When the Central Bank of Nigeria (CBN) launched mobile money service in 2010, many industry observers believed the country held all the aces to become a dominant player in the African market.
With only 25 million bank accounts out of a population of 167 million people, and about 129 million active mobile phone subscriptions, it is understandably rational for them to have such weighty expectations. But four years after the introduction of service in Nigeria, Africa’s largest economy by Gross Domestic Product (GDP), the service is yet to catch on with the masses.
A recent poll by the Nigerian research company, NOI, shows that only 6 out of 10 Nigerians are aware of the service (59 percent), and of that number only 13 percent are actually using it. Even more disheartening is that 93 percent of the mobile money adopters are using the service in conjunction with an existing bank account. The remaining 7 percent had a bank account, but operated it separately. What this means is that the target audience—the unbanked—is missing out completely in the grand scheme of things.
The lack of generally accepted proofs of formal identification required to assist service providers navigate KYC concerns has been identified as a major drawback to the success of mobile money operations in Nigeria, according to the Lafferty Group. Market observers are also of the view that the infrastructure constraints, poor agent network, and the lack of reciprocal interoperability amongst disparate mobile money systems, were some other factors militating against the growth of the sector. But, it’s not all doom and gloom.
The minister of communication technology, Omobola Johnson, while making a presentation at the American Business Council in Lagos, said Nigeria conducted transactions valued at $600 million via mobile money in the past two years. Emmanuel Okogwale, principal consultant at Mobile Money Africa, thinks Nigeria will require a national accelerator programme to speed up adoption of mobile money service by the vast majority of Nigerians.
Speaking at the 3rd annual BusinessDay Mobile Money roundtable held in Lagos, recently, he said, “We need to move away from policy to actual implementation. We can develop an end-to-end value chain system to drive mobile money usage. “We can select six specific industries and build m-payment systems around their processes”. One company that is thinking outside the box in terms of how to boost mobile money usage is national carrier, Globacom. Though, telecommunications operators’ role in the ecosystem is limited by virtue of CBN regulation, Globacom, says the sectors’ potential of N1.1 trillion is enough incentive to invest in an innovative approach expected to jump start the sub-sector.
Globacom is in a renewed push to scale up mobile money services in Nigeria, through the formation of a new partnership ecosystem, comprising of leading financial services companies, and a robust nationwide agent network. The company is boosting cashless policy of the apex bank with the launch of Glo Xchange, a Mobile Money Agent Network that is aimed at accelerating mobile money revolution and financial inclusion in the country. It is Nigeria’s biggest Mobile Money Agent Network pioneered by Globacom in partnership with licensed mobile money operators, Firstmonie, Ecobank, Stanbic IBTC and Zenith Bank. Other banks are also in the process of joining the network. Glo Xchange will avail the mobile money sector of the much needed agent network across the entire country, as well as the technology platform required for seamless mobile money transactions.
The initiative however will provide the partner banks on the project with Glo’s extensive network of 150 Glo World and Glo Zone shops, over 35,000 Glo Dealer and sub dealer outlets and over 400 Con Oil filling stations across the country. It is thus expected that Glo Xchange platform will be a phenomenal success from its first day of operation. The initiative is also leveraging on the Association of Community pharmacists of Nigeria (ACPN) with which Glo has a working partnership. The association has over 7,000 outlets and these along with the Gloworld, Glo Zones, Glo Dealer outlets, sub dealer outlets and Conoil filling stations will ensure that people all over the country, even in the remotest locations, benefit from the platform. The network also includes the branches of all the partner banks across the country.
CBN & Globacom reaction
Launching the innovative product recently, Godwin Emefiele, governor, CBN, said the new initiative, would accelerate the apex bank’s drive to achieve a cashless policy and financial inclusion. The Management of the Central Bank says that the next revolutionary step in this journey of expanding financial access is the Bank’s Mobile Money and Agent Banking Framework.
This framework is however aimed at encouraging financial institutions to partner with retail agents to extend financial services in locations in which building new bank branches would not be economical. “It is in view of this expectation that I am delighted with today’s launch of Glo Xchange, the first Mobile Money Super Agent Network in our country.
I believe that this launching marks the beginning of a new collaboration between two major industries of our economy: the Telecoms industry and the Financial Services industry.”I want to sincerely commend the major collaborators in this venture, including Globacom, First Bank, Ecobank and Stanbic IBTC Bank for harnessing the synergies of their technical expertise and creating this network for the betterment of our people”, he further added.
Market observers say this new approach will work as the partnering banks and Globacom will collaborate to ensure that mobile money reaches the critical mass of the people across the country.
