It appears Telecommunication companies are strong-arming their way into Nigeria’s Mobile Money space to the chagrin of Banks, who would rather remain gatekeepers to all things financial.
Telcos have formed an association to quicken their inclusion in Nigeria’s financial space, citing the CBN’s promise to open the playing field for them and their huge database which services the mobile technology service as reasons to move on to what should become the new look of the mobile money market.
They call on banks to cooperate with them or compete, their choice.
Mobile Money allows customers to transfer or receive money to wallets across all telecom networks, which offer mobile money services. It also allows users to transfer money between mobile wallets and bank accounts
Mobile Money Transactions in Nigeria has witnessed tremendous growth over the last half a decade. From just under 50,000 transactions a month it grew to about 3 million transactions a month reaching a record high of 5.1 million transactions worth about N49.4 billion in March 2016, the CBN reported.
In July, transactions exceeded 6.5 million and at December, transactions worth a whopping N77.7 billion transpired. The growth has been ever increasing since then.
According to CBN also, mobile money was the greatest driver of the impressive records of e-payment channels’ transactions which hit N65.3 trillion in the first half of 2018. With these statistics in mind and with the plans to turn the over one million airtime agents across the country into mobile money agents, the services will improve, the e-payment channel market will expand and telecommunication companies will be big earners from the expansion.
The banks argue such inclusion will diminish the essence of retail banking and even drive operators out of the market. Telco’s have refuted this position, stating the move would instead be complementary of the services banks already offer and not competitive.
Countering the argument, a senior official of one of the top GSM operators in the country who pleaded anonymity, said: ‘We are not banks but we are service providers, the banks should be our major business partners to support what we do as we support theirs too. All the transactions that people do today the banks are the custodians, they hold these funds, they ensure that the funds are also protected from the customer’s point of view. So looking at it dispassionately, the banks have a lot to gain’
He called for better collaboration between the banks and telcos to improve the mobile money industry in the country. Also, Irish vendor and software provider, CR2, has recently advised the Banking sector in Nigeria to open itself for cooperation with the telcos or outrightly compete with them in the mobile money space because with recent tech developments, it is no longer fashionable to shut them out of the services.
The solution provider which just won the award of ‘Excellence in Channel Banking Software Solutions’ at the Nigeria edition of New Age Banking Summit 2018, said; ‘In the current technology world creating results together is the most potent growth weapon.’
Chief commercial officer of the company, Mr. Kieran Kilcullen, said that in Ethiopia, a financial institution, Dashen Bank launched a mobile wallet, Amole, which offers mobile subscribers digital payment capability and access to aggregated digital products and services from retailers, the entertainment industry, airtime dealers, bill payment points, Airlines, social media players and third-party service providers. He said such competition cum cooperation with telcos has helped the bank trigger the growth of e-commerce in Ethiopia and promote financial inclusion across the country by ensuring a majority of the population in the country are roped into the financial inclusion net using technology.
Also supporting the telcos in this campaign is a veteran economist and Lead Economist at Time, Trade and Commodities (TTAC), Mr. Tunji Andrews. In a paper he delivered recently, Andrews said: ‘To drive the nation’s vision of 80% financial inclusion as stipulated in its National Financial Inclusion Strategy, we must push through with CBN Governor, Godwin Emefiele’s remarks on eventually giving licenses to telecommunication companies (Telcos) to provide mobile money services.
‘I believe they are better suited to offer products that would see a massive rolling out of agent networks and creating awareness to increase adoption of digital financial services as simple, flexible and easy alternative channels for reaching remote areas and rural hinterlands’
Apparently emboldened by the huge support from strong quarters, the telcos have taken a step further to strategically position themselves towards taking advantage of a licensing opportunity the CBN may likely extend to them. Just a few days ago, Nigeria’s largest GSM operators: Glo, 9Mobile, Airtel, MTN Nigeria, and Ntel, teamed up to constitute a Telecommunications Financial Inclusion Committee and laid out the roadmap for deepening financial inclusion and financial literacy across Nigeria. The committee is a fall out of the meeting the telcos held recently, where they articulated their commitment to deepening financial inclusion and providing Nigerians with access to a range of affordable financial services.
During the inauguration, the committee – which is tasked to operate within the Association of Licensed Telecommunications Operators of Nigeria, ALTON, laid out its mandate, which included:
- To drive an awareness programme that will deepen financial literacy across the country, within the next 3 months
- To leverage the committee’s assets in order to deliver the promised access to financial services to 90 million Nigerians over the next 30 months, through a combined mobile base, Integrated Identity systems, and distribution network.
- To work in collaboration with other stakeholders and engage proactively with the government to ensure the telecommunications sector contributes its quota to the national goal of attaining 80% total financial inclusion and 70% formal financial inclusion by 2020.
In the short-term, the committee aims to deliver financial services to up to 35 million Nigerians and increase financial literacy and awareness within 12 months. The longer-term goal of delivering access to 90 million people across 773 local government areas by 2020 will be achieved through the conversion of it’s over one million airtime agents to mobile money agents.
Chairman of ALTON, Engr Gbenga Adebayo, said: ‘The inauguration of this committee is a positive and necessary first step to achieving our goals of improving inclusion and literacy. We are focused on delivering sustainable solutions to achieve long-term results. The potential of our sector’s participation in these efforts is enormous. The telecommunications subscribers’ database is the most comprehensive, our coverage is vast and this speaks to the potential that we have as a group to truly contribute to solving some of the challenges that have been faced so far.’
The committee also spent some time discussing the recent publication of exposure guidelines for the licensing and regulation of Payment Service Banks in Nigeria, articulating necessary next steps and direction. Adebayo said of the guidelines: ‘We commend the Federal Government and the CBN for the recently released exposure guidelines for Payment Services Bank (PSB) License, a welcome development that will play a critical role in accelerating financial inclusion in the country.’
Also, Johnson Oyewo of MTN Nigeria and Secretary of the Committee, stated, ‘Our job is to ensure that our industry contributes effectively to financial inclusion and literacy in Nigeria. This committee is being inaugurated at an opportune time with the recent announcement by the CBN, allowing for an inclusive model that encourages all players to contribute towards driving financial inclusion in the country.’ The committee members include Engr. Gbenga Adebayo (ALTON), Oladokun Oye (Airtel), Samuel Akinsola (Ntel), Chinedu Anochirionye (Ntel), Ismaila Suhailu (Ntel), Oluwaseun Omotosho (EMTS/9mobile), Chidozie Arinze (EMTS/9mobile), Johnson Oyewo (MTN Nigeria), Jane Amadi (MTN Nigeria), Esaie Diei (Globacom), Oluwatosin Cole (Globacom), Gbolahan Awonuga (ALTON Secretariat).
They will meet fortnightly over the coming months to deliver on its mandate.