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Mobile money customers are on the rise in the country as a new finding by New Telegraph newspapers shows that population of users have exceeded 8.5million.The figure is likely to quadruple in the months ahead as Payment Service Banks (PSBs) go into operation and gained traction.
PSBs are licensed by the Central Bank of Nigeria (CBN) to among others, ‘leverage on mobile and digital services to facilitate access to financial services for low-income earners and the unbanked segments of the population, particularly in the rural areas.”
According to the latest “EpaymentFact Sheet” released by the Nigeria Interbank Settlement System (NIBSS), the number of mobile money customers jumped from 3.84 million in 2017 to 8.5 million last year, representing 4.7 million or 121.3 percentage increase.
The data indicates that despite concerns over the slow growth of the electronic payment channel, mobile money is showing some growth in these parts.
Indeed, further analysis of the data shows that the number of mobile money agents rose from 10,491 in 2017 to 38,416 last year, representing 27,925 or 266.2 percentage increase.
Similarly, the total mobile money transaction volume last year stood at 87.1 million compared with 47.8million in 2017.
However, the NIBSS data shows that total mobile money transaction value marginally declined to N1.8 trillion in 2018 from N1.10 trillion in the previous year.
Also, the number of licensed mobile money operators (MMOs) remained unchanged in the last one year.
For instance, as at December 2017, licensed MMOs were 21 and the figure remained the same as at the end of 2018.
But with banking institutions across Africa currently grappling with numerous challenges such as high-cost models and fees that make them unaffordable to low-income segments, thereby making the continent’s retail-banking penetration one of the lowest in the world, analysts have argued that mobile money is the key to boosting financial inclusion and banks’ growth in Africa.
It would be recalled that as part of efforts to enable Nigeria meet its 20 per cent financial inclusion target by 2020, the Central Bank of Nigeria (CBN), Bankers’ Committee, licensed MMOs and super agents, in March last year, launched the Shared Agents’ Network Expansion Initiative (SANEF), which is aimed at enrolling 500,000 mobile money agents throughout the country to extend financial services to 60 million financially-excluded Nigerians by 2020.
The project entails an aggressive roll out of 500,000 agent network to offer basic financial services such as Cash-in, Cash-out, funds transfer, bill payments, airtime purchase, government disbursements as well as remote enrolment on BMS Infrastructure (BVN) to millions of Nigerians that are currently under-banked by 2020.
Speaking at the unveiling of the initiative, Chairman, Body of Banks’ Chief Executive Officers and Managing Director/Chief Executive Officer, Access Bank Plc, Mr. Herbert Wigwe, stated: “This agreement reflects our commitment to aggressively pursue the CBN 2020 Financial Inclusion target in an integrated way with minimal systemic risk to the financial system. This initiative will also generate 500,000 new jobs over the next two years.”
However, stakeholders are sceptical about the SANEF’s targets being met, especially given that the country currently has only about 38,416 mobile money agents.
The low number of mobile money agents is generally blamed on the poor performance of mobile money operators, who, according to industry watchers, are hindered by lack of adequate funding, lack of technical skills, poor shared infrastructure arrangement as well as lack of focus as to what their mandate should be.
In fact, in the wake of the poor performance of the 21 licensed MMOs, CBN in November, last year, released guidelines on the licensing and regulation of Pay ment Service Banks (PSBs).
Under the guidelines, PSBs must have N5billion as their minimum capital requirement and are permitted to carry out activities such as operation of savings accounts and acceptance of deposits from individuals and small businesses; payments and remittance (including inbound cross-border personal remittances) services through various channels within Nigeria; issue debit and pre-paid cards as well as operate electronic purse and invest in Federal Government of Nigeria and CBN securities.
The guidelines, however, bar PSBs from granting of any form of loans, advances and guarantees or trade in foreign exchange market.
Interestingly, leading telecommunications companies, such as MTN and Airtel, have said they would apply for a PSB licence and launch mobile banking in Nigeria by the second quarter of this year.
Analysts predict that this will intensify retail banking competition between deposit money banks (DMBs) and the telcos.
A senior banker, in a chat with New Telegraph, said: “With a PSB licence, MTN’s subscriber base of over 50 million clearly gives it an edge over banks. In fact, most of the major telcos can easily provide most of the services being offered by banks.
“In fact, compared with banks, the telcos have a bigger budget and better technical know-how to drive mobile banking. So, banks are going to face more issues when these firms start introducing new financial products.”Also commenting on the issue, the Managing Director/CEO, Bic Consultancy Services, Dr. Boniface Chizea, said that telecom companies have massive reach going by the level and spread of subscriptions.
He said: “It should therefore be expected that banks would see their involvement in payment services as a threat. But if the telecom companies are not licensed to perform other banking related services, I would not unduly worry. But for self-interest sake, there is the need for concern. It could mean that the commissions earned by banks from massive transfers might be threatened and such a development could undermine profitability.”
He said: “It should therefore be expected that banks would see their involvement in payment services as a threat. But if the telecom companies are not licensed to perform other banking related services, I would not unduly worry. But for self-interest sake, there is the need for concern. It could mean that the commissions earned by banks from massive transfers might be threatened and such a development could undermine profitability.”
Credit: The New Telegraph
