• Tuesday, July 16, 2024
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Telecoms to unlock new opportunities for unbanked Nigerians – SBM

Telecoms to unlock new opportunities for unbanked Nigerians – SBM

Beyond telecom’s contribution to Nigeria’s economy, SBMIntel, one of Nigeria’s leading geopolitical intelligence platforms says the sector has seen a meteoric rise and now stands well-positioned to unlock new opportunities to drive financial inclusion with the recent award of payment service bank licenses.

According to the report released by SBM on Friday, December 10, the telecom sector now stands above both Manufacturing and Oil & Gas despite recent setbacks.

“Apart from its direct contribution to the economy, the sector has had a far-ranging impact, fostering innovation in such sectors as banking, information technology, sports, logistics, healthcare, media and entertainment while enabling the birth of such growth sectors like fintech and e-commerce,” Research analysts at SBM said.

The report by the Lagos-based organization titled “Towering high: A look at Nigeria’s telco sector” explained that the growth of the industry from a mere 1.5 percent contribution to Nigeria’s GDP in 2001 to 17 percent of GDP in 2021 has primed it as the best tool to push financial inclusion over the finish line.

“The sector almost single-handedly lifted Nigeria out of recession in the fourth quarter of 2020 with a contribution of 14.7 percent in the same period in which the second-fastest-growing sector, Agriculture, grew at a paltry 3.42percent,” the report said.

Financial inclusion will be a key part of how both the industry and the big telecom service providers evolve in the near term, the report states.

Nigeria’s quest to include its unbanked adult population received yet another nod in November as the Central bank of Nigeria (CBN) granted Approval in Principle to two of the country’s largest mobile service operators- MTN Nigeria and Airtel Africa.

Although it’s the first step in the process towards final approval, subject to the fulfilment of certain conditions as stipulated by the CBN, the move by the industry regulator brings the take-off of mobile money services in Nigeria closer.

“Banks haven’t been able to reach half of the Nigerian adult population and they do not have the model to do so,” Ashley Immanuel, CEO of EFInA, the organization that collates Nigeria’s biennial financial inclusion data, said.

Mobile money is expected to remove some of Nigeria’s barriers to having a basic bank account like documentation in obtaining a Bank Verification Number (BVN), an 11-digit number that is created for bank customers before they are assigned a bank account, proximity to financial services provider and among others.

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As witnessed in countries that have leveraged the mobile money-led financial inclusion model to onboard the majority of their unbanked population, Nigeria is expected to ride on the innovation to boost access for the hardest-to-reach segment of its adult population.

With just a phone number, any Nigerian who does not have a bank account will most likely be able to ride on the infrastructure of any of the telco or other service providers to transact through an e-wallet or mobile money account.

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The existing customer base, infrastructure and high mobile phone penetration rate in Nigeria are some of the reasons for the nod for Telcos to partake in deepening Nigeria’s financial inclusion rate.

While Nigeria’s commercial bank branches (per 100,000 adults) in Nigeria was 4.30 as of 2018, mobile phone subscribers per 100 people stood at 99.07. For comparison, the world average in 2020 based on 144 countries was 113.12 subscribers per 100 people.

Analysis of the data by FBNQuest revealed that Nigeria’s total active bank accounts were about 111.5 million as of September 2020. This pales in comparison to the 205 million active subscriber lines for network operators in the same period.

Access Bank, Nigeria’s largest bank by assets and customer base, disclosed in its H1 ’21 presentation that it had 42 million customers. This is significantly less than MTN Nigeria’s over 69 million subscribers in the same period. Also, given their reach, GSM operators have a larger pool of MoMo agents on their platform.

On its nine-month conference call, MTN Nigeria disclosed that it had increased its agent network by 234,000 agents to about 630,000 agents this year. In comparison, First Bank’s agent network which is the largest among the banks was around 117,000 agents as of H1 ’21.

A lower financial exclusion rate in Nigeria could slow the country’s poverty rate as access to credit and insurance puts them at an economic advantage.

“MTN leads the financial inclusion train through its more than 180,000 MoMo (mobile money) agents and 6.6 million MoMo subscribers, well ahead of other telecom operators and already a bigger cohort than all but the biggest banks,” Research analysts at SBM said.