Nigeria: Leveraging Mobile Money to Drive Financial Inclusion

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Sep 2018
Nigeria, September, 05 2018 - Although the Central Bank of Nigeria (CBN)’s 80 per cent financial inclusion target by 2020 looks unlikely to be realised, the recent surge in new offerings by mobile money operators (MMOs) in the country seems to indicate that Nigeria may not fall far too short of that mark.

According to data obtained from the Nigeria Interbank Settlement System (NIBSS), the total number of customers of licensed Mobile Money Operators (MMOs) in the country as at June 2018 stood at 1. 50million, while the total number of agents enrolled by the 21 licensed MMOs as at the end of the second quarter of this year, stood at 13,113.

The data also shows that total transaction volume and value for the industry during the first half of 2018 was 35.94million and N429.79billion.

Analysts point out that compared with other electronic payment channels, such as Automated Teller Machines (ATM), the Point of Sale (PoS) terminals, operators in the mobile money industry still has some catching up to do in terms of the total transaction volume and value especially given that estimates put the market worth of mobile money transactions in Nigeria at over N1 trillion.

The apex bank had in 2011 launched mobile money service, issuing operating licenses to 21 organisations- bank and non-bank- as part of its policy to extend financial services to the unbanked.

However, various studies indicate that the country continues to lag behind countries such as Kenya and Ghana.

IFC report

In fact, a report released by the International Finance Corporation (IFC) last June, said Nigeria was lagging behind its peers in sub-Saharan Africa in terms of financial inclusion and mobile money.

In the report, entitled, “Digital Access: The Future of Financial Inclusion in Africa”, the IFC said the number of financially excluded people in Nigeria increased by 2.1per cent in 2017 to 40.1 million, noting that the country’s underperformance was related to the modest growth in mobile money.

It said the number of mobile money accounts expanded by just six per cent in Nigeria in 2017, compared with double-digit growth in many jurisdictions.

Significantly, a project known as the Partnership for Financial Inclusion programme, run by the IFC and the Mastercard Foundation, recently released a study, which highlighted the huge impact mobile money has on driving financial inclusion in Africa.

According to the report, driven by mobile, there have been $300-million in monthly transactions in Africa from 7.2-million new people using digital financial services and 45,000 new banking agents between 2012 and 2017.

The 7.2-million new digital finance users are a 250 per cent increase from the 2012 baseline, the organisations said in a statement, adding: “Saharan Africa is the only region where the share of adults with a mobile money account exceeds 10 per cent”.

Also, writing in the report’s foreword, IFC’s CEO Philippe Le Houerou and Mastercard Foundation President and CEO Reeta Roy, stated: “Financial inclusion is one of Africa’s great success stories of this decade. Mobile money solutions and agent banking now offer affordable, instant, and reliable transactions, savings, credit, and even insurance opportunities in rural villages and urban neighborhoods where no bank had ever established a branch.”

SANEF

Clearly, operators and regulators in these parts also saw the huge advantages mobile money had over other e-payment channels with regard to extending financial services to the unbanked because in recent months the industry has announced several schemes aimed at boosting financial inclusion in the country.

However, arguably the most significant of these was the CBN’s collaboration with Deposit Money Banks (DMBs), licensed MMOs and super agents to unveil a scheme tagged, Shared Agent Network Expansion Facilities (SANEF) in March this year.

The initiative 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 an estimated 50 million Nigerians that are currently under-banked.

Chairman, Body of Banks’ Chief Executive Officers, and Managing Director/Chief Executive Officer, Access Bank Plc, Mr. Herbert Wigwe, who along with some other bank CEOs, briefed journalists at the event, explained that the scheme reflects the commitment of all the parties involved: “to aggressively pursue the CBN 2020 Financial Inclusion target in an integrated way with minimal systemic risk to the financial system.

In his remarks, Managing Director/ CEO, GTBank Plc, Mr. Segun Agbaje said: “Under the agreement, 10 licensed mobile money operators and super agents are expected to immediately deploy financial services agents’ outlets in under-served urban and rural areas in Nigeria, with priority in the Northern geo-political zones where financial exclusion is most predominant.

“The approved CBN-Bankers Committee’s roll-out ratio is as follows: North East, 30 percent; North West, 30 percent, North Central, 20 percent, South South, 7.5 per cent; South East, 7.5 percent and South West, 5.0 percent,” he added.

