Is there hope for Mobile Money in Nigeria?
In the early part of the last decade, the news of the emergence of mobile money into the Nigerian fintech space was an exciting one. Your mobile number would be more like a bank account and you could perform basic transactions like pay bills, accept funds, and transfer funds as little as N50 to another mobile number all on your mobile phone without owning a bank account sounded exciting. With more than 30% of Nigerians without a bank account, mobile money was supposed to be successful in Nigeria if it leveraged on the reach of the telcos, mobile services, and agent banking network.
During the lockdown period, complaints were many and the Federal Competition and Consumer Protection Commission (FCCPC) confirmed this in a statement dated April 22, that they had received a lot of complaints from consumers on issues bordering on failed electronic banking transactions within the period of lockdown. This shows a major concern on over-dependence on the banking system.
In addition, the number of bank accounts in Nigeria appears to be decreasing and not increasing and the quest for a cashless society is one fraught with challenges. Aside from the financial infrastructure challenges, if your targeted audience does not see any value in the product you are offering, they will refuse to sign up. Customers are not happy with the constant deductions for one charge or the other and would prefer to hold onto their cash than fully utilize a bank account.
NIBSS reported that 10 million bank accounts became dormant in 2018 and that inactive bank accounts grew by 28 percent to 46.7 million in 2018 from 36.7 million in 2017. That tells you that in just one year, ten million bank accounts recorded zero transactions. The statistics further revealed that the number of inactive bank accounts grew faster than active bank accounts in the past five years 2014–2018. Inactive bank accounts grew by 73% while active bank accounts grew by 35% according to the guardian.
The success of M-Pesa in Kenya, MoMo in Ghana, and that of Tanzania can’t work in Nigeria due to numerous factors and regulators. The goal of the National Financial Inclusion Strategy (NFIS) adopted by the CBN in 2012 and later revised in 2018 states that the CBN’s strategy is to ensure that 80 percent of “bankable adults” in Nigeria have access to financial services by 2020.
The need to invest in a business model that can provide an economist of scale that offers agent banking or mobile banking as a part of a network of services that scale on the back of the synergy each product creates. Stand-alone services, particularly in Nigeria, have a more precarious path to success.
There is still hope for Mobile Money to thrive in Nigeria with the launch of MTN MoMo and other telcos joining in. The over-reliance on banks won’t cut it for an economy looking to go cashless with the aim of financial inclusion to the underserved.
