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Mobile money next big thing for cash-less, financial inclusion

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IMAGE: Dipo Fatokun, CBN director of payment systems »


As Nigeria’s cash-less policy gains momentum across the states of the federation, another big thing that would bring additional transformation is the globally evolving mobile payment platform. This is so considering the fact that Nigeria has hit over120 million mobile telephone mark, making penetration easier.

Mobile payment, also referred to as mobile money, mobile money transfer, and mobile wallet, refers to payment services operated under financial regulation and performed from or via a mobile device.

Mobile money entails the use of mobile phones as a banking tool both for the banked and the unbanked. With the mobile phone, people can open accounts, transfer funds, pay bills, purchase goods and services, etc.

This means that rather than paying with cash, cheque, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods.

Today, mobile payment is being adopted all over the world in different ways. Reports indicate that in 2008, the combined market for all types of mobile payments was projected to reach more than $600 billion globally by 2013, which would be double the figure as of February 2011.

Under this platform, mobile network operators engage with each other, the banks, financial institutions regulators, governments and ecosystem partners to identify and implement solutions that will successfully allow more mobile financial services to be delivered to a broader range of people.

Today, in Nigeria, mobile money transactions are valued up to N819 million monthly, while 23 mobile money operators have already secured licences.

Apart from mobile payments, volume of transactions on about 15,000 Automated Teller Machines (ATMs) spread across the country has now hit N1.7 trillion, according to CBN figures.

Nigeria has increased its ATM machines from 10,727 in 2012 to 15,000 by June 2014, with the transaction volume up from N1.3 trillion to N1.7 trillion within the same period.

CBN latest figures indicate that the number of Point of Sales (PoS) terminals, which was mere 21,400 in 2012, grew to 135,000 at as June 2014. The transaction volume increased from N57.3 billion in 2012 to N138 billion by June this year. There have also been increases in the volume of transactions through other electronic transfer channels.

Besides these achievements, another boost came to the cash-less policy last week as Globacom led four financial institutions, including FirstMonie (a subsidiary of First Bank of Nigeria), Ecobank, StanbicIBTC and Zenith Bank, to launch mobile money initiative tagged ‘Glo Exchange’.

Dipo Fatokun, CBN director of payment systems, said the mobile platform would be critical to the success of the policy as it allows for quick spread, with Nigeria having over 120 million subscribers.

Fatokun said telecommunications operators would be critical to complement CBN efforts, as he affirmed mobile money as the next thing expected to transform the apex bank’s cash-less policy.

“The apex bank believes that such initiative like this will aid both telecommunications and banking industries to further serve Nigerians better,” Fatokun noted.

Mobile money as a major focus for financial inclusion

In developing countries, mobile payment solutions have been deployed as a means of extending financial services to the community known as the “unbanked” or “underbanked,” which is estimated to be as much as 50 percent of the world’s adult population, according to Financial Access’ 2009 Report “Half the World is Unbanked”.

It is estimated that 2.5 billion people in lower to middle income countries lack access to financial services and cannot adequately invest in their livelihoods, protect their assets nor mitigate shocks that cause them to fall deeper into poverty.

It is also estimated that 1.7 billion of these people have a mobile phone, providing existing infrastructure that can be used to sustainably offer financial services such as payments, transfers, insurance, savings, credit and cross-border remittances.

Sub-Saharan Africa (SSA) is widely recognised as a pioneering market for mobile money and is home to 52 per cent of all live mobile money deployments worldwide.

In Nigeria, there are over 100 million mobile lines available to serve customers while there are less than 6,000 bank branches, 15, 000 ATMs, and 135, 000 POS terminals and less than 20 million bank accounts.

The mobile phone is the most ubiquitous and cheapest electronic channel today and therefore becomes the easiest route to the financial inclusion of the unbanked segment of the economy.

Studies show that the mobile money industry grows and the number of subscribers increases, mobile money is having a greater impact on financial inclusion. Reports indicate that as of June 2013 at least nine countries (Cameroon, the Democratic Republic of Congo, Gabon, Kenya, Madagascar, Tanzania, Uganda, Zambia, and Zimbabwe) had more mobile money accounts than bank accounts, compared to just four countries in 2012.

“We have seen the significant benefits of mobile financial inclusion in the developing world and operators recognise that, through collaboration, there are opportunities to extend this inclusion even further,” said Anne Bouverot, Director General, GSMA.

Fatokun, while appreciating Globacom for initiating the move tagged ‘Glo Exchange’, noted that the initiative is significant to the apex bank plan to deploy telecommunications platforms and bring more Nigerians to the financial inclusion cycle.

According to him, over 46 per cent of Nigerian adults have no access to financial services, a situation the CBN is working to correct through a well formed national financial system. “Today’s launch between Globacom and four financial institutions will drive the policy and ensure people use electronic means to transact businesses across boundaries.”

Kamal Shonibare, Head of Glo, Prepaid Services, said the government, through the CBN, canvassed cash-less revolution through relationship between banks and the telecommunications operators.

Shonibare, assured that telecommunications operators would create platforms that would drive and make the process a success.
In his contribution, Ayo Teriba, the Chief Executive Officer of Economic Associate, said though mobile money had been on for years, the new fusion between Globacom and the four banks would jumpstart and expose the hidden benefits in the scheme and create more job opportunities for the army of unemployed Nigerians.

“This will allow for more synergies between telecoms operators and banks, creating more rooms to do business”, he stated.

For Bismarck Rewane, Managing Director, Financial Derivatives, the objective of the initiative is to develop and sustain an efficient payment system that would drive an increase in the velocity of money.

Rewane raised hope of a possible explosion of financial services to both phone and financial services users.

But despite the apparent gains and optimism that holds on Nigeria’s full deployment of the mobile money platform, there are also threatening challenges to its success.

For instance, the envisaged attitudinal changes expected from the public removes people from their comfort zone. This discomfort and the lack of clarity/understanding had hampered adoption and fueled conspiracy theories amongst our stake holding.

Despite series of awareness campaign that have gone into understanding of cash policy amongst the banked & unbanked, there is still resistance due to prevailing cash culture, Techno-fobia, Illiteracy, among others.

Another huge challenge is the high level of poverty in the country since people cannot spend what they do not have.

There is also Infrastructure Lag and distrust in banking system.

But the CBN, continues to assure that it is taking some major steps in addressing these obvious hitches, including intense awareness, Grass-root mobilization and sensitization at various markets.

Besides, discussion was entered into with NIGCOMSAT with the view to exploring other alternatives to the available GPRS technology being used for the deployment of POS’s.

A tripartite MoU was also drafted for NIGCOMSAT, CBN & NIBSS for the provision of Wi-Fi hotspots, as well as Deposit Money Banks deployment to focus on Wi-Fi & CDMA compliant devices.

Experts, however believe that the Implementation of the policy across the nation would entail significant collaboration and amongst key stakeholders.

According to Anne Bouverot, Director General, GSMA, “Mobile money is a young industry, with over 80 per cent of all deployments launched during or after 2010.

“In order to accelerate the growth of mobile money, we call on telecommunications, financial sector regulators and policymakers to provide a policy and fiscal environment that enables these services to be rolled out successfully to promote a nascent and important driver of commerce and socio-economic development,” Bouverot advocated.

Article Credit: Businessdayonline

Updated 5 Years ago

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