• Sanusi Lamido, CBN Governor
The granting of licences to 11 mobile money operators last year by the Central Bank of Nigeria (CBN); the offer of operational platform by telecom companies and the eventual commencement of business by the operators all but point to the impending payment system revolution and the consequent evolution of e-commerce in Nigeria.
These spring directly from the objective of the Mobile Money Service (MMS) as spelt out by the Central Bank of Nigeria(CBN) . According to the apex bank, MMS is to promote savings as well as enable people carry out financial transactions, including sending and receiving monies from phone. It also enables subscriber to buy airtime both for self and others, pay bills, pay for goods and services in shops and on the internet.
In other words, your handset has become your wallet; your cash-in-transit. Carrying wallet about will soon be rendered obsolete like a fad waiting to fade out fast.
To drive home this point, Ayotunde Kuponiyi, Globacom's Director of Telebanking, described mobile money as bringing banking directly to the hands of Nigerians. Also the acceptability of this channel is expected to strike Nigeria off the list of nations with low financial inclusion.
Presently, the nation occupies the unenviable position of number one country in Africa with largest number of people with no access to financial services. According to data compiled by MIX(an acronym for Microfinance Information Exchange)last year, Nigeria and the Democratic Republic of Congo were found to have the largest gaps between populations living in poverty and those with access to financial services – 80 million in Nigeria and 48 million in the Congo.
It is against this backdrop that Mr. Tunde Lemo, the CBN's Deputy Governor in charge of Operations, said that 'the application of mobile technology for financial services, especially in the rural areas, will ensure that a large percentage of the population outside the formal banking system would have access to financial services using one of the three models of card-based, account-based and virtual account.'
The report had stated that Cape Verde and Kenya are the only markets in which the number of accounts exceed the population living below the national poverty line. Giving insight into how this came about, MIX states: 'For Kenya, this is in part due to the outreach of mobile banking, which has only recently been linked with savings or credit services. While the number of mobile banking projects remains small, their reach is broad and this sector covers more than 18 million people. 12.6 million of these are reached through Safaricom's M-Pesa product, with another five million via Vodacom and MTN products..'
Kenya experience
Just a year after the roll-out of mobile money in Kenya, financial inclusion- people holding bank accounts-increased by about six per cent while millions of jobs were added through the mobile money transfer services. And within three years, three phone operators running the service had enrolled over 9.5 million customers and recruited over 27,000 agents.
Benefits
The benefits of MMS are said to be legion. Apart from financial inclusion, they include jobs creation, financial empowerment; increase in the income of rural dwellers, absence of CoT(Cost of Transaction).In fact, by bypassing banks and other financial institutions that charge fees on money transfers and the truncation or voiding of the long distances usually traveled to deliver money, the system could save money that would be channeled to other ventures. Other benefits include its ability to raise the tempo of business activities and move cash on to the hands of people who can use it quickly,cheaply and efficiently.
How Mobile Money works
Mobile money operator would provide basic mobile financial services such as fund transfer, deposit and withdrawal from the bank account, which can be done at an agent location in the community. Before a customer can access these services, such a customer must have opened a mobile account. Once that account is opened, it becomes your wallet.
Demonstrating how the mobile money works, Mr Paul Lawal, the immediate past CEO of Nigeria Inter-Bank Settlement System (NIBSS), said that all the mobile payment companies in the country are linked to the central switch which is already linked to every bank and network.
Then how does a phone subscriber apply it? 'We have the NIBSS instant payment', he explains, 'with this, you can instruct your bank even at the point of purchase that you would want to move money to a beneficiary on your mobile phone. And the beneficiary will receive the money in less than 10 seconds. And the sender will be informed through his own mobile phone that the money has been paid to the beneficiary. For the NIBSS instant, the key thing is that that customer must make himself available in the payment platform of the bank.'
Challenges
As plausible as this new initiative is, experts, have, however, warned that all that glisters is not gold. According to them there are many challenges that should be surmounted before the promoters of mobile money could shout Eureka! The challenges range from agency network to poor quality of telecom service. The rest are cash float problems, insecurity,money laundering and poor customer service and complaint handling.
Speaking to a national daily recently, the Principal Associate, Mobile Money Africa, Mr. Emmanuel Okoegwale, said operators require over 10,000 agents nationwide for their services to be widely spread across the nation.
