The top mobile telecommunications operators in Nigeria including MTN, Airtel, Globacom and 9mobile have committed to ensuring that the country’s financial inclusion rates are deepened to reach at least 90 million customers in the next 30 months if given a level playing ground to perform mobile money functions as in the case of Kenya’s Mpesa.
In Nigeria, Telco’s are excluded from accessing mobile money licences directly under current guidelines, while in most sub-Saharan African markets where mobile money is successful, Telco’s are given a level playing field.
The mobile operators who met on Tuesday September 4, 2018, concluded that it is overly possible to significantly reduce Nigeria’s financial exclusion rates of 40 percent to 20 percent if the telecommunications operators with a wider subscriber base than the total banked population are allowed to drive mobile money penetration.
Nigeria’s telecommunications industry is till date, one of the most thriving industries in the country and has the capabilities, including technology, infrastructure, distribution network and subscriber base that can quickly be leveraged to provide these solutions.
According to the Nigerian Communications Commission, the industry has a reach of 86 percent of the country, with 162.3 million customers (the single largest customer base of any industry in Nigeria).The industry players have a combined presence in 773 local government areas across the country further emphasising their ability to reach especially hard to reach areas of the country in a bid to deepen access to financial services.
They also have 1,000,000 unique agents already in place selling airtime across the country, creating a strong distribution network that can quickly be converted to established mobile money agent networks.
Yinka David-West, Academic Director and Senior Fellow at Lagos Business School who facilitated the meeting with the Telco’s on Tuesday said; ” Far beyond financial inclusion rates in Nigeria, we also have to examine how people currently considered to have access to financial services stack up when evaluated against the criteria for true financial inclusion, i.e. access to a full suite of quality financial services, provided at affordable prices, in a convenient manner. When evaluated against this definition, it is clear that as a country, we have to work, not just to drastically increase the number of financially included persons, but also to increase the quality of inclusion and access we give, especially if we hope to positively impact the economy and the quality of the lives of Nigerians in any meaningful way.”
As part of their commitment, the Telco’s promised to use their numbers and capabilities to bring access to financial services, serviced by 100,000 agents to 15 million customers by the sixth month.
In 24 months, they will be bringing financial services to 70 million Nigerians, serviced by 600, 000 agents across the country.
By the 30th month deadline, the Telco’s have committed to making sure that 90 million Nigerians, serviced by 600,000 agents will have access to financial services through mobile money.
This is in addition to the group’s commitment to deepen financial literacy levels in the country through establishing a financial inclusion secretariat within the Association of Licensed Telecommunications Operators of Nigeria (ALTON).
Gbenga Adebayo, Chairman of ALTON said; “According to Mckinsey, as a direct result of increasing financial inclusion rates, Nigeria could realise as much as a 12.4 percent boost in GDP, the creation of 3 million new jobs, $2 billion reduction in government leakages and $57 billion in new credit for small and medium scale enterprises over a four-year period.”
“The proposed intervention by the telcos will not only give customers access to a variety of affordable financial products and services, but also deliver 1,000,000 direct jobs in addition to the other benefits identified by the McKinsey report. Opening up the Digital Financial Services sector can be the basis for transformative change in the structure and sustainability of growth in the Nigerian economy.
“We acknowledge the concrete commitments the industry has made towards delivering access to financial services today as well as their commitment to financial literacy which while vital, cannot happen in isolation of the Telco’s. This integrated approach, if allowed to, will deliver long term solutions and tangible impact,” Adebayo said.
Umar Garbar Danbatta, Executive Vice Chairman of NCC had in May this year told BusinessDay that security challenges on the telecommunications infrastructure in Nigeria is a contributing factor in holding back the licensing of Telco’s for mobile money services.
Analysts however say, financial inclusion can only grow if driven by telecoms operators who have large numbers of subscribers on their networks.
Kenya has about 60 percent mobile money service penetration, while Ghana has about 40 percent service penetration.
Even with a lot more population numbers, Nigeria remains at 1 percent because the Nigerian model is bank led.
“Discussions are going on about how we can appoint telecommunication companies as super agents or through the introduction of special purpose benefits, which is also telco dependent, in order to improve on the level of penetration,” Danbatta said in Lagos.
BusinessDay recalls that the NCC and Central Bank of Nigeria (CBN) in April this year, signed a memorandum of understanding (MoU) that provides framework for licensing of payment service providers and also guides the workings of the stakeholders both in the banking and telecommunication industries about driving not just the mobile payment but also the payment system in Nigeria, however, this has in no way hastened the journey towards financial inclusion.
Jumoke Akiyode-Lawanson
