Image

Many western companies are aware of the growing mobile money market in Africa and are watching with great interest, some actively participating in this growing industry, to the success and failures of different business models in different regions and countries.  They are also paying close attention to the different players; governments, financial institutions, and telecommunication providers, in regards to regulation or lack of regulation within the mobile money industry.  MMIT operates in the mobile money space out of Nigeria and West Africa so we feel that we are in a position of knowledge and expertise to talk on this matter in a concrete way, and also in a way that can hopefully add value and substance to the mobile money industry as it grows and matures.

Nigeria is home to 170 million individuals living in a country the size of Texas.  70% of that 170 million are unbanked, which means they either do not have access to formal banking institutions and services or are not taking part of the formal banking institutions and services. Nigeria has been labeled the financial hub of the African continent and many are watching this market to see if Nigeria is able to mimic and evolve the mobile money space in West Africa and eventually all of Sub-Saharan Africa.  The Central Bank of Nigeria (CBN) is pushing for a cashless society in Nigeria which will limit the amount of cash being carried around the country. CBN is also currently licensing out mobile money licenses that will allow financial institutions and non-financial institutions (telecommunication providers and mobile money providers) to capture the unbanked populace in Nigeria.  This regulation of the mobile money sphere by CBN is seen as a blessing and also a curse.  For the people of Nigeria mobile money allows them to bank with ease and make transactional payments without restrictions regardless of their location to a banking outlet, the time factor of when the bank opens and closes, and they can perform transactions at any time of the day. The negative for the populace is the lack of agent networks (small kiosks in rural and heavily populated areas) to cater to the areas that banks are not located in. The consumer needs to be able to cash-in his or her physical money to virtual money and if there aren’t enough agent networks it defeats the whole purpose of mobile money and a cashless society.

Image

To counter this concern CBN has been pressing the financial institutions to increase their agent network to meet the needs and demands of the unbanked population and to decrease the use of cash as a payment option.  CBN also has been playing more of a role in the creation of the structure for the laws and regulations of the mobile money sphere to make sure it has some control over the industry.  The Central Bank fears that if it does not get involved it will not have an influence on the financial structure in Nigeria.  This has been a key issue in Kenya where the telecom company Safaricom has been able to build the M-Pesa platform and develop a monopoly on the mobile money industry and the financial banking industry of that country. CBN wants to avoid this and also apply a structure that will help the consumer but at the same time reduce cash that is circulating in the country.  Progress has been slow and to the naked eye it might seem as though CBN isn’t doing much.  You have to keep in mind that the mobile money industry is still in its infancy and government regulation is a new development for an industry that has seen little to no regulation since its birth.  MMIT believes that before the year is over you will see a significant change in the regulation and penetration of the mobile money industry led by CBN.

3c3b8ad

Anthony Bushu is a Business Strategy, Marketing and Communication Consultant for MMIT a mobile software developer in Lagos, Nigeria.  Anthony has diverse experience in the mobile and telecommunications industries and has worked for telecommunication companies in the US, UK, and Africa.  Anthony can be reached on Twitter@anthonybushu or by email at Anthony.b@mmitonline.com.

Advertisements