MTN opens up network to indigenous applications developers

Ben Uzor Jr

Indigenous developers of applications that run on smart phones will before long have an opportunity to tap into the multi-billion dollar applications development market. Mobile network operator, MTN has opened up its network platform to support locally developed applications. Bola Akingbade, chief marketing officer, MTN Nigeria, told Business Day at a forum on mobile application development that MTN was keen on becoming a frontline player in the application development space, adding that fast-growing portfolios of mobile apps would be fuelled essentially by an efficient developer ecosystem.

Also called mobile apps, it is a term used to describe Internet applications that run on smartphones and other mobile devices. Mobile applications usually help users by connecting them to Internet services more commonly accessed on desktop or notebook computers, or by making it easier to use the Internet on their portable devices. A mobile app may be a mobile web site book-marking utility, a mobile-based instant messaging client, G mail for mobile and many other applications. According to Akingbade, MTN would facilitate access to over 50 million mobile phone users in the country.

This, according to him would enable developers monetize their ideas. The telecoms company assured that with only 10 million subscribers spending incremental N50 per month on a developer’s app, every mobile application developer can become a billionaire in one year. The CMO further explained MTN’s focus would be to build a committed and vibrant community of local developers by providing a platform for ideas generation and more importantly assisting local developers monetize their skills. “Applications have emerged as a fundamental driver of enabling lifestyle and productivity as consumers want to access relevant content from PCs, laptops, mobile phones and even in-car systems.

“The increasing popularity of mobile applications (mobile apps) has driven a need for telecoms operators to start focusing on reducing the barriers to adoption.” Also, the firm has introduced ‘The MTN Ideas Forum’, a Networking and idea generation forum that enables MTN connect with the local applications developers community as well as other stakeholders in the value chain (Google, Nokia, Samsung, e.tc). Akingbade stressed that partnership was critical in the emerging ecosystem. This, he further added was because within the Telemedia value chain, no single entity can run alone.

Giving vivid insight into the some of the value proposition developer should expect from MTN, “We would give handsome monetary and non monetary reward to winners of the MTN Apps competition. We would certify qualified developers as MTN App developers and provide developers toolkits”, he further added. MTN disclosed that it is currently setting up an App store, and will provide visibility for local developers within the online distribution platform with access to 21 MTN markets. Research has indicated that there is a yearning for relevant local and international mobile applications.

According to industry watchers, apps create an exciting and elevating feeling of unconstrained sense of belongingness and being in touch with the world. Mobile handsets, according to them are getting smarter and more accessible because of increasing availability of ultra low cost smartphones with improved user interface. They also argue that data usage is growing tremendously thus bringing more Nigerians online via the mobile screen. However, there is very limited local mobile content in the country which according to industry analysts presents a massive opportunity.

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CBN, PTSP remove infrastructure bottleneck hindering cashless project

Ben Uzor Jr

Newly licensed Payment Terminal Service Providers (PTSPs) and the Central Bank of Nigeria (CBN) are working assiduously to mitigate the infrastructure bottlenecks that threaten the smooth take-off of government’s proposed ‘Cashless Nigeria Project’. This is even as the CBN steps us engagements sessions with stakeholders to create buy-in and ensure maximum public awareness. Firstly, PTSPs have disclosed plans to deploy 150, 000 Point of Sale (PoS) terminal in Nigeria by the end of 2012. This, they say would enable Nigerians conduct cashless transactions in the country and around the world.

In a clear indication of the CBN’s optimism about the prospects and advantages of moving the economy into cashless mode, the apex bank licensed six PTSPs with the singular mandate to deploy and manage PoS terminals in Nigeria. The six successful firms are ITEX, Paymaster, Etop, Citiserve, ValuCard and EasyFuel. CBN licensed only these firms, to enable the PTSPs build scale and maximise efficiency. These six firms, according to industry watchers are tested and trusted e-payment firms that provide e-business infrastructure with the objective of establishing and running a secure, reliable and scalable network.

Having shown strong pedigree in the e-business sector especially in the area of deploying and maintaining independent multiplication and functional PoS terminals network which accepts cards from all payment schemes in Nigeria, PTSPs have said that they are working closely with the financial regulator to ensure infrastructure challenges bordering on power, connectivity, and security are properly addressed. Ernest Nduje of ITEX, a PTSP confirmed that 150, 000 PoS terminal would be deployed by 2012, adding that 53, 000 PoS terminals would be deployed by the end of December 2011.

