Dormant mobile money operators slow cashless project

Ben Uzor Jr

The inability of some licensed mobile money operators to roll out financial services after acquiring licenses a year ago is slowing down the Central Bank of Nigeria’s (CBN) ‘Cashless Nigeria Project’ aimed at reducing the amount of physical cash circulating in the economy, and encouraging more electronic-based transactions. In line with its cashless policy, the apex bank had licensed 16 mobile money operators to provide financial services and assist in bridging the divide between the banked and unbanked segments of the population but a large number of them are yet to find their feet in the industry. According to market watchers who spoke with Business Day, issues revolving around access to requisite funding and technology constraints have conspired to hinder the take-off of these mobile money operators.

Out of the licensed 16 mobile money operators, BusinessDay learnt that, GTBank (in strategic partnership with MTN and Fortis), United Bank for Africa (UBA), Stanbic IBTC, Pagatech and E-transact Plc have resumed operations. Among those yet to roll out financial services are M-Kudi, Monetise, Paycom, Eartholeum, Moneybox, Parkway Projects , Chams and FETS. Analysts have expressed reservations about this worrisome situation, lamenting that it could hinder the fulfillment of the CBN’s 2020 target of  increasing the formal use of electronic transactions to 70 percent; from the current level of 36 percent of the adult population. With over 60 percent of the population having access to mobile phones, analysts argue that mobile money is a veritable tool to provide low-cost financial services, especially to the unbanked.

Despite the huge investments already channeled into the mobile money ecosystem by mobile money operators, poor awareness, according to industry analysts have slowed down penetration rate. Francis Efe, an m-payment enthusiast argues that the current situation was expected, even before they were granted licences, observing that not all licensed mobile money operators would survive. “Some of these mobile money operators will fall by the way side due to issues revolving around access to financing, technology, poor agency and distribution networks”, Efe said. Although there are some mobile money licensees who are rolling out innovative financial services and building agent networks, the process is rather slow.

Analysts at FBN Capital disclosed recently that mobile payment was still at a low level in Nigeria. According to the Nigerian Communications Commission (NCC), the number of active telecoms lines expanded by 12.5 percent year-on-year in May to 101.8 million. The value of electronic payment, according to industry analysts at FBN Capital reached N1.67 trillion in 2001, a 56 percent increase on the previous year. But more importantly, transactions on Automated Teller Machines (ATMs) accounted for N1.56 trillion of the total, and mobile payment was just N21 billion as against N7 billion in 2010. In January this year, the CBN disclosed that activities had since increased within the mobile money ecosystem and operators have recorded 35,971 transactions.

Chidi Umeano, head, shared services, CBN said the value of the 35,971 transactions was N227.92 million. “Sixteen mobile payment operators licensed in August 2011 recorded 35,971 transactions valued at N227.92m ($1.4m) in January 2012.” Sola Bickersteth, director, One Network, a mobile money industry development platform, strongly believes that the figure is an insignificant fraction of the huge sum of money that can be generated by mobile money operators if all the teething issues in the burgeoning industry are surmounted.