In a short circular released to the public on Thursday, 4 June 2019, the Central Bank of Nigeria made it clear which institution it favoured to lead mobile money in Nigeria.
The circular titled ‘Operation of Mobile Money Wallets by Deposit Money Banks’ signed by Sam C Okojere, stated that “Deposit Money Banks (DMBs) shall henceforth not require prior approval to offer mobile money wallet services.” They are however expected to notify the CBN before the commencement of these services and are required to operate within the extant regulations on mobile money operations.
The apex bank said the move was part of efforts aimed at deepening financial inclusion and achieving the national target of 80 per cent by 2020.
CBN’s latest move amounts to giving commercial banks a head-start ahead of the proposed licensing of the telecommunications operators (telcos) that have indicated interest in providing services in the mobile money space.
It will be recalled that in 2018 the CBN and the Nigerian Communications Commission (NCC) signed a memorandum of understanding which is expected to consider telcos in the issuing of mobile money licenses allowing them to play as payment providers in the country. Following the memorandum, the CBN in October released guidelines for licensing and regulations of Payment Service Banks (PSBs) in the country. The guideline specified that the PSBs, which includes interested telcos, will need to make a minimum capital deposit of N5 billion. The CBN reportedly granted the telcos a provisional approval to apply for a PSB license through a subsidiary company.
There have been expectations that the licenses will be issued before the end of the first quarter of 2019. At the BusinessDay Inclusion for All summit which held earlier in 2019, Nurudeen Zauro, the Technical Adviser, Financial Inclusion Secretarial at CBN said, “Most probably by the end of this first quarter we’ll roll out PSBs.”
The second quarter of 2019 has passed, yet no word from the apex as to when the telcos will get the license.
“CBN allowing banks to do mobile money won’t achieve anything,” said a top VC executive who chose to remain anonymous in order to speak freely. About 10 banks currently have mobile money licenses and they have not done anything with it. How are the rest going to be different?”
Mobile money licensing has been a lifelong pursuit of telco companies like MTN Nigeria, Africa’s largest telecommunication network, and Airtel. MTN is betting on its dominance of the telecoms market to woo customers to its mobile money service. Despite a fractious relationship with the CBN which accused it of illegally repatriating $8.1 billion in profits and debt of $2 billion in taxes, MTN said it would be applying for a mobile money license in Nigeria in 2019.
Airtel which received $1.2 billion in new funding and is set for an IPO on the Nigerian Stock Exchange has also indicated open interest in securing a mobile money license in 2019.
While the telcos continue to wait for the CBN to fulfil its promise, it should be noted that banks providing mobile services is not likely to make any difference. To start with, many Nigerian banks already claim to be offering the services yet the number of unbanked Nigerians has not moved at the pace expected.
“Banks are fine with banking and mostly mobile money as very troublesome business with very little margin,” the VC executive said. “Getting N5000 into 1 million accounts is just N5 billion in deposits. It is pretty marginal for a bank with an NFRR of say 8 per cent to just N400 million a year. N400 million won’t operate mobile money with 1 million active customers.”
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