Mobile Money Signals a New Dawn for Financial Inclusion in Nigeria
Nigeria has been rather slow to adopt the concept of mobile money, but with telecoms giants, MTN and Airtel formally commencing MoMo operations, the sector looks set to finally take off in this country.
As the old saying goes, it’s better late than never.
MTN’s mobile money service had been in the works for quite a while, with the company awaiting final approval for a Payment Service Bank (PSB) licence from the Central Bank. That licence has finally been granted, paving the way for the official beginning of MTN’s fintech arm in Nigeria.
Airtel Africa also has obtained its operating licence and has started delivering mobile money services through their fintech product, SmartCash PSB.
With these two heavyweights now firmly in the game, Nigeria is set to take some very significant steps in the mobile money market in the coming months and years.
We are still some distance behind continental top dogs, Kenya and Ghana, but with the sizable population advantage Nigeria has over those countries, we will be running them close in the next few years.
Having said that, it will be easy to close the gap between Kenya’s monstrous mobile money industry and to a lesser extent, Ghana.
Not only are they the biggest mobile money markets in Africa, but they are also among the largest in the world.
Kenya, through Safaricom’s M-Pesa, is a global leader in the mobile money game, while Ghana, with MTN, Vodafone and Airtel Tigo are not too far behind.
Like MTN said in their statement, mobile money will enable millions of unbanked Nigerians to access a wide range of financial services and products.
With mobile money, you don’t need a bank account. You don’t even need an internet connection. Making payments or transferring money via this means is similar to sending a simple SMS on your phone. This is why it is such a great payment system.
As we have seen from the Kenyan and Ghanaian examples, mobile money significantly improves financial inclusion in the country, enabling many more people, both in rural and urban communities, to make financial transactions.
A 2006 release from the Central Bank of Kenya revealed that only 27% of Kenyan adults had access to formal financial services. That figure has now shot up to over 80%, majorly due to M-Pesa.
That is the sort of impact mobile money can make.
With people able to make payments more easily, businesses will generally grow, and the economy will be better for that.
Many other sectors, from the power generation sector to the gambling industry, will also benefit from the imminent mobile money revolution in Nigeria.
In Kenya for example, gambling, especially sports betting, has become a huge revenue generator, thanks to the effect of M-Pesa. The story is not too dissimilar to Ghana.
At the moment, the most popular payment method on online betting sites in Nigeria is deposit via ATM cards, but do not be surprised if, in a few years’ time, mobile money platforms like MTN and Airtel take over.
Mobile money is still very much a foreign concept to many Nigerians, and it will take some time before the average citizen gets used to it. When that finally happens, Nigeria will take some stopping.