MTN Nigeria awaits CBN’s licence, says it’s eager to commence PSB operations

Nigeria’s largest telecommunications company, MTN Nigeria said it is currently awaiting the Central Bank of Nigeria’s license for it to operate a Payment Service Bank (PSB).

The mobile service operator revealed this recently during the 12th Annual Pan-Africa Investor Conference by Renaissance Capital titled ‘Navigating an Economic Recovery Amid a Pandemic’.

“We are already in the Fintech space under the super-agent licence but eager to be able to run the PSB activities as soon as the CBN enrols us,” Elsa Muzzolini, General manager, commercial, Mobile financial service MTN Nigeria, said.

If granted the permit to offer mobile money services, the infrastructure of the telecom company will be instrumental in onboarding Nigeria’s over 40 million unbanked population into the financial system, industry players said.

With the largest market share of the telecom industry at over 73 million subscribers, MTN Nigeria plans to invest N640 billion (S$1.5 billion) over the next three years to expand broadband access across Africa’s most populous country, in line with the federal government’s 2020-2025 National Broadband Plan and support of MTN Group’s strategy tagged, Ambition 2025: Leading digital solutions for Africa’s progress.

Read also: MTN partners Flutterwave to ease mobile money service across Africa

Largely driven by telecom operators, Kenya’s financial inclusion expanded from a low base of 26.7 percent a decade ago to 83 percent in 2020. The East African country is one of the world’s leaders in mobile money services. Telecom’s operator Safaricom pioneered its M-Pesa service 12 years ago to cater for Kenyans without access to the formal banking network.

While Nigeria went late to the party as the Central Bank of Nigeria only gave an official nod to telecoms and other non-financial companies to offer financial services in 2018, its slow licensing pace and scarce permits have delayed the industry’s take-off.

More than two years after the Central Bank of Nigeria move to allow non-financial companies to apply for mobile banking licences to assist in deepening access to financial services, not much has changed.

While two Telcos and a payments company have been given mobile money licences, the country’s largest mobile operators, MTN and Airtel, are yet to receive the licence.

Before now, only banks and licensed financial institutions were allowed to provide financial services (bank-led financial inclusion model). Although telecom operators and other fintech companies indicated interest to operate in the market, the CBN policy would not allow them.

The regulator eventually shifted because of the increasing rate of financially excluded people in Nigeria and the lack of progress in getting banks to provide financial services to people living in areas that lack access.

The apex bank has a target to ensure that 95 percent of the country’s adult population is financially included in the financial cycle by the year 2024.

The CBN had in a circular in July 2018 lamented that Nigeria was not meeting any of the financial inclusion targets agreed and contained in the 2012 Financial Inclusion Strategy.

Nigeria failed to meet its National Financial Inclusion Strategy target for 2020 to include 80 percent of its adult population into the financial system. EFInA data show that only 64.1 percent were financially included by the end of last year.

This means that 36 percent of Nigerian adults, or 38.1 million of the country’s 106 million (18 years and above) adults, remain completely financially excluded. This is a shortfall by 16 percent points from the desired target of a 20 percent exclusion rate.

“At our current rate of progress, we will not reach the 2020 financial inclusion targets until around 2030,” Ashley Immanuel, CEO of EFInA, said.

Financial inclusion means that people have access to basic financial services like a savings account, credit and insurance. A higher exclusion rate in Nigeria could lead to a poorer population as lack of access to credit and insurance puts them at an economic disadvantage.