Nigeria is on the verge of allowing wireless carriers to transfer cash, a move that could soften a previous policy that protected the turf of banks and may help Africa’s most populous country cut its number of financially excluded.
The regulator late last year released guidelines on how Payment Service Banks will operate to reverse a drop in access to affordable financial products.
Analysts believe the country’s central bank may have realized it can’t rely on lenders alone to achieve its objective of extending services to the 50 million adults still without a bank account in the nation of about 200 million people.
But, with 162 million active lines between the nation’s four wireless carriers, the regulator is opening up the field in a bid to more than double its financial inclusion rate to 80 percent by 2020.
The adoption of mobile money helped grow financial inclusion across sub-Saharan Africa more than 8 percentage points to an average of 43 percent between 2014 and 2017 but in Nigeria the coverage rate dropped nearly 4 percentage points to 39 percent over the same period, according to World Bank data.
Major players in the sector are bracing for increased competition under the new dispensation and telecommunications firms, including South Africa’s MTN Group Ltd., have shown interest in applying for licenses that will allow them, and even supermarket chains, to create units that can collect deposits and maintain savings accounts.
“I don’t think everyone will say, ‘this is the perfect document,”’ said Usoro Anthony Usoro, the general manager of mobile-financial services for MTN Nigeria, the market leader with 67 million mobile subscribers. “It’s a first step towards bringing all players in. We expect that the CBN will keep listening to customers, to potential participants in that space and will keep improving the policy.”
Segun Ogunsanya, CEO of New Delhi-based Bharti Airtel Ltd.’s Nigerian unit calls it “ a win-win for everybody,”.
Airtel Nigeria may apply through an affiliated entity rather than applying for a license directly, he said. Nigeria’s two other main wireless operators, 9mobile and Globacom, with a combined 59 million subscribers as of November, didn’t respond to requests for comment about potential plans to apply for a license.
“These guys are going to grab all the bottom-of-the-pyramid transactions,” said Bismarck Rewane, chief executive officer of Financial Derivatives Co., a risk advisory group based in Lagos. “This is a disruptor to the traditional way of doing things.”
Banks aren’t standing still and are confident they can withstand the competition with their own digital offerings. FBN Holdings Plc’s First Bank of Nigeria is pushing ahead with its digital-banking roll-out, with more than 10,000 agents targeting the unbanked everywhere in the country, according to CEO Adesola Adeduntan, out of the 500,000 agents which the regulator has said are needed to cover Nigeria.
The lenders will need to be on their toes. “Banks will be forced to develop innovative banking services,” said Oluwole Babatope, a senior research analyst at International Data Corp., or risk losing accounts to mobile-phone providers, hurting their revenue.
“As a bank, we can open accounts nationwide using digital financial services, invest the funds across a broad range of asset classes, and, most importantly, we can lend,” said Lagos-based Diamond Bank Plc’s head of corporate communications, Ezechinyere Anyanwu.
By our Reporter