Should all go according to plan, 2019 is the year mobile network operators (MNOs) provide mobile money services to their millions of customers in Nigeria, and potentially challenging the dominance of banks in the mobile banking landscape.
The recent Guidelines for Licensing and Regulation of Payment Service Banks (PSBs) published by the Central Bank of Nigeria (CBN) more than paved the way for the entry of MNOs in mobile money. The objective of the new guideline is to boost financial inclusion through use of financial technology. Nigeria has about 40 million people that are financially excluded.
CBN guidelines provide that banking agents, retail chains (supermarkets), mobile money operators; and MNOs (through their subsidiaries) are recognised as eligible promoters. Essentially, an MTN for instance, can through a subsidiary establish a PSB and provide services like accepting deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carrying out payments and remittances (including inbound cross-border personal remittances) services through various channels within Nigeria; issuing debit and pre-paid cards in its name.
African telecommunications giant, MTN and its counterpart Airtel are known to be leading the campaign for non-banking entities to participate in mobile money. MTN also plans to re-launch the service in South Africa in 2019. The service was originally launched in 2012 when the company partnered with the South African Bank of Athens, Pick n Pay and Boxer stores to offer a mobile money solution that enables the opening of simple banks accounts via phones. MTN had to pull the plug when the market persistently returned weak traction.
Rob Shuter, the company’s CEO, said MTN has since learnt its lessons and would be looking to implement the lessons in both Nigeria and South Africa when it launches in the markets latest second quarter.
By the end of June, MTN had 24.1 million active mobile money users in 14 markets. MTN’s active voice subscriber base in Nigeria hit 66,453,314 in the second quarter of 2018, according to data from the National Bureau of Statistics (NBS).
MTN will be expected to operate in the Nigerian space through its subsidiary Mobile Money Limited in partnership with Nigerian banks. Rob Shuter alluded to this in 2018 at the AfricaCom conference in Cape Town, South Africa.
In Ghana where it already provides services to thousands of its customers, the platform collaborates with 10 banks in the country and it operates through authorised agents who facilitate the service on behalf of Mobile Money Limited. Customers can use the MTN Mobile Money to send and receive money, top-up MTN airtime, pay bills (DSTv, ECG Postpaid, MTN Postpaid, School fees and more), buy and pay for insurance, pay employee salaries, pay for airline tickets and other goods and services.
Airtel’s subsidiary, Airtel Money has been launched in 13 African countries and would likely be the flagship company to power its ambitions in Nigeria. The service allows users to send and receive money across networks, instantly top up airtime and also send airtime to someone else’s phone; make payments for utility bills, goods and services; link bank accounts to Airtel Money wallet and enable users check bank balances, deposit money from phone to bank account; and make cardless withdrawals from partner ATMs.
In 2018, Airtel overtook Globacom to become the second largest telecommunication company in terms of subscriber base with nearly 40 million subscribers.
Expanded role for SANEF
Until recently, the Shared Agent Network Expansion Facility (SANEF) was driven by Nigerian banks given that they bankrolled the initiative, but this might likely change and become bigger with the entry of MNOs.
SANEF is a project powered by the CBN, Deposit Money Banks (DMBs), Nigeria Inter-Bank Settlement Systems (NIBSS), licensed Mobile Money Operators (MMOs) and Shared Agents with the primary objective of growing financial inclusion in Nigeria. The initiative involves on-boarding 40 million low income and unserved Nigerians into the financial system, increasing financial access points from the current 50,000 to 500,000 by 2020 and deepening access to mobile and digital financial products and services such as savings accounts, micro loans, insurance, pensions by Nigerians.
The challenge however for MNOs is the poor state of infrastructure, weak interoperability with partner banks and weak broadband penetration.