Despite agent banking growth, Nigeria still behind peers in mobile money

There may be more banking agents in Nigeria today than there have ever been, but the country lags its peers in West Africa in terms of mobile money growth.

Ghana, Ivory Coast, and Senegal are doing much better than the most populated country in Africa in reaching millions of citizens that do not have access to financial services, according to Akinwale Goodluck, Head of GSMA in Sub-Saharan Africa.

Unlike Nigeria, the countries are reaping the benefits of creating an enabling regulatory environment for mobile money to thrive. Another driver of growth is the commitment of the operators to provide investment and sustain their infrastructure. The cordial and mutually beneficial relationship between the mobile telecommunication sector and the financial and banking sector in these countries is also responsible for the growth.

Nigeria on the other hand is currently dealing with a seemingly unending feud between telcos and commercial banks, with a regulator that is clearly reluctant to giving a free pass to telcos in financial services.

However, Nigeria’s financial regulator has set a target of including 80 percent of Nigerians into the financial services system. While it is unwilling to have all the telcos participate in achieving the target, it has accelerated efforts in pushing mobile banking agents across the country. It is also pushing for more adoption of the mobile money market but largely led by the banks.

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While mobile is a payment solution that enables users to pay for goods and services with their mobile phones which serves as a wallet, Nigeria’s mobile banking system is almost 100 percent dependent on a bank account. In other words, users would necessarily need to open a bank account directly or indirectly to be able to use a mobile banking service.

“With mobile money, you are not required to have a proper bank account. Your wallet sits on your phone. You are able to do your transactions without owning a proper bank account,” Goodluck said.

Agent banking services are still largely bank-account dependent. Interestingly, most of these agents are supposed to be leveraging mobile money to drive financial inclusion.

The number of banking agents rose from 38,416 in December 2018 to 239,940 agents as of December 2019, representing a 517 percent increase. The figure is likely to have doubled in 2020 given that MTN alone said it deployed about 108,000 agents in 2020 using the Super Agent licence it got from the CBN. First Bank of Nigeria also announced that it now has 86,000 agents while OPay claims it has 300,000 agents.

The increase in the number of banking agents has yet to significantly dent the financial exclusion figure. With a population of over 190 million people, research shows that 73.2 million adults, representing 41.6 percent of the adult population in Nigeria are financially excluded, said Umar Danbatta, Executive Vice Chairman and CEO of the Nigeria Communications Commission (NCC) said at a conference in March 2021.

Akinwale Goodluck says there is more to mobile money than deploying mobile banking agents. Apart from the over-dependence on bank accounts, there is the interoperability between mobile money operators, banks, and the interoperability between mobile money platforms and ATMs. To be able to link a mobile number with a bank account, banks and mobile money operators have to e able to communicate with each other seamlessly. Currently, banking customers complain transactions between banks don’t work all the time or takes hours to go through.

“What is required to drive financial inclusion in Nigeria is the further liberalisation of the regulatory environment,” Goodluck said.

He also says the regulator needs to create a level playing field in issuing licence to the telcos. So far, only Globacom and 9Mobile have been issued a Payment Service Bank licence, but the two biggest mobile money operators MTN and Airtel are yet to receive even though they applied even earlier than the other telcos.

MTN and Airtel have significant mobile money experience in other markets in sub-Saharan Africa and are expected to bring that experience to Nigeria.

A level playing field would also need to be extended to the rest of the industry as it gives confidence to existing mobile money operators to deploy capital for scale. Goodluck says if potential mobile money uptakers do not get a sense that their mobile money accounts would allow them to transact with the generality of the people in Nigeria, it may sort of curb appetite and limit the adoption.

“If As long as the two biggest players in the market in Nigeria are excluded it would be very difficult to sell a mobile money proposition,” he said.

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