Besides, MD/CEO, Standard Chartered Bank, Mrs. Bola Adesola, disclosed: “Some of the prequalified CBN licensed operators include, Capricorn Digital Limited, e-Tranzact Limited, Innovectives Limited, Inlaks Limited, Interswitch financial Inclusion Services Limited, Paga Tech Limited and Unified Payments Nigeria Plc.”

Interestingly, commenting on behalf of the mobile money operators, Founder and CEO of Paga, Mr. Tayo Oviosu, said: “To significantly grow financial inclusion in Nigeria, we need to offer truly effective digital financial services that operate on all mobile telecom networks and a robust nationwide network of agents for convenient access.

“The Shared Agent Network Expansion programme supports our plans to rapidly scale up the agent network over the next year. With this expansion programme, the entire financial industry will reach deeper into even more communities and give millions of Nigerians convenient access to financial services.”

Paga’s new offering

Indeed, Paga, which emerged the top mobile money operator and was recognised by the NIBSS, for achieving the highest transaction count on the Global Mobile Regulatory and Monitoring Platform in 2017, announced its newest offering, a money transfer app, last week that is aimed at making it easier for Nigerians to send and receive money.

The app, which is available in both the Android Play and iOS App stores, shrinks the already existing functionalities of the Paga platform and strips it down to 2 main functions – send money and request money.

Commenting on the new offering, Oviosu said: “Paramount for us was the user experience. To get it right, we took a step back and removed all the clutter you find in a lot of apps —and chose to focus on two things — send and request money. Have you ever found yourself spending time trying to contact someone to get their account number just so you can pay them?

“Or looking for your account number to give someone? Then going through the numerous steps required to complete a payment? Well, no need to ever do that again! Simply pick the person you want to send money to, and do so easily – by phone number or email.”

Firstmonie

Similarly, as part of efforts to drive financial inclusion in the country through cost effective channels, First Bank of Nigeria Limited re-launched its mobile banking service, Firstmonie Agent network last in July with a pilot of the Agent Banking scheme in six highly populated States – Lagos, Oyo, Kano, Abuja FCT, Anambra, Rivers.

The Tier 1 lender said that after an impressive 6-month pilot that ended in December 2017, the Agent Banking scheme was extended nationwide in January, 2018. The lender added: “Within 6 months of its launch, the scheme has made appreciable progress with a pervasive network spread across every State, and almost every Local Government Area nationwide (over 98% coverage).”

According to the Group Head, eBusiness, First Bank, Chuma Ezirim: “FirstBank, is focused on building a quality Agent network in the country by deploying a robust risk framework and the right product mix to ensure viability and security of the network, aimed at deepening financial services access, especially in the unserved and underserved segments of our market. We therefore, encourage individuals in these local communities to look out for the Firstmonie Agent locations closest to them”.

NCC’s MoU with CBN

It will be recalled that in its bid to strengthen the mobile money segment of Nigeria’s Information and Communications Technology (ICT) sector, the Nigerian Communications Commission (NCC) and the CBN signed a Memorandum of Understanding (MoU) last April.

Speaking to journalists at the event, the Executive Vice Chairman of NCC, Professor Umar Danbatta, said: “On the basis of the MoU we’ve signed, the two organisations have indicated commitment towards driving the financial inclusion in the country as well as ensuring improvement in the mobile money penetration.”

Also, in his remarks, the CBN Governor, Godwin Emefiele, noted that with the signing of the MoU, the goal of achieving 80 per cent penetration in financial inclusion is now realisable.

“With this signing, we are now very sure that we will very easily improve the level of financial inclusion from the level it is today, which is about 40 per cent, and we set a target for ourselves by 2020 that the level of financial inclusion should increase to close to 80 per cent,” he said.

Speaking further, Emefiele said the MoU provides the framework for licensing of payment service providers, and also guides the workings of the stakeholders both in the banking and telecommunication industries about driving not just the mobile payment but also the payment system in Nigeria.

Last line

However, as a top official of a Tier 1 bank, who spoke on condition of anonymity, pointed out, no matter how helpful the regulatory framework is to the industry or how innovative operators are, their success will still depend to a large extent on if they receive adequate patronage from Nigerians.

“Income levels in Nigeria are generally very low; a lot of people are unemployed. So where will they get the funds to transfer or pay bills, the official queried.



Source : New Telegraph
 

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