MNOs (mobile network operators) comprise some of the latest arrivals on the African financial services scene. In Nigeria, though, these telecoms operators seem to be having a hard time offering mobile money services.
About a week ago, the Central Bank of Nigeria issued a long-awaited regulatory framework, the one to dictate how mobile money service providers in the country will operate.
As the narrative goes, the CBN isn’t keen on allowing the country’s telcos to adopt the mobile money model. In the real world, that directive means providers like MTN Nigeria, Etisalat, Airtel Nigeria, and Glo won’t be able to offer financial services M-PESA-style.
In the CBN’s official filing, a section reads: “This regulatory framework addresses business rules governing the operation of mobile money services, and specifies basic functionalities expected of any mobile money service and solution in Nigeria. It identifies the participants and defines their expected roles and responsibilities in providing mobile money services in the system. In addition, it sets the basis for the regulation of services offered at different levels and by the participants.”
While Nigeria’s apex bank doesn’t deny that telcos have a significant role to play in mobile money operations—albeit appreciating “the criticality of the infrastructure they provide”—it stated in the filing that the telco-led mobile banking model will not be operational in the country.
Meanwhile, a section of the regulations puts the CBN in complete control of the monetary policy ops. Only organizations licensed by the Bank will be able to operate in the mobile money sector.
So who gets CBN’s green light? According to the official release, there are only two acceptable models for implementing mobile money services in Nigeria, going forward.
The first is the bank-led system, where a typical financial institution like First Bank, FCMB, Access Bank or a consortium involving them would be the lead initiator. The other model is non-bank-led, where corporate organizations authorized by the CBN can lead the offering of mobile money services.
Telcos are not completely left out though. According to the CBN—who will regulate mobile money in teams with the Nigerian Communications Commission (NCC)—MNOs continue to play a role in providing the infrastructure needed for the exchange of messages involved in mobile payments.
Basically, that means the licensed operators will still need the big telco’s platforms or tech to reach the end user via mobile phones. In the real world, TeamApt’s Moniepoint, for instance, will offer mobile money to customers subscribed to telcos like Airtel and MTN.
Not long after the CBN released the statement, the stakeholders in Nigeria’s telecoms sector responded. In their opinion, mobile money services ought to be driven by MNOs. According to the chairman of the Association of Licensed Telecommunications Operators of Nigeria, Gbenga Adebayo, the two new models introduced by the Central Bank would only hamper the growth of financial inclusion in the country.
Adebayo’s statement points out that driving mobile money outside the existing infrastructure of telcos across the country will slow down the penetration of digital finance.
His statement reads: “If you talk about mobile penetration, use of mobile phones for financial service, the last mile is actually by the operators. The last mile to reach the people is by the operators. We are of the view that penetration would be slower than it should. We think the CBN should consider operators which are interested in offering these services. For the sake of speedy coverage and easy access, we are of the view that if operators are allowed to play well in that space, it will improve penetration and inclusion for more people.”
Adebayo’s stance is supported by that of Ikechukwu Nnamani, the chairman of the Association of Telecommunications Companies of Nigeria. He indicated that the CBN should have taken a cue from the success of Safaricom’s M-PESA in Kenya.
He said: “The CBN has decided to go the route where telcos are not taking the lead. Following the most successful example of mobile money in Africa, which is the Safaricom M-PESA experiment, we had believed that making it telco-led would lead to greater adoption because a lot of people are already on the telecom platform.
While mobile money isn’t yet a biggie in Nigeria, there are several countries in Africa where the model has been proven viable. Seemingly, much of the premium is the prerogative of Eastern African countries—including not-so-populars like Namibia, DRC and Malawi.
Adoption has been relatively faster in recent times for countries like Ethiopia (Telebirr by Ethio Telecom) and Ghana (fintech startup ZeePay) yet the story seems the opposite for Nigeria. Much of that crawl has to do with the scarcity of mobile money licenses in the country.
In late 2018, the CBN announced its intentions to give non-financial companies the go to apply for the licenses to operate mobile money services. Being that Nigeria is home to more than 200 million people and unarguably the continent’s largest unbanked population, there is a huge reliance on cash on the country. Since there are more mobile subscribers than bank accounts, allowing telcos to offer mobile banking services looked the ideal route to financially including more Nigerians.
However, no new licenses have been issued to telcos till now. At the time, it appeared the CBN wanted to avoid an M-PESA-type market monopoly by asking banks and telecoms operators to work closely and compete in the mobile money sector. To avoid Kenya’s hamstrings, Nigeria also seemed willing to ensure that the phone firms will be regulated the same way traditional financial institutions are. But now, it looks like the CBN doesn’t want telcos on the playing filed altogether.
With the highest concentration of blacks in the world, Nigeria is the most populous country in Africa—with a population at least thrice more than that of, say, Kenya. Sometimes referred to as the continent’s unofficial tech capital, and fintech hotspot, there could be no better time than now to earnestly push the adoption of mobile money.
And there’s evidence of what’s possible in the space. Moniepoint, which was launched by Series B-stage fintech startup TeamApt in 2019, is now the largest non-bank mobile money platform in Nigeria.
According to the company, the service processes more than 13 million transactions every month. Now, all the commercial banks in Nigeria are 5-year-old TeamApt’s customers, it has more than 3 million customers and 100,000 businesses buying its solutions and using its infrastructure.
For now, it’s fingers crossed and awaiting further updates.
Image Courtesy: Freepik