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Nigeria lags peers in mobile money usage despite growth in agency banking

… as 70% of consumers are either unaware, familiar, but do not use

Even though Nigeria has more banking agents today than it did in the last ten years, the country is still behind its Sub-Saharan African peers when it comes to mobile money adoption.

Out of the six countries surveyed in the region by Ericsson’s Consumer and Market Insight report -‘Mobile Financial Services on the Rise’ to capture the trends, Nigeria only outperformed Ethiopia’s 8 percent mobile money usage rate.

Although Nigeria made progress from the 3 percent mobile money adoption rate in 2015, its 30 percent in 2021 lags Ghana’s 90 percent, Angola’s 47 percent, Ivory Coast’s 79 percent and Senegal’s 75 percent, as gathered from the latest Ericsson.

“This survey shows that consumers in Ghana have the highest usage levels, at 90 percent. Meanwhile, this is about 80 percent for Ivory Coast and Senegal, while Nigeria and Ethiopia are still in the early stages of establishing mobile money use,” the September 2021 report said.

Agent banking is the provision of financial services to customers by a third party (agent) on behalf of a licensed deposit-taking financial institution but mobile money is a technology that allows people to receive, store and spend money using a mobile phone.

While GSMA, an industry organization, describes Sub-Saharan Africa as “the epicentre of mobile money” due to the exponential growth of registered accounts in the region, Nigeria is yet to catch up with its peers as 70 percent of the country’s consumers are either unaware, familiar, but do not use mobile money.

The rate is 8 percent in Ghana, 54 percent in Angola and 19 percent in Ivory Coast.

Unlike Nigeria, the countries with high mobile money usages are reaping the benefits of an enabling regulatory environment that supports mobile money growth.

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

While Nigeria went late to the mobile money party as the Central Bank of Nigeria (CBN) 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.

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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.

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.

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