NCC: Why Nigeria is yet to see mobile money growth

NCC: Why Nigeria is yet to see mobile money growth

NCC: Why Nigeria is yet to see mobile money growth

0

A mix of low collaboration and technologies not talking to each other have undermined the promises of mobile money in Nigeria, the nation’s telecoms watchdog has said.

Professor Umar Danbata, Executive Vice Chairman of Nigeria Communications Commission (NCC), the telecoms industry regulator says that these issues among relevant players and stakeholders within the value chain are undermining growth of mobile money services in Nigeria.

Radical steps must be taken if Nigeria must make appreciable progress towards the attainment of the sustainable development goals and also deepen mobile money services hoped to address financial inclusion among the unbanked across Nigeria’s rural and underserved communities, the telecoms watchdog chief said in Lagos.

This mode of operation as stipulated by CBN, which excludes telecoms operators from taking the lead role in the Nigerian mobile money ecosystem, according to Danbatta, the nation’s telecoms regulatory chief, “is part of the reason why there is slow uptake in the roll-out of mobile payment system since it started in 2009.”

Commercial activities underway at Ikeja Computer Village, the nation's biggest technology market as Nigeria debates whether or not to devalue to the Naira
Commercial activities underway at Ikeja Computer Village, the nation’s biggest technology market

Danbata, who dropped this hint at the 4th annual Brands and Marketing Conference 2016 held weekend in Lagos by Brand Journalists Asscociation of Nigeria (BJAN) underscores need for stakeholders to collaborate to drive the growth of mobile money system in Nigeria.

The conference which was organized by Brand Journalists Association of Nigeria (BJAN) on the theme, “Mobile Money in Nigeria: Challenges, Opportunities and Threats” converged players from the banking and telecoms sectors, as well as government regulatory bodies to proffer solutions to the problems facing the mobile money system in Nigeria.

Danbatta, who was represented by Henry Ojiokpota, Principal Manager, Policy Competition and Economic Analysis at NCC, told participants at the conference that “the success of mobile money lies in the provision of enabling policies, regulatory framework, synergy among the relevant players and in the mobile money ecosystem and the willingness of potential customers to subscribe to the service.”

Explaining how the mobile money system operates in Nigeria, Danbatta says that the Central Bank of Nigeria (CBN) approved two models of operations which are the bank-led model and the non bank-led model.

These two models by the CBN excludes telecom operators from taking the lead role in the Nigerian mobile money ecosystem, according to the NCC EVC’s x-ray of the prevailing policy and regulatory environments guiding mobile money services in the country.

“The bank-led model promotes the bank taking the lead role while the telecoms operators provide access and infrastructures, and the non bank-led model also promotes those who are Information Technology professionals and other personnel that are not financial institutions to lead the mobile payment system and the telecoms operators are to provide only the access”, the NCC EVC says.

NATCOM must pay, Professor Umar Danbatta, Executive Vice Chairman at NCC, insists
Professor Umar Danbatta, Executive Vice Chairman of NCC

This mode of operation as stipulated by CBN, which excludes telecoms operators from taking the lead role in the Nigerian mobile money ecosystem, according to Danbatta, the nation’s telecoms regulatory chief, “is part of the reason why there is slow uptake in the roll-out of mobile payment system since it started in 2009.”

Reflecting the prevailing mood of the telecoms industry players, the NCC boss further says that “the telecom operators are of the opinion that providing access is not enough, that they also want to participate actively in the ecosystem and that is why the CBN equally introduced ‘Super Agents’, encouraging the telecoms operators to register as ‘Super Agents.”

According to Danbatta, “the NCC is of the opinion that since the core responsibility of the telecoms operators is telecommunication, going to financial services will distraught a lot of things. We advise that they should register a special purpose vehicle like a subsidiary to drive the ‘Super Agent’ services which will enable them to participate actively in the mobile money ecosystem.”

He also says that “finding the right technology and business models that are well suited for our peculiar environment has been a challenge as the actors have distinctly different business drivers and motives thus; continuous partnership and strategic engagements, co-operation among the players and appropriate deregulatory direction are required to help achieve the desired long term goal of this laudable initiative.”

The NCC chief says that “financial inclusion which encompasses mobile payment service is rapidly evolving in Nigeria after the industry experienced a slow start in 2009. Mobile payment services are still mainly utilised by the banked population with penetration mostly limited to the urban areas. Penetration level among the unbanked and those living in the rural areas are zero or very low.”

While noting that mobile money and financial inclusion can be used interchangeably depending on the context, the NCC EVC underscores the steps that the CBN has taken so far in driving financial inclusion in Nigeria. “The Central Bank of Nigeria in pursuit of financial systems strategy 2020 identified the need to develop a payment system that is nationally utilised and internationally recognised.

“The CBN noted that the financial system in Nigeria is heavily cash-based as people still prefer to be paid by cash due to the level of trust and integrity in the system. That is the main reason why mobile money is an alternative to card system because it’s registered in your name, you have your number attached to it and you can always use it to make and effect payment.

