way or the other, “we all pay bills. In addition, many aid donors and their implementing partners have already begun to integrate mobile money into their programs and are at the forefront of this learning opportunity. The sector already enjoys a great deal of support from government and other parties, and is currently experiencing phenomenal growth on its own.”