With the commencement of the Central Bank of Nigeria’s (CBN) cashless project, Nigeria is set to become a dominant player in Africa’s emerging mobile payments market, analysts have said.
According to the industry analysts, about 20 million Nigerians are expected to be embraced into the formal banking system via mobile money over the next three years. In November, the United Nations Conference on Trade and Development (UNCTAD) had disclosed that 40 million mobile money users currently exist in Africa.
Research firm, Ovum expects this figure to rise to 1.2 billion by 2015. Nigeria, according to analysts, is expected to drive this growth going forward. Kenya is currently the dominant player in Africa’s mobile payment markets with over 20 million subscribers. As at January 2012, Uganda’s mobile money market has expanded to an estimated 1.5 million users between three providers. According to new data from World Wide Worx, 37 percent of South Africa’s cell phone users also use mobile banking services.
Analysts say that with only 25 million bank accounts out of the 167 million population and about 90 million mobile phone subscribers, there exists a huge opportunity for Nigeria to dominate Africa’s mobile payment landscape. Industry analysts argue that given these statistics, there is a margin of between 20 million and 35 million unbanked mobile phone subscribers. They further say that if only ten percent of unbanked mobile phone users subscribe to mobile banking, the scheme would rake in between two million and six million Nigerians into the formal banking system in the first year.
Furthermore, if up to 15 percent subscribe, then the figure would be between 3.5 million and 10.5 million Nigerians embraced into the formal banking system. Sullivan Akala, director, business development, E-transact told Business Day in an interview that Nigeria has the potential to become the largest mobile payment market in Africa. “Yes, Nigeria can dominate Africa’s mobile payment market like it has done with telecommunications. Mobile payment will help CBN achieve its objective of moving Nigeria into a cashless mode faster than any other electronic channel. The world is going mobile.
“It is the technology trend all over the world. Mobile phones are convenient, it is something you can use at any point and anywhere. Other electronic channels don’t have this advantage. For ATMs and PoS, you will have to leave your homes and offices to perform a transaction. For web, you will need an internet connection. The fastest way to promote financial inclusion will be through the mobile phone. Since the inception of banking in Nigeria, banks have only 25 million accounts. But in ten years after successful liberalisation and deregulation of the telecoms sector, we have over 80 million mobile phone subscribers. Mobile money can address that gap by providing basic banking services to the unbanked.
“The mobile phone will now become a virtual account. The adoption rate will be faster than any other electronic channel”.
Emmanuel Okogwale, principal consultant, Mobile Money Africa told Business Day recently that the mobile payment market looks interesting and “will thrive to become the largest market in Africa, depending on the collaborative efforts of all stakeholders. I see strong internal migration driving mobile remittances, strong compelling services like agency banking for the underserved communities.
“Depending on the numbers of final licensees in Nigeria, the market looks promising for potential players. Stakeholders should endeavor to build a shared agent network to serve all the stakeholders. Since agency is the heart of mobile financial services and the agents do not sell primary products of the licensee, unlike in mobile network operator- driven ecosystem. There is a need to source, develop, train and deploy agents on a shared basis”, he added. Industry analysts are generally agreed that the growth and development of mobile payments especially in rural communities, is largely dependent on a solid agent network.”
Industry analysts have expressed their dissatisfaction on the low level of public awareness of Nigeria’s mobile payments scheme can affect inclusion rates. According to them, too much attention has been placed on Point of Sale (PoS) transactions in the CBN’s ‘Cashless Nigeria’ enlightenment programme, at the expense of mobile money, which according to numerous international forecasts, should become a booming industry in no distant time, dramatically changing the face of communications and financial services, by providing a whole new and exciting experience to Nigerians.
Mobile payment, according to them is a fast convenient and affordable way to send money across the country and pay for goods and services, using a mobile phone. In the last three months, the emerging industry has already witnessed the launch of innovative mobile money services from GTBank (in strategic partnership with MTN and Fortis), United Bank for Africa, Stanbic IBTC, Pagatech, E-transact. Besides, the likes of M-Kudi, Monetise, Paycom, and Eartholeum are yet to find their feet. Francis Efe, a mobile payment enthusiast believes that not all licensed mobile money operators will survive. He says: “Some will fall by the way side due to poor financing and issues revolving around technology.”