Traction in mobile payments still low, experts

Bill Okonedo & Ben Uzor Jr

Industry experts say mobile money service is still struggling to get a footing in Nigeria even with its huge potentials. Mobile money operators and banks have failed to clearly define the benefits customers can derive from using the service, according to speakers at Mobile Money Roundtable 2012. The Lagos event, organised by BusinessDay Media, focused on “Mobile technology and the future of the cashless initiative in Nigeria. Nigeria’s mobile payment market is valued at $7.2 billion (N1.12 trillion) according to Accenture; however the pervasiveness of poor infrastructure is hindering its take-off.  Participants at the conference agreed that the major challenge faced by the mobile payment system in Nigeria, include poor infrastructure, inadequate remuneration for agents, and a value proposition for consumers.

Henrietta Bankole-Olusina, head of mobility for Accenture Nigeria said at the conference that mobile money operators have been unsuccessful in the area of showing Nigerians the value of using the service. "We can invest in infrastructure all we want but if we don't have the right business models, we will not achieve desirable results," she said. An effective business model and a clear customer value proposition is what this sector requires to stimulate growth. We have a myriad of operators offering the same standard of products. Nobody is telling the consumer about what values they can derive from using the service."  Only four out of the 20 licensed mobile money operator are interoperable as the industry is currently fragmented with disparate mobile payment systems that don't talk to one another, she said.

“Traction in mobile payment in Nigeria remains very low. Interoperability is a serious issue. The likelihood of growth is clearly reduced”, she added.  The potential in the mobile money market is huge, but it is a capital-intensive, thin margin business, said Chuma Ezirim, head of e-banking at FirstBank Plc.  “There is need to manage the expectations of some stakeholders especially on the viability of the Mobile payment deployment. The growth period might be longer than expected because of the complexity of the ecosystem. The industry needs strategic ‘partners’ to develop an ecosystem that would provide the needed incremental value to all parties”, he noted. The value of mobile payment transactions is N27 billion, a significant increase of just N200 million last year, according to CBN.

Keleonu Chimene Eme, deputy lead, Cashless Nigeria Project, CBN said mobile money is expected to play a critical role in the attainment of the apex bank's financial inclusion strategy. There were 14 mobile money operators licensed in August 2011 recorded 161,786 transactions valued at N2.41 billion in June 2012. But issues revolving around faulty business models, low customer awareness, interoperability, poor agent network as well as technology constraints have conspired to slow down the growth of the service. Other industry stakeholders in attendance lamented that low adoption of mobile money could hinder the fulfillment of the apex bank's 2020 target of increasing the formal use of electronic transactions to 70 percent -- up from the current level of 36 percent of the adult population. 

For Deji Oguntonade of GTBank Plc, if financial inclusion is important to government then it needs to provide necessary incentives geared towards ensuring that the scheme takes-off. “Success can still be achieved if key stakeholders abide, respect and support the laid down rules governing mobile money. Also, government in its own capacity should subsidise and actively stimulate growth in this direction”. He said mobile money is a veritable tool to provide low-cost financial services, especially to the unbanked.  Kamar Abass, country manager, Ericsson Nigeria said that there is insufficient capacity on telecoms networks to deliver efficient payment services. "We are moving away from SMS based mobile payment transactions to application based transactions", he said. "We stand the risk of running fast as it relates to the adoption of the service that the existing infrastructure on ground can not cope with.”