“The CBN therefore introduced electronic payment initiatives in order to change this mindsets and foster confidence and ease of payment and trust to the Nigerian payment system. One of these initiatives under this pursuit is the adoption of mobile payment systems in Nigeria. This is the financial inclusion for the rural dwellers that may have no bank accounts.”, Danbatta says.

According to him, “the CBN deemed that mobile phone usage has reached a high level of penetration and coverage across Nigeria more than the present usage of banking services especially at the rural area. Mobile payment basically rides on the telecoms network infrastructure while leveraging on the wide range of services and coverage of mobile network and the huge subscriber base of the telecoms operators.

“The active lines of subscribers in the telecoms operators are 152, 000, 000 active lines as at August, 2016 and that is the basis for which mobile payment is being used to drive financial inclusion in Nigeria, thus, making the activities of the telecoms operators very critical to the success of this initiative. The NCC as the telecoms regulator, therefore entered into regulatory collaboration with the Central Bank of Nigeria on this laudable initiative.”

Mr. Godwin Emefiele, Governor, Central Bank of Nigeria (CBN)
Mr. Godwin Emefiele, Governor, Central Bank of Nigeria (CBN)

The NCC chief says that “financial inclusion which encompasses mobile payment service is rapidly evolving in Nigeria after the industry experienced a slow start in 2009. Mobile payment services are still mainly utilised by the banked population with penetration mostly limited to the urban areas. Penetration level among the unbanked and those living in the rural areas are zero or very low.”

The most popular transaction on the mobile payment platform is airtime top-up, person-to-person transfer and the bill payment, Danbatta says.

The role of the NCC in mobile money implementation in Nigeria includes pervasive infrastructure support and along this line, he says that “the NCC has authorised infrastructure companies at the North Central and Lagos State to provide infrastructure backup and support for those who are going to lay backbone fibre uptake for the rollout of the mobile money especially at the last mile. In addition to that, the remaining five geo-political zones are currently being advertised for the rollout of infrastructure.”

Another role for the NCC to promote mobile money implementation was underscored by the telecoms watchdog boss to include ensuring affordability. “We regulate the price of the USSD and ensure that it is not exorbitant. We also join the CBN in joint technical committee to regulate mobile money through the telecoms operators as well as the mobile money operators that are licensed by the CBN.”

According to NCC, “we are involved in a series of committee work with the CBN. We are involved in enhancing financial innovation access (ELFINA), mobile money working group, payment infrastructure strategy working group, financial inclusion strategy committee, Melinda and Bill Gate Foundation on financial inclusion committee, mobile payment system committee, joint technical committee on mobile payment, among others.”

Danbatta says that a few milestones have been recorded since the Commission started collaborating with the CBN on the implementation of mobile money. “One of them is the Joint Regulatory Framework on Mobile Money. The first one was developed in 2009. A revised version was developed in 2014”, he told the forum.

“We also provided an input into the agency distribution network guideline to drive mobile money and also the issuance of short-codes for mobile money operators. The NCC also is involved in harmonising short-codes to ensure that the short-codes they are using is in line with the numbering policy of the commission.

“We also provide quarterly report to the CBN on financial inclusion which is also called mobile money services. We were involved in the publication of the revised guidelines for mobile payment services and the publication of the licence framework for super agents”, Danbatta says.

Different phone Brands on display at computer village
Different phone Brands on display at Computer Village, Ikeja, Lagos.

The NCC boos highlighted the opportunities and benefits of the mobile money system in Nigeria to include ease and convenient transactions from remote locations; access to funds on the go which boosts economic activities; creation of employment for mobile money agents, supermarket, payment points, petrol stations and other service windows; access to ICT services, the e-commerce such as Konga, OLX, Jiji and others.

For Danbatta, mobile money potentials lie in massive social media and market growth potential, increase in overall living standard and well being of the populace, reduction in transportation cost and congestion, financial inclusion for the unbanked and underserved, thereby boasting overall monetary policy of the country.

In addition to the challenges mentioned earlier, the NCC EVC also identified some other challenges and threats as part of hindrances to the uptake of mobile money services in Nigeria.

The challenges include limited agency distribution outlets across the nation- inadequate branded kiosk for mobile money, lack of finance, as well as limited availability of data in the industry.

Add these to weak infrastructure support, limited access points across the country; the underserved rural areas; perceived technology support; Internet access; electronic transaction failure due to poor network; use of electronic medium as legal evidence of transaction in court; weak regulatory framework; inconsistent regulatory policy direction; reliance on telecom operators network infrastructure and subscribers, as well as cost of transactions, Danbatta says.

To address these challenges Danbatta recommends that “there is need to strengthen the agency distribution network across the country through continuous engagement and collaboration among all stakeholders.”

According to him, “that actually necessitated an institutionalised branding for mobile money, not just one with logo and the handset and the currency but one that when you look to your right or to your left, the next brand you see is mobile money kiosk or mobile money service window and leveraging on aesthetic coverage of infrastructure available at the various post office locations across the nation.”

Elizabeth Edozie Technology Journalist @Technology Times 08077671659 elizabeth.edozie@technologytimes.ng

LEAVE YOUR COMMENT

Your email address will not be published. Required fields are marked *

two × two =

%d bloggers like this: