Nigeria’s vibrant recharge card business which generates an estimated N1 billion daily is been threatened by the emergence of mobile payments.
The Central Bank of Nigeria (CBN) had licensed 16 mobile money operators to render mobile banking and payment using agent networks, and using the mobile phone as a means of delivering financial services.
Mobile money, according to industry analysts is expected to play an integral role in the apex bank’s drive to capture the unbanked population in Nigeria. But more importantly, mobile payments would enable Nigerians perform basic financial transactions such as air-time top up efficiently without having to purchase physical recharge cards.
“Currently, the airtime retail business will experience a steady growth as recharge card sales increases. However, the future of this platform may change significantly as the drive towards e-payment and mobility is being attained. In the nearest future, the channels of distributing airtime will change to mostly e-transfers and payments. This may eliminate long chains and channels previously being used.” Femi Adeagbo, chief executive officer, Comnavig Information Communication Technology (ICT) Consultants, said.
According to him, “If a chunk of this income is moved to admittedly more efficient mobile money channels, significant income and job displacement may occur.”
To address this income displacement challenge, Adeagbo said specific programmes aimed at tooling recharge card sellers with skills and resources to enable them offer agent services under a retail principle or as stand-alone businesses should be developed.
Statistics from the United Nations Conference on Trade and Development (UNCTAD) show that 40 million mobile money user currently exist in Africa. Industry analysts estimate that about 20 million Nigerians are expected to be embraced into the formal banking system via mobile money over the next three years.
According to them, m-payments will change the way consumers interact with financial services and make payments. A research by eShekels shows that recharge card is one of the fastest selling products by telcos in the country, recording daily sales of over N1billion worth of recharge cards.
The report further says 100 naira denomination of recharge cards is most patronized among subscribers of various operators as subscribers patronize the lowest denominations available.
This indicates that lower denominations (500 naira and below) control a larger share of the market. According to the research, different channels of distributing recharge cards will change to mostly e-transfers and e-payments, thereby eliminating the airtime distribution chain.
On the other hand, over 49 million adult in Nigerians do not have mobile phones and, as such, cannot instantaneously benefit from the mobile money scheme aimed at providing financial inclusion for the un-banked population in the country.
Latest figure on the website of the National Population Commission (NPC) revealed that Nigeria’s population now stands at 167 million people.
Enhancing Financial Innovation & Access (ELFINA), a World Bank-backed body that aims to deepen financial inclusion in the country, in its Access to Financial Services in Nigeria 2010 Survey, found out that the country’s population comprised 82.3 per cent of adults or over 137 million Nigerians.
In addition, the apex bank, in collaboration with the National Bureau of Statistics (NBS), carried out an ICT access survey in 2011 among adult Nigerians between the ages of 15 and 60 years.
The survey, among other things, revealed that 63.9 per cent (representing 88 million) of the country’s 137 million adults already had mobile phones.
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