MfBs, mobile money as vehicles for financial inclusion

By Amaka Abayomi, Vanguard

Across the developed world, access to financial services is largely at ones' fingertips; there is an abundance of cash and credit on demand, from multiple channels, any locations, and 24 hours a day. But, this story is very different in the developing countries like Nigeria is still high as findings have shown that the number of households without access to financial services in Nigeria remains high.

Financial inclusion, which is the delivery of financial services at affordable costs low income segments of society, has been identified as a plank to lift a large fraction of the unbanked population in countries across the world, especially Nigeria, out of poverty and hunger and bring them into the financial system.

The introduction of cashless policy and mobile money, financial experts say, would better enhance financial inclusion in Nigeria as over 90 million mobile phone users would have access to financial services.

This is because mobile money is designed to meet the needs of the unbanked without a formal bank account with a microfinance or commercial bank. The money on your mobile account is kept in a bank and managed on your behalf by the scheme operator.

One does not need to register with any licensed operator before one can conduct any financial transaction. All that is needed is to have the sender's details and authorization code to withdraw the funds at any licenced mobile money agent location. However, it will be more cost effective for the sender if you register as a mobile money subscriber in case you keep receiving mobile money transfers.

Buoyed by this, the Central Bank of Nigeria (CBN) recently issued operating licenses to 12 mobile firms. The firms include: Fortis Money, UBA/Afripay, GTBank Mobile Money, Pagatech, eTranzact, Monetise, Eartholeum, Paycom, FET, Ecobank and Kudi.

According to the Head, Business Development, Fortis Mobile Money, Mr. Kunle Ogunmola, due to the wide reach of MfBs, Fortis Mobile Money is partnering with MfBs for the cashless policy to be effective and achieve its objectives,

"Mobile money is using a mobile phone as a means of authentication to conduct basic financial services like savings, remittance, payments, access to cash and other allied financial services in a convenient and secure manner from the comfort of their mobile phones, 24/7.

"It would allow people with mobile phones conduct seamless financial transactions. Your money is stored in a real bank account and not your phone, and it takes away the stress of queuing up at the banks or going to look for an ATM machine."

For the Chairman, National Association of Microfinance Banks, Lagos State chapter (NAMBLAG), Mr. Olufemi Babajide, by partnering with one of the licenced mobile money operators, the state chapter would play the role of an aggregator which automatically makes all MfBs in Lagos agents.

According to the Central Bank of Nigeria, some of the benefits accruable to the Nigerian economy from the adoption of the mobile money technology include: reduced cost of handling cash, cost of funds, improved national planning, financial inclusion, understanding of the country's true Gross Domestic Product (GDP) by the CBN, avoiding sub-charges from banks by customers, reduction in robbery incidences, as well as enhanced economic activities.

Mobile money technology would integrate Nigeria's huge informal economy, which is driven by unbanked small scale farmers, traders, craftsmen and other types of small and medium sized businesses, into the formal economy. This is because the lower transaction costs, convenience and the secure nature of the mobile money platform would strongly appeal to these segments of the society.

On the long term, mobile money will bring about transparency, improved remittances and economic activities across various sectors of the economy, both in urban and rural areas. Therefore, it is imperative for the regulators, licensed operators and other stakeholders to work together to achieve its objectives.

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