Nigeria’s mobile money agent outlets hits 6-yr high – IMF

The number of registered mobile money agent outlets per one thousand kilometres square in Nigeria surged to the highest in six years, according to a new report by the International Monetary Fund (IMF).

The report showed that the number of outlets rose by 137.7 percent to 1,618.6 in 2022 from 680.9 in 2021. The number of registered mobile money accounts per 1,000 adults also increased to 225.9 from 191.0.

The value of mobile money transactions as a percentage of the GDP grew to 16.11 percent from 8.74 percent.

“The increase is a progressive step in the right direction in the country’s race to increased access to formal financial services,” Chinasa Collins-Ogbuo, director at Inclusion for all Initiative, said.

She said there is a high mobile phone ownership/access within the rural and marginalised groups which makes mobile money accounts easy to adopt and it is the fastest route to formally include them in formal financial services.

“If mobile money agents are in their communities, it addresses the distance to banks barrier that typically precludes access to formal financial services for these groups. Mobile money also enables their dependency culture as they’re able to reliably receive financial support from relatives in urban locations,” she added.

Gbolahan Ologunro, portfolio manager at FBNQuest, said the increase is consistent with the explosion that is currently happening in the fintech space.

He added that there has been a significant increase in the number of fintech companies in the country. “The traditional banks have also explored the fintech space by establishing subsidiaries to carry out activities that a typical fintech company would normally carry out.”

The IMF’s report is a unique supply-side dataset that enables policymakers to measure and monitor financial inclusion and benchmark progress against peers. Launched in 2009, it is based on administrative data collected by central banks or financial regulators from financial institutions and service providers.

Mobile money agents are bridging the unbanked gap by bringing more people into the financial net, said Moses Ojo, a Lagos-based economic analyst.

“They are bringing those who are not financially included into the net by opening accounts for them and also embarking on financial transactions for them,” he said.

The mobile money agents, widely described as ‘human ATMs’, are third-party retail outlets contracted by financial institutions to process clients’ transactions. They are empowered to reduce reliance on over-the-counter transactions while providing convenient personalised services.

The agents are equipped to carry out services that include account opening, cash deposit, airtime purchase, bills payment, withdrawals, and money transfer.

Globally, agency banking is recognised by policymakers, researchers, and development agencies as a financial inclusion initiative that has remained an integral tool in developing economies, particularly in the areas of poverty reduction, employment generation, wealth creation, and improving welfare and general standard of living.

The means to access finance have been rapidly changing in recent years, with traditional financial access points such as ATMs and bank branches gradually declining while non-traditional access points such as retail agents and mobile money agents are growing rapidly, according to authors of the IMF report.

“For example, in middle income economies, the number of retail agents and mobile money agents combined more than doubled between 2019 and 2022 while the number of ATMs and bank branches declined by nine percent over the same period,” they said.

They added that the continued growth in access points to digital financial services has naturally been accompanied by an increase in their usage, as measured by the number and volume of digital financial transactions.

“Between 2021 and 2022, the number of mobile money transactions per 1,000 adults increased by 28 and 24 percent in Africa and Asia and Pacific regions, respectively.”

The Central Bank of Nigeria in 2012 adopted the National Financial Inclusion Strategy, which was built on four strategic areas: agency banking, mobile banking/mobile payments, linkage models, and client empowerment.

And in 2018, the apex bank set up the Shared Agent Network Expansion Facility (SANEF) to recruit, train and support more people to become agents. The facility also provides funding to companies, incentivising them to expand agent networks in underserved cities across the country.

Data from the SANEF show that the number of bank agents surged to 1.3 million in 2022 from 83,500 in 2018.

A recent report by the GSM Association noted that global mobile money accounts grew by 13 percent in 2022 thanks to regulatory changes in SSA, particularly in Nigeria and Ethiopia.

It said registered mobile money accounts rose to 1.6 billion from 1.4 billion in 2021.

“Some of the key contributors to the growth of mobile money in the past few years have been regulatory changes in large markets,” Mats Granryd, director general at GSMA, said.

He said in Nigeria, for example, new licenses have seen many new mobile money players emerge, and with this a 41 percent growth in the number of registered agents.

“Not only has this created employment for millions of new agents, but mobile money services are now accessible to more people in Africa’s largest economy,” he added.

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According to the report, Nigeria contributed to the staggering 41 percent increase in the number of mobile money agents to around 17 million last year from 12 million in 2021.

“Much of this growth was in Nigeria where a liberalised regulatory regime has led to an increase in Mobile Money Providers. Agents are an important part of any mobile network service and were responsible for two-thirds of all cash-in transactions in 2022,” it said.

Last year, the World Bank said higher adoption of mobile money is driving the growth of account ownership in financial institutions particularly in Sub-Saharan Africa countries.

Nigeria’s banked population increased by 15.6 percentage points to 45.3 percent in 2021, the highest in 10 years from 29.7 percent in 2011.

“Mobile money has become an important enabler of financial inclusion in Sub-Saharan Africa, especially for women as a driver of account ownership and of account usage through mobile payments, saving, and borrowing,” the report said.