Although some of the operators have vowed to recruit the mandatory number of agents within a year, but investigation shows that the agency network is grossly inadequate with less than 1,000 verifiable agency points in the country.
But if the MMS operators can go ahead to match their words with action, the shortage of agents nationwide may soon be a thing of the past .For instance, the Managing Director/CEO of eTransact International Limited, Mr. Valentine Obi, while unveiling a mobile payment service known as 'PocketMoni' recently in Lagos, said the company had concluded arrangements to deploy 50,000 agents network across the country within the next 12 months.
Also, Fortis Mobile Money has targeted to achieve the number before the end of this year. According to its Managing Director/CEO,Mr Henry Nwawuba, the company would deploy 10,000 agents across the country in one year. 'Having launched our service in Lagos, we would rapidly take off in other cities and states across Nigeria. , That is because without the agent network, mobile money will not work.
In Lagos, we have about 420 agents.In Abuja, we have about 1,000, while in PortHarcourt, we have activated 200 agents,' he added. The Managing Director, Technocrat Consult and IT Systems Limited, Mr. Femi Ayo-Yusuf, at a public forum on 'Mobile Money: The New Ecosystem', organised by ITWorld International Magazine in Lagos last year, said cash float problems for both agents and customers, especially in the rural areas, was a challenge ahead of the mobile money operations in the country.
Incidentally, the rural areas are a major focus of the mobile money system because a larger part of the unbanked population lives there. The Nigerian Communications Commission(NCC) seems to keep its eye on the challenges posed by cell phone banking in the country. According to its Executive Vice-Chairman, Dr. Eugene Juwah, the use of mobile phones for transactions comes with some attendant concerns which the NCC has identified.
He said the NCC placed high premium on quality of service; adding that key performance indicators and service level agreement would be established to guide the implementation of the mobile market,adding that this is essential, particularly, as it is enshrined that operators must perform at optimum level for every mobile transaction. The NCC boss stated that those who are going to be licensed or those who are already licensed by the CBN would need to get interconnectivity licences from the NCC.
Juwah, who spoke through Mrs Lolia Emmakpore at the ITWorld event, said: 'The NCC maintains a policy of recognitions to market entry for all telecommunications services providers. All licensed telecoms providers who are eligible to participate in provision of mobile money payment scheme will be expected to have free access to register and not restricted. We have open access to all mobile money service providers and in fact, all other players in the telecommunications market so long as they meet the criteria and requirement for providing such services.'
He added that NCC is particularly concerned about the tariff that would be charged in the mobile payment scheme, adding ' we hope that the operators will work with the CBN and come out with good tariffs that will be suitable and fair to consumers. The NCC recognised that financial transactions are under the purview of CBN, however, the mobile payment requires the NCC regulations as well as the CBN, which is why we are looking at a regulatory framework to perform mobile payment scheme by operators.'
Juwah said issues such as allocation of soft code, interconnectivity among the operators and pricing must be addressed for the benefit of the mobile money system. 'The mobile payment system is generally regarded as value added where payments are made via mobile money using mobile handset and accessed to the mobile platform via short code. The ongoing SIM registration is very key and vital to ensure the safety of consumer information. It is important that the operators of the scheme should ensure that only consumers who have registered their SIM should come on the scheme,' he said.
Though the NCC is ready to support the mobile money process, Juwah said the commission was more interested in the regulatory requirements that would ensure seamless interconnections between mobile money operators and telecommunications platform providers. 'It is important that we mention that while we go on, awareness and consumer education is important to ensure a successful implementation of the scheme,' he said.
The President, Institute of Software Practitioners of Nigeria, Dr. Chris Uwaje, lamented that certain regulatory loopholes must be blocked for mobile money to be successful. He said: 'There are lots of things we cannot go to market and buy, one of those things are good policy and strategy instrument. We need them. We always find ourselves running without equipment, so we need to equip ourselves with what we need to run with.
Essentially this is a country where e-transactions are happening without e-law or e-legislation; where e-transactions are happening without e-policy; e-transactions are happening without adequate protections of critical information infrastructure. We believe that this is very fundamental to the success of what we want to achieve.'
