Later this year, Nigeria will count a year of mobile payment licensing and approval to commence commercial activities for the approved providers comprising of financial institutions and independent providers.
REGULATORY CERTAINITY
Though there is still on-going debate on why Mobile network operators were not licensed to participate as stated in the framework of the Central Bank of Nigeria which contradicted itself by empowering scheme provider partners to sign customers for mobile financial services. Hence, a scheme provider’s partner can be a mobile network operator.
The industry deserves a clearer interpretation to ensure some level of certainty which is the purpose of any regulated industry. Lack of certainty will affect investments if scheme providers and partners are not sure if they are breaching any regulatory provision.
Round-robin regulatory oversights from the Nigerian Communications Commission for an industry that is managed by the Central Bank of Nigeria and intention to over regulate innovation will further put pressure on the players while the masses are denied the benefits of mobile financial services.
Granted, the telecommunications commission regulates mobilemoney in some African countries but this is not the Nigerian case and it is not a universal practice. It depends on the perception of risk and the readiness of prudentially managed institutions that are desirous of participating in the mobile financial sector that will determine which regulator holds the reign.
To some extent, the successes recorded in the mobilemoney space can be attributed to the regulatory climate in that nation. Recently UNCTAD called for uniformity in mobile money regulation in East Africa to boost financial inclusion to the masses in that region.
Around Africa, MobileMoney is moving from alternative channel to becoming main channel of providing basic financial services and payments services for the banked and unbanked. Adoption is growing at exponential rate in East Africa and some parts of Southern Africa. Uganda, Tanzania, Rwanda and Zimbabwe are new frontiers aside more established nation like Kenya. Recent studies showed 43% of Ugandans, 24% Rwandans use mobilemoney while Ecocash, a runaway success in Zimbabwe is planning to become the biggest bank in Zimbabwe soon.
It might appear that the MNOs are having all the successes recorded in East Africa but non telcos initiatives are also making strides. Equity Bank, Tangaza and MTZL are examples in this regard.In all the countries, innovation came ahead regulation.
REGULATORY CERTAINITY
Though there is still on-going debate on why Mobile network operators were not licensed to participate as stated in the framework of the Central Bank of Nigeria which contradicted itself by empowering scheme provider partners to sign customers for mobile financial services. Hence, a scheme provider’s partner can be a mobile network operator.
The industry deserves a clearer interpretation to ensure some level of certainty which is the purpose of any regulated industry. Lack of certainty will affect investments if scheme providers and partners are not sure if they are breaching any regulatory provision.
Round-robin regulatory oversights from the Nigerian Communications Commission for an industry that is managed by the Central Bank of Nigeria and intention to over regulate innovation will further put pressure on the players while the masses are denied the benefits of mobile financial services.
Granted, the telecommunications commission regulates mobilemoney in some African countries but this is not the Nigerian case and it is not a universal practice. It depends on the perception of risk and the readiness of prudentially managed institutions that are desirous of participating in the mobile financial sector that will determine which regulator holds the reign.
To some extent, the successes recorded in the mobilemoney space can be attributed to the regulatory climate in that nation. Recently UNCTAD called for uniformity in mobile money regulation in East Africa to boost financial inclusion to the masses in that region.
Around Africa, MobileMoney is moving from alternative channel to becoming main channel of providing basic financial services and payments services for the banked and unbanked. Adoption is growing at exponential rate in East Africa and some parts of Southern Africa. Uganda, Tanzania, Rwanda and Zimbabwe are new frontiers aside more established nation like Kenya. Recent studies showed 43% of Ugandans, 24% Rwandans use mobilemoney while Ecocash, a runaway success in Zimbabwe is planning to become the biggest bank in Zimbabwe soon.
It might appear that the MNOs are having all the successes recorded in East Africa but non telcos initiatives are also making strides. Equity Bank, Tangaza and MTZL are examples in this regard.In all the countries, innovation came ahead regulation.
SETTING THE PRIORITIES
Some weeks ago while in Accra, the local Television stations showed mobilemoney commercials back to back throughout the duration of my stay but the reality on the street is far from the advertorials. Agent’s outlets are difficult to locate and far in between, agent’s inadequate knowledge of the service, not sure if the service can perform other functions aside sales of airtime, shortages of customer educational materials, poor agency monitoring and oversight.
Nigeria in same region with Ghana seems to be positioned in that direction. It is erroneously believed that all services must be like MPESA without considering the strong compelling needs of the local market, cultural and pattern of internal migration. Despite all the sincere efforts, providers are still faced with significant challenges of accessing the access channels which is needed for mass market for mobile money to be a success.
Some weeks ago while in Accra, the local Television stations showed mobilemoney commercials back to back throughout the duration of my stay but the reality on the street is far from the advertorials. Agent’s outlets are difficult to locate and far in between, agent’s inadequate knowledge of the service, not sure if the service can perform other functions aside sales of airtime, shortages of customer educational materials, poor agency monitoring and oversight.
Nigeria in same region with Ghana seems to be positioned in that direction. It is erroneously believed that all services must be like MPESA without considering the strong compelling needs of the local market, cultural and pattern of internal migration. Despite all the sincere efforts, providers are still faced with significant challenges of accessing the access channels which is needed for mass market for mobile money to be a success.