“The CBN’s cashless initiative is very commendable. Some of us have been in this business for over six years without the backing of the CBN. The fact that the CBN has come forward to back us is indeed positive. The cost of managing cash is expensive. Infact, direct cost of cash is estimated to reach N192 billion in 2012. In terms of connectivity issues, the networks need to be committed to this initiative. This is a national project and we expect them to come on board, give us their full commitment to ensure that this initiative is a success. We want them to guarantee 100 percent availability on the network.

“We have ordered terminals that have dual SIM card to ensure high availability. We have also tested the platform to ensure that it can handle the huge traffic expected. The cooperation from the banks is positive. In terms of negotiations and pricing, they have been very cooperative. The ‘Cashless Nigeria Project’ will open up a huge industry that will bring a lot of benefits to the nation. It will create employment opportunities for young Nigerians. We have already started hiring engineers, setting up support teams to handle the deployment and maintenance of these devices.

“We expect the government to create the enabling environment for this initiative to fly. We expect the government to provide tax holidays for PoS importation. In terms of timelines, by 15th of October 2011, the first batch of PoS will go live from NIBSS. We expect that 53, 000 PoS terminals will be deployed by the end of December 2011”, Nduje told BusinessDay. The Bankers Committee had earlier disclosed plans to deploy 40, 000 PoS by the end of December. At one of the engagement session in Lagos at the weekend, Tunde Lemo, deputy governor, operation, CBN said that the apex bank was closely with the Nigerian Communications Commission (NCC) to ensure that connectivity issues are addressed.

“For example, dedicated connectivity will be provided by MTN and Globacom for all point of sale traffic going forward. This should greatly increase the terminal uptime. Also, most terminals will be dual-SIM or roaming SIM, which will ensure fail over options and guarantee a higher uptime. Power issues are also being addressed with relevant stakeholders. For example, in recent manufacturer selection form, PoS terminals specifications were defined to take into account Nigeria's current power challenges. All PoS terminals will have a minimum battery life span of 24hours, while many will do 48 hours with no charge.

“They also come with backup batteries and car chargers as appropriate to address the power challenge”, Lemo added. Alluding to consumer reservations around card security, Lemo noted that the challenge has been addressed with the introduction of chip and pin cards. He said Chip and PIN card are more secure than the previous magnetic strip cards that were in use last year. “CBN is also working with the banks and NIBSS to put in place a comprehensive fraud monitoring tool, which will enable the industry to identify trends and be proactive in mitigating electronic fraud”, he concluded.

Highlighting the various drawbacks of a cash-based economy, Tayo Olajide, managing director, EasyFuel, one of the licensed PTSP firms noted that the huge cost of cash management, security risk, among others, make the proposed cashless economy an ideal one. He added that the CBN through the PTSP license has shown its intent to transform payment system in the country. The apex bank also recently reversed its directive on off-site ATMs and mandated banks to deploy 75,000 ATMs before 2015. This, according to industry analysts is an attempt to encourage the adoption of electronic channels.

Plan for cashless economy troubled

Ben Uzor Jr

Government’s desire to move the nation into a cashless mode is being threatened by the absence of requisite infrastructure for the efficient deployment and adoption of electronic payment and commerce in Nigeria, analysts have said. Industry analysts told Business Day that Nigeria’s low point of sale terminal (PoS) density and poor last mile connectivity constitute significant drawbacks to the success of the Central Bank of Nigeria’s (CBN) ‘Cashless Nigeria’ project which is scheduled to go live by June 2012. Besides, Business Day investigations reveal that there are only about 3,000 functioning PoS terminals in the country out of the existing 13,000.

Spain, for instance has 1.6 million active PoS terminals with a population of 14 million people, while India which has deployed about 500, 000 PoS terminals, conducts 360 million transactions per annum. With electronic commerce increasingly driving economic growth in developing economies, government’s priority should be the infrastructure that citizens need to make online payments, analysts have argued. The financial regulator and banks are upbeat about the prospects and benefits of moving the economy into cashless mode. Only recently, the CBN licensed five independent Payment Terminal Service (PTS) providers with the singular mandate to deploy and manage PoS terminals in Nigeria.