He noted that mobile money scheme must be built on trust. 'The benefit of trust in the mobile money system is security. How do we build the trust for mobile money?' He asked. According to him, people will find mobile money interesting if they know that trust has been built, if they know that their dealings have been protected and if they know it is sustainable. He added: 'That is where registration of operators comes in. Can you give a licence to a mobile money operator or agent who has deficient infrastructure? Can you allow somebody who does not have the competence to handle mobile money operations? 'Can you allow people who cannot ensure that the trust involved in the transaction is sustained? How does the regulator ensure that all these things can happen?'
As for the Director-General, Koffi Annan Centre for ICT Excellence, Accra, Ghana, Mrs. Doherthy Gordon, there should be cooperation between her country and Nigeria to ensure the success of the cell phone banking.According to her, people erroneosly believe that Ghana had gone ahead of Nigeria in terms of mobile money .Puncturing this this, she said it is not so. She,however, advised that the two countries should work together to develop mobile money system across West African region.
Gordon expressed the belief that the mobile money system should be all encompassing and should be integrated into the economies of other West African countries, adding that Nigeria's role is very critical.
She stated:'Around August, we had round-table discussion on the regulatory platform to facilitate the growth of the mobile payment system in Ghana. I will give you from the report a few of the recommendations. First of all, there was a very clear realisation that we have to make sure that we integrate within West Africa and in fact, within our continent, you are the largest player. There is no doubt in anybody's mind, Nigeria is the largest nation in the West African sub-region and therefore anybody who wants to get it right must try and get it right in Nigeria first and it will have huge impact in all the other countries in the sub-region.'
She suggested that the cost of accessing mobile money should be quite affordable for the consumers which meant 'we have to have a greater transparency in that pricing policy if we are really going to reach the unbanked.' Despite this impressive projection, other experts believe that the flip side of mobile money is incredibly complex because of a variety of reasons, including the number of players in the value chain; the majority of target consumers never transacted electronically; the challenge of finding and activating an effective distribution network; issues around regulatory compliance; and the technical challenges of integration into the wider ecosystem.
The rollout
Some of the operators have actually rolled out their services, among which are U-Mo, the mobile money product of the United Bank for Africa (UBA) and its associate company; Afripay Limited. GT Bank and Fortis Mobile Money have also commenced operations in partnership with MTN. Another product,'PocketMoni'has equally been launched by eTransact International.
Launching U-Mo service last year, the Group Managing Director/CEO of UBA Plc, Mr. Phillips Oduoza, said the event represented a major step towards realizing the objectives of the cashless or 'Cash lite' policy of the CBN which would soon explode into a revolution. U-Mo was the first of the 11 licencees to roll out the mobile money service in the country for the benefit of the over 90 million GSM subscribers irrespective of network.
To make the operation run seamlessly, the bank as well as another operator, Stanbic IBTC , have to enter a partnership with Globacom to offer their services on the network of the telecom giant. The partnership is to allow the two banks leverage on the robust Glo fibre optic infrastructure to transact businesses while targeting the over 23 million subscribers currently on Glo network as their potential target market in the first instance.
According to Glo's Executive Director, Human Resources, Mr. Adewale Sangowawa, the platform is to enable Glo subscribers be reached via the GloTxtcash, a channel already created by Glo to connect to all banks and mobile money operators willing to use the platform for delivering their m-payment services to customers.
He said the GloTxtcash channel is to ensure that people no longer carry wallets and mobile phones at the same time thereby underscoring the convenience and safety of the service. Sangowawa explained that the objective of the partnership is to join hands with the banks for their mobile money intiatives to cater for subscribers across Glo mobile network, 'This initative shall bring facilities similar to banking to the unbanked population through their mobile phones and would redefine their ways of life', he added.
Speaking at the launch of GT Bank and Fortis Mobile Money ,the MTN Chief Executive Officer, Brett Goschen, said that MTN Mobile Money platform represents another opportunity to bring added value services to its over 40 million subscribers. 'The use of Mobile Money products will not only improve the quality of people's lives but will also encourage banking as opposed to storing one's earnings in cash. Nigeria will also benefit as the impact of mobile money will flow into other segments of the society and have a multiplier effect on the economy', Goschen said.
Allaying the fears of Nigerians who are afraid that the m-payment may not work because of network congestion, poor service and possibly fraud, Anthony Okafor, Assistant Director, Banking Operations Department of CBN. According to him, there is no cause for alarm as many countries are leveraging on m-payment to actualise a cashless society that efficiently work. 'So Nigeria's case would not be an exception', he seemed to be saying.
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