POSITIONING THE AGENCY NETWORK
In all the countries where mobilemoney had been a success, investments in agency network is paramount followed by technology and marketing. These are top three expenditures for providers. In Nigeria, it seems marketing is taking the largest expenditure spend, followed by technology and lastly, agency network. Though not in all cases as we can see but some providers are making little investments in agency network maybe in expectation that in near future the regulator will enforce shared agency network and they don’t want to make investments that will bring benefits to competitors or they are misled about what mobile money is.
HOW NOT TO SHARE THE AGENCY
In the scenario above, shared agency network is a mirage. It had never worked elsewhere. Technical handshakes where mobilemoney from any provider can be treated like a currency will be effective and eliminates the need to push shared agents.
For illustration, the e-money of QuiQui can terminate into the account of a Paga wallet holder. The paga subscriber receives funds from QuiQui subscriber and can cash it out at paga’s agent locations as paga’s e-money.It is a technology solution to a technology challenge which a switching provider can manage and in the case of Nigeria, the government switching firm, NIBSS or any other switching provider that might have capacity to do it with the backing of the regulator.
This eliminates the challenge of who brands the agents outlets if shared? How do providers display their tariffs in the limited shared agent outlet? How will the agent manage e-float for multiple providers or support customer of different providers? How will the agent choose which provider wallet to open for customers when they make enquiry to open a wallet? Cash re-balancing trips to different provider’s bank or super agent will take the agent away from the outlet more than the time spent, managing it.
Mobile money is not is not airtime which is a product. It is a service. With a shared agency network, there will be no basis for differentiation so it may impact profitability. While not foreclosing that shared agency can never happen, it will come as a result of competencies that will be built over time. For illustration, FirstMonie may have agents spread in South West of Nigeria and may choose to work with FortisMobileMoney in Abuja or Ecomobilemoney in South -South based on mutually agreed terms.
COMMUNITY PRECEDES COMMERCE
A mobilemoney firm, just like a remittance company has its strength in the spread and availability of the agency network. That is why international remittance providers do not try to win customers by talking about the security of their platforms. They win customers on the basis of service points availability which translate into the agency footprints.
In a normal mobilemoney setting, agency activation precedes customer sign- up but we are seeing the opposite. Is the market responding to Nigerian peculiarities? Is this a way to avoid the investments needed for deploying and monitoring the agency network or there are other established channels that are replacing and providing the roles the agents?
I am wondering if Money transfer will not work and we headed towards a payment and person2person channel in Nigeria and redefine the perception of mobile money as it suits our local environment. Maybe the primary data that we based our expectations are wrong in terms of the unbanked population and what they lack?
GOVERNMENT TO PERSON PAYMENT
Government to citizens payment has proven to be a channel to grow adoption of mobile financial services as we have seen in some parts of East Africa and Haiti, a country of less than 10 million recently reached the 5 million transactions milestones with less than 800,000 registered users and about 22,000 frequent users. That is the power of government payments and partners that flooded Haiti after the natural disaster that left most of the country devastated some years ago.
Despite the fact that Government payment can grow adoption and transaction uptake but there seems not to be a concerted effort and unified agenda to promote and deploy mobile money for governments across all the tiers in Nigeria. I am yet to see a state government explore tax payment potentials using a tool that is always with most of the citizens at most times,the mobile phone.
Where there are glimpses of hope in government2person schemes, yet-to-be-licensed or unknown technology providers were given precedent over long suffering licensed providers to participate in such government schemes.
Government to citizens payment has proven to be a channel to grow adoption of mobile financial services as we have seen in some parts of East Africa and Haiti, a country of less than 10 million recently reached the 5 million transactions milestones with less than 800,000 registered users and about 22,000 frequent users. That is the power of government payments and partners that flooded Haiti after the natural disaster that left most of the country devastated some years ago.
Despite the fact that Government payment can grow adoption and transaction uptake but there seems not to be a concerted effort and unified agenda to promote and deploy mobile money for governments across all the tiers in Nigeria. I am yet to see a state government explore tax payment potentials using a tool that is always with most of the citizens at most times,the mobile phone.
Where there are glimpses of hope in government2person schemes, yet-to-be-licensed or unknown technology providers were given precedent over long suffering licensed providers to participate in such government schemes.
THE FUTURE
Though always embarrassed when people ask me they want to sign up for mobilemoney and I tell, go to the nearest agent but they cannot locate one in their immediate vicinity. Is it early days yet?
The industry is still grappling with the glaring lack of knowledge where only a few of the licensed providers seems have good understanding of the task ahead. Is it a miserable future for mobile money in Nigeria?
I know the future will be rewarding for firms that will not be banking on legislation to make profit but for firms that will go out on the limbs where the fruits are.
As seen in the Indian model where Micro finance is driving the agency model, Brazil is driven by government payments and Kenya’s money transfer and lately, payments. What will be the Nigerian model? Only time will tell.
Though always embarrassed when people ask me they want to sign up for mobilemoney and I tell, go to the nearest agent but they cannot locate one in their immediate vicinity. Is it early days yet?
The industry is still grappling with the glaring lack of knowledge where only a few of the licensed providers seems have good understanding of the task ahead. Is it a miserable future for mobile money in Nigeria?
I know the future will be rewarding for firms that will not be banking on legislation to make profit but for firms that will go out on the limbs where the fruits are.
As seen in the Indian model where Micro finance is driving the agency model, Brazil is driven by government payments and Kenya’s money transfer and lately, payments. What will be the Nigerian model? Only time will tell.
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