Mobile Money Nigeria: The hidden facts

1. October 7, 2016
Mobile Money: The Scenario in Nigeria
by
Basil Mutisya (RAFM & Mobile Financial Services Expert/Consultant)
It is over seven (7) years since the introduction of the mobile money concept in the Nigerian Market, however, it has become a vicious cycle of confusion and there are no clear-
cut rulesof play.Yes, theCentral Bank of Nigeria (CBN) has sincereleased frameworks to guide mobilefinancial services including guidelinesfor agency banking but,havethese
made things clearer or rather there are more unanswered questions? The Nigeria communication commission (NCC) on the other hand seems to either lack a clear understanding
ofthisconceptortheyaretotallyunconcernedofthefactthatthereisneedtoacceleratetheadoptionofmobilemoneyservicesforthebenefitofthemasses.However,theregulatory
bodiesratherseemobsessedwith controllinghowtheseservices areimplemented withintheGSMenvironmentinsteadofmakingsurethatthereis aclear pathto bringaboutspeed
in awareness creation, learning, understanding and adoption of these services. This coupled with NCC’s lack of support for the Telco has not helped streamline issues either and
the latter has been left with little or no part to play at all within the mobile financial services spectrum, hence the slow achievement of financial inclusion goals.
WhatisclearhoweveristhefactthatTelco’sarenotallowedtoparticipate aslicensedmobilemoneyoperators(MMOs) butratheras“infrastructurechannelproviders”forlicensed
banks and independents. But what infrastructure and at what cost? Should it be for free? It is akin to having your home refrigerator where the regulation dictates that you allow
your neighbors to preserve their food stuff in it irrespective of the privacy and costs of purchase and maintenance.
Everyone familiar with the mobile money business across the Globe knows all very well that Banks philosophy everywhere is a quick-quick return on investment and this is not
the case with mobile money business. Banks have never embraced and may never establish a solid and widespread Foundation that supports mobile money services as observed in
most markets. With Mobile money foundation, here we are talking about things like a Robust mobile money platform, quality and active widespread agency network that is the
backbone for any mobile money service spread, the marketing commitment to create awareness and market reach for faster learning and adoption and, of course other market
elements, especially Telco’s network resources that are well known for speedy market penetration. Again, how does a Telco participate in a business where they are handcuffed
and denied operational basics such as the visibility of the way the revenues are earned by refusing them important platform access, ownership rights and hosting.
In this market, several mistakes were made not only by the regulators but the MMO’s as well. The MMOs for example committed the cardinal sin of purchasing off the shelve
platformsinsteadofscopingthosethatwillprovideabestfitforthemarket.Therefore,amultivariateofproblemshaveplaguedtheiroperationswithdifficultiesinthebasicmobile
money management aspects and lack of tailor-made reporting that is required to drive the business forward and quickly. This situation has been exacerbated by CBN’s non-
exclusiveness stance in the Agency Network rules, hence not a single party is willing to put up the required mammoth investments in a distribution channel that is not protected
from exploitationby other players. Whilst agency non-exclusiveness is goodfor thecustomer as seen in theTanzanian model,there is no established mechanism inNigeria to place
firm ownership and rewarding to the recruiting organization in a bid to safeguard the cost of investments and foreseen projected revenues.
When itcomes to general GSM mobiletechnology management and innovativeness,theTelco’s havean edge over their peers and arebestsuited to drivemost mobilephonebased
services. This sector however being a financial business segment, banks have been tasked to be in the forefront to roll-out these services in the market but the BIG Question is?
Should this be used to curtail the advancement of the mobile money business and financial services inclusion for the masses? Should they be allowed to run the show in an area
where they are not experts by having the complete license and hosting of platforms that they are unable to scope and manage effectively? Should they have autocracy over a
distribution channel that is today effectively managed by the Telcos? And finally, should banks be allowed to run down a business niche that holds so much economic growth
potential and is of widespread interest tothe majority of the population to the detriment of the entire economy?
Mobilemoneybusinessisoneoftheinnovationswherewehaveseenmanybenefitsbeingaccruedsuchasreductionofthealreadypervasiveunemploymentseeninmostdeveloping
economies by generating new job opportunities, financial inclusion of the marginalized and bringing about speedy currency circulation thus improving the standards of living of
many especially the poor, traders and a source of major foreign direct investments. In Nigeria, the regulation has in a way slowed down the realization of these benefits despite the
economy today being in an economic recession and experiencing awidespread scarcity in foreign exchange thatseems to worsen as thedays go by.Nigeriaattracts a lot of interest
from global business moguls and mobile financial services, especially mobile money services is one area in modern technology that is attracting a lot of attention and is an avenue
for tapping in much needed foreign investments if only the right enabling environment is provided.
As it stands today, Nigeria is still at the infancy stage in the Mobile Money business journey, that begins with Service unawareness; Awareness, Understanding, Knowledgeable,
Service Trial, and Regular Use. To date the majority of the population including the elite cannot differentiate between mobile money and mobile banking services concepts and all
this is because there is a strong belief from the market that, there are cartels in the economy bend on making sure that the benefits of mobile money services do not trickle down to
the populace in a bid to protect their already existing business revenues from what they view as a disruptive technology.
The truth however is that; the Nigerian economy holds the key to making the Africa continent envy of the entire world by consolidating the already realized benefits and potential
of mobile financial services such as M-pesa in Kenya and others by propelling such to explosive heights. There is so much potential in the market for success and improvement of
the standards of living for the majority but, this expected improved livelihoods in the most populous Nation in Africa is threatened to become only but a pipe dream.
Should Nigeria, the BIG BROTHER of smaller nations in Africa lag behind in mobilefinancial inclusion?