This, they added, would occur as both parties’ leverage on their extensive retail market experience and customer-base to build an unprecedented mobile money distribution chain across Nigeria. Kamal Shonibare, Globacom’s Head of Corporate Sales, said the firm aims to recruit over 500,000 Mobile Money Agents across the country in the next 5 to 6 years, who will earn excellent commission monthly on sales, in line with the vision of CBN. Shonibare also harped on the simple recruitment process of the network, stating, “With as little as N20, 000, Nigerians can become Glo Xchange Agents.”
Financial analysts view
Renowned financial analysts have thrown their weight behind the scheme. Speaking at the launch of the service, Bismarck Rewane, chief executive officer, Financial Derivatives Company Limited, said that the initiative is an essential ingredient for accelerating electronic payment and financial inclusion in the country. Rewane described Nigeria as a mineral-rich and commodity-dependent economy with a nominal GDP of $510 billion. According to him, it is 12 times the size of Kenya’s economy which has profited massively from mobile money.
He said that though Nigeria is the largest economy in Africa, and 26th largest in the world, the economy is largely cash-based; a situation which he said constitutes a barrier to rapid growth.
He said therefore that Glo Xchange will help to enhance the cashless policy of the CBN by improving the velocity of money in order to drive economic activity and economic growth. It should be noted that the potential GDP growth rate in Nigeria is 11 percent, whereas the actual GDP growth rate as discerned from the rebasing exercise recently carried out by the Federal Government is six percent.
He said since people don’t live on potential but actual, it is of utmost importance to implement policies that will help Nigeria to actualise the potential growth rate.
One veritable way of achieving this is to capture the money lying outside the formal sector. Considering that over 46 percent of Nigerian adults currently have no access to financial services, mobile money is a strong tool for financial inclusion of this huge category of Nigerians. In the same vein, Ayo Teriba noted that while Mobile Money service has been in Nigeria for over three years, it has failed to grow as expected because of certain reasons, including lack of an efficient and expansive agent network. “Usually for such a service as mobile money, the bigger the network, the higher the chances of an explosion, and by extension, the bigger the benefits accruable to all the stakeholders, from the banks down to the customers,” he said. He added that Glo Xchange, with the nationwide network of agents as unveiled by Globacom, is just the ingredient the industry has been waiting for.
Speaking at the launch event, Mike Ogbalu, managing director of Firstmonie, said that Glo Xchange would make financial services available to more Nigerians especially at the grassroots.
Ecobank’s Executive Director, Kingsley Aigbokhaevbo, asserted that the Network, through Glo Xchange, would drive financial inclusion in the country.
Aigbokhaevbo cited the example of the Conditional Cash Transfer program of the Federal Government as one of the ways in which mobile money is already impacting positively on the lives of the common people through Globacom. He disclosed that under Glo Xchange platform, Ecobank mobile money wallet, hosted on Glo Mobile lines, was already being used to disburse monthly subvention to beneficiaries. He added that youth farmers in Ekiti State were also receiving subsidies through the same means. Speaking on behalf of Stanbic IBTC, executive director, Obinnia Abajue said his bank was proud to be associated with Globacom because “Glo, in its characteristic manner, has provided the bridge that will deliver true financial inclusion in Nigeria”.
Agent training begins
Globacom has commenced regional registration for prospective agents. The first regional agent registration exercise was held by the company at Brayston Habour Hall of Constantial Hotel in Benin City, Edo State capital, last Saturday. Prospective candidates drawn from across the 18 council areas of Edo State trooped out to register as agents of the mobile money network Glo launched in partnership with licensed mobile money operators, Firstmonie, Ecobank, Stanbic IBTC and Zenith Bank. Charles Odiase, Executive Assistant to the Group Chief Operating Officer of Globacom, in his remarks said that Globacom had been in the forefront of breaking new grounds in the telecoms industry in Nigeria, adding that Glo Xchange “is a robust initiative that will significantly enhance financial inclusion, get the unbanked into the formal banking system and completely change the way we live.” One of the participants at the training, Odion Inegbinebor, said “after listening to the presentations here today and the fact that one does not have to borrow from the bank to start this business, I am willing to be an agent and make legitimate money for myself.”
Also speaking at the end of the training, managing director of Dadev Ventures, Deaconess Maria Oisamoje, said that she could testify that “it is profitable to do business with Globacom.” “I am here today as a living testimony to how faithful Globacom is to its partners. I have been a Globacom dealer since 2013 and I can confidently say that it is profitable doing business with Globacom. I wish to encourage those that will want to be agents of this Glo Xchange to do so now because they stand to gain much at the end,” she enthused. Participants at the training included businessmen and women, members of the Association of Community Pharmacists of Nigeria, (ACPN), artisans and petty traders.