The slow take-off of mobile money in Nigeria amid scarce licence could cost Africa’s largest economy some of the much-needed foreign direct investment, as investors eyeing the industry could settle for Ghana and Kenya with more developed regulatory policies. Crypto.com, a global cryptocurrency exchange company, and investors in Sweden, disclosed their interest in Africa’s mobile money industry at the Fintech Week London on Monday.
“We, for example, are trying to set up partnerships with telecom companies in Africa so that people can have access to financial services and be able to transact using mobile money,” Mariana Gospodinova, general manager, Europe, Crypto.com. According to Gospodinova, telecoms have been providing financial services in sub-Saharan regions of Africa and have expanded to some extent, West Africa. “Mobile money is becoming more popular in those regions than opening bank accounts,” Gospodinova said at the Fintech Week in London.
Largely driven by mobile technology, Kenya’s financial inclusion expanded from a low base of 26.7 percent a decade ago to 83 percent in 2020. The East African country is one of the world’s leaders in mobile money services. Telecom’s operator, Safaricom, pioneered its M-Pesa service 12 years ago to cater for Kenyans without access to the formal banking network.
While Nigeria went late to the party as the Central Bank of Nigeria (CBN) only gave an official nod to telecoms and other non-financial companies to offer financial services in 2018, its slow licensing pace and scarce permits have delayed the industry’s take-off. The industry regulator gave its first set of licences to three players in August 2020, two years after it received applications. Even so, the country’s largest mobile operators, MTN and Airtel, are yet to receive the licence, more than three years after they applied to help deepen access to financial services in a country where almost 40 million adults do not have a bank account. “I think it is really interesting what telecom providers have done with mobile money accounts in a lot of emerging countries in sub-Saharan Africa in particular. I think to some extent it is now an already aged technology, but, interestingly, the telecoms have disrupted some banks in some of the regions,” Zeiad Idris, co-founder/CEO, Algbra, said at the Fintech Week London.
According to Idris, “We have a lot to look forward to in terms of where things are going. It is also important that whether it is from a regulator perspective or from a technology perspective that we understand that we are serving people and people have needs.”
Financial inclusion means that people have access to basic financial services like a savings account, credit and insurance. A higher exclusion rate in Nigeria could lead to a poorer population, as lack of access to credit and insurance puts them at an economic disadvantage. “From a regulatory perspective, one basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank mobile money providers, such as Mobile Network Operators (MNOs),” London-based Group Special Mobile Association (GSMA) said.