MNOs (mobile network operators) are among the latest arrivals on the African financial services scene. In Nigeria, however, these telecom operators appear to be struggling to offer mobile money services.
About a week ago, the Central Bank of Nigeria released a long-awaited regulatory framework, one that will dictate how mobile money service providers in the country operate.
As the story goes, the CBN is unwilling to allow the country’s telecoms operators to adopt the mobile money model. In the real world, this directive means that providers like MTN Nigeria, Etisalat, Airtel Nigeria and Glo will not be able to offer M-PESA style financial services.
In the official CBN file, a section bed: “This regulatory framework addresses the business rules governing the operation of mobile money services and specifies the basic functionality expected of any mobile money service and solution in Nigeria. It identifies the participants and defines their expected roles and responsibilities in the provision of mobile money services in the system. In addition, it lays the foundations for the regulation of the services offered at different levels and by the participants.
Although the Nigerian Apex Bank does not deny that telecom operators have an important role to play in mobile money operations, although it appreciates “the criticality of the infrastructure they provide,” it said in the statement. case that the model of mobile banking led by telecommunications operators will not be operational. in the countryside.
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Meanwhile, a section of the regulations gives the CBN full control over monetary policy operations. Only organizations approved by the Bank may operate in the sector.
So who gets the go-ahead from CBN? According to the official statement, there are only two acceptable models for implementing mobile money services in Nigeria in the future.
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 not led by banks, where CBN-licensed companies can lead the delivery of mobile money services.
Telecom operators are not, however, completely outdone. According to the CBN, which will regulate mobile money in a team with the Nigerian Communications Commission (NCC), MNOs continue to play a role in providing the necessary infrastructure for the exchange of messages involved in mobile payments.
Basically, this means that licensed operators will still need the technology platforms of the big telecom companies to reach the end user via mobile phones. In the real world, TeamApt’s Moniepoint, for example, will offer mobile money to customers who subscribe to telecom operators like Airtel and MTN.
Shortly after the CBN released the statement, stakeholders in Nigeria’s telecommunications sector responded. In their view, mobile money services should be driven by MNOs. According to the president 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 highlights that driving mobile money outside of the existing infrastructure of telecom operators across the country will slow the penetration of digital finance.
His statement bed: “If you are talking about mobile penetration, the use of mobile phones for financial services, the last mile is actually by the operators. The last mile to reach people is through operators. We believe that penetration would be slower than it should. We believe that the CBN should consider the operators who are interested in offering these services. For quick coverage and easy access, we believe that if operators are allowed to play well in this space, it will improve penetration and inclusion of more people.
Adebayo’s position is supported by that of Ikechukwu Nnamani, president of the Association of Telecommunications Companies of Nigeria. He said the CBN should have been inspired by the success of Safaricom’s M-PESA in Kenya.
He said: “The CBN has decided to go down the path where telecom operators are not taking the lead. Following the most successful example of mobile money in Africa, which is the Safaricom M-PESA experiment, we thought that making it led by telecom operators would lead to greater adoption as many people are already using the telecommunications platform.
While mobile money is not yet a big deal in Nigeria, there are several countries in Africa where the model has proven to be viable. Apparently, much of the bounty is the prerogative of East African countries, including less popular countries like Namibia, DRC, and Malawi.
Adoption has been relatively faster lately for countries like Ethiopia (Telebirr by Ethio Telecom) and Ghana (fintech startup ZeePay). the story seems opposite for Nigeria. Much of this exploration has to do with the scarcity of mobile money licenses in the country.
At the end of 2018, the CBN announced its intention to allow non-financial businesses to apply for a license to operate mobile money services. Given that Nigeria is home to over 200 million people and arguably the largest unbanked population on the continent, the country is heavily dependent on cash. As there are more mobile subscribers than bank accounts, allowing telecom operators to offer mobile banking services seemed the ideal route to financially include more Nigerians.
However, no new license has been issued to telecom operators so far. At the time, it appeared that the CBN wanted to avoid an M-PESA-type market monopoly by asking banks and telecom operators to work closely together and compete in the mobile money industry. To avoid Kenya’s hamstrings, Nigeria also seemed willing to ensure that phone companies would be regulated in the same way as traditional financial institutions. But now it looks like the CBN doesn’t want the telecom operators on the game to be completely dropped.
With the highest concentration of blacks in the world, Nigeria is the most populous country in Africa, with a population at least three times that of Kenya, for example. Sometimes referred to as the continent’s unofficial tech capital and fintech hotspot, there’s no better time than now to seriously push mobile money adoption.
And there is evidence of what is possible in space. Moniepoint, which was launched by Series B 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 each month. Today, all commercial banks in Nigeria have been clients of TeamApt for 5 years, it has over 3 million clients and 100,000 companies purchasing its solutions and using its infrastructure.
For now, we are keeping our fingers crossed and waiting for more updates.
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