The five successful companies are Paymaster, Etop, Citiserve, ValuCard and ITEX. CBN licensed only these companies, to enable the PTSPs build scale and maximise efficiency. Industry analysts say that the five firms are tested and trusted e-payment companies that provide e-business infrastructure with the objective of establishing and running a secure, reliable and scalable network. Some of the licensed firms, analyst say, have shown strong pedigree in the e-business sector in the deployment and maintenance of independent multiplication and functional Point-of-Service terminals network, which accepts cards from all payment schemes in Nigeria, by connecting directly to relevant electronic transaction switching and processing companies.

In addition, the apex bank also recently reversed its directive on off-site ATMs and mandated banks to deploy 75,000 ATMs before 2015. This, according to analysts is an attempt to encourage the adoption of electronic channels. “The CBN’s cashless economy drive cannot be ready now. It is very easy for the CBN to make an announcement, but it really depends on the political will to make this a reality. At the moment, we are not ready for this transition, infrastructure-wise. Government needs to take pro-active measures and actions to ensure that the requisite infrastructure needed for the ‘Cashless Nigeria project to thrive is on-ground. As you know, there is this haphazard motion of government in taking decisions that border on the socio-economic development of the country.

“I hope the new minster is taking stock of these issues and I hope her voice will be heard”, Emmanuel Amos, managing director/ chief executive officer of Programmos, an indigenous software company told Business in an interview at the weekend. Usen Udoh, senior director, high technology, Accenture told Business Day in an interview that the dearth of infrastructure is hindering the growth of e-commerce in the country. “For instance, we do not have the last mile connection to take advantage of the internet to grow e-commerce and e-payments in Nigeria . “Yes, we have the submarine cables (MainOne, Glo-1 and SAT-3 cables) providing huge bandwidth capacity but the last connection is still a very pertinent issue in the country. Telecommunications companies like MTN, Globacom, and Multilinks are investing in last mile connection but they are doing it at a very slow pace and they are not sharing.”

Lanre Ajayi, past president, Nigerian Internet Group (NIG) said “Infrastructure- wise, we are not there yet but it is a work in progress. The objective of CBN’s cashless Nigeria project is to promote the use of electronic channels as opposed to cash. This project is feasible in my opinion. I do not think infrastructure is the most important problem. I think awareness is something the government needs to address, to drive the adoption of electronic channels. Take for instance; PoS terminals use GPRS for transactions to take place. Almost all parts of the country are covered by GPRS. Yes, we still have a very low PoS density but it something that is surmountable, considering the resolve of financial institutions to deploy 40, 000 PoS terminals in Lagos by December.”

“The vision of the CBN over the next two to three years is that Nigeria has 500, 000 PoS terminals. Are banks ready for the move? Yes, they are. Do banks have the expertise to deploy PoS terminals? That is subjective. Another challenge is the prohibitive cost of deploying PoS. It is very expensive because people buy, based on silos. “The industry is looking at it from a shared service perspective, which would ensure that the cost goes down”, Luqman Balogun, divisional head, e-Banking, UBA told BusinessDay. Juliet Anammah, director, real sector, Accenture Nigeria, confirmed that 3, 000 PoS were operational, adding that connectivity issues resulting in frequent downtime in communications, merchant apathy, and lack of awareness, were some of the factors responsible for Nigeria’s low PoS density.

She said that the CBN was working with telecoms firms to ensure 95 percent bandwidth availability to boost user confidence in the systems. “As you know, the PoS transaction doesn’t actually carry much capacity. Maximum is 4 kilobytes, so it is just a question of ensuring that there is bandwidth for that and CBN has said that they are working with telecoms providers to ensure 95 per cent availability and to develop that further, until they have 100 per cent availability”, Anammah posited. Balogun believes that another challenge is the prohibitive cost of deploying PoS. “It is very expensive because people buy based on silos. The industry is looking at it from a shared service perspective, which would ensure that the cost goes down. “We are partnering with the telcos to ensure connectivity is addressed.

As an industry, we are working to improve customer education and awareness. From a CBN perspective, we are looking at making the cost of processing ATM more than using the PoS. When you combine all these factors together, what we would see is an aggressive growth of PoS usage.”

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