Working around the Impediments to Mobile Money

Uptake in Nigeria




7 February 2013
Presented
at
Mobile Money Expo, 2013
Oriental Hotel,
Lagos -Nigeria

by




Osondu C. Nwokoro
Director, Regulatory Affairs & Special
Projects
Airtel Nigeria
Outline
Motivation for Mobile Money (MM) services
MM Value Chain
Disturbing MM uptake statistics
Reasons for slow MM services uptake
Recommended work arounds
Structured and Flexible Regulation Master Key for
unlocking MM Industry potentials
Conclusion.

Motivation for MM services

*EFInA Access to financial services in Nigeria Survey 2012; ** NCC statistics
Huge potential in the MM space.
Stimulation of Mobile Money (MM) Service, key plank of Cashless Policy and Financial System
Strategy (FSS) 2020 of the Central Bank of Nigeria (CBN). Aimed at:
(a) facilitating increased utilization of electronic payment platforms; and
(b) promoting financial inclusion and reducing number of unbanked adults by 20% by 2020.

Policy


Total Population: 170m (estimate)
**Total Active GSM Lines: 105m
**Teledensity: 78.21 (Oct 12)
*Total Adult population: 87.9m
*Banked Adults: 28.6m
*Unbanked Adults: 58.3m


Demographics


MM, natural evolutionary trend in telcos service delivery model - convergence of
communications and financial services.


Technology


MMOs
1) Revenue stream
2) Innovation -
friendly sector.
Still to be
stretched.
SUBSRIBERS
Convenience of
financial transactions
with attendant
improvement in
standard of
living.
GOVT
1)Stimulation
of financial
inclusion.
2)Employmen
t generation.

MM Value Chain
All stakeholders can extract value share in the cake
Benefits accruable to each stakeholder segment
Disturbing MM uptake statistics
Represent 2010 data published in 2012 by CBN Financial Inclusion in Nigeria, p.16
Learnings from the above are:
countries at similar or lower levels of development as
Nigeria have recorded uptake numbers from MM.
MM services still virtually non-existent in Nigeria, almost
two years after first licences were issued.
Despite the potential of the Sector and value to be extracted by
each stakeholder segment , MM uptake is still discouraging.
A recent survey by EFInA stated there are about 440,000 MM activations in
2012, almost two years after first MM licences were issued.


Why has MM uptake been slow in
Nigeria?

Reasons for slow MM uptake
Virtually no public awareness
of the existence of MM
services due to:
Cultural attitudinal
stereotypes towards
financial services -
mistrust, apathy, etc,
Illiteracy,
Absence of structured
and consistent education
programmes to address
the above.
Financing



Insufficient funds for roll
out due to:
Uncertainty around
prospects of the
sector.
Lender-wariness
towards non-bank
MMOs.




Public Awareness

Reasons for slow MM uptake Contd
Sub-optimal harnessing
of technology due to:
Non-standardization
of equipment
specifications -
leading to integration
challenges.
Unclear short code
allocation process.
Trouble shooting
limitations.
Technology Retail Network
Underdeveloped retail
network due to:
Limitations in MMOs
expertise.
Non-integration of
expertise from
established
distribution chain
segments.

Recommended work arounds
All stakeholders to
collaborate to
design, fund and
implement a
comprehensive, all
segment inclusive
MM public
enlightenment
programme.
Financing




CBN to consider
establishment of an
intervention fund for the
non-bank led MMOs.
Federal Government to
consider granting MM
industry fiscal concessions,
such as, tax holidays,
import duty waiver, etc.





Public Awareness
Retail Network
Recommended work arounds contd
Specifications of
basic equipment
functionalities to be
provided by the
NCC.
Expedited approval
of a uniform short
code scheme by
the NCC.
Technology
MMOs should
collaborate with
established
distribution
chain
segments-
Telcos, FMCGs
Structured & Flexible Regulation Master Key for
unlocking MM Industry Potentials
Two Regulators CBN and NCC involved.
Critical for CBN and NCC to align initiatives for coordinated and
proactive regulation.
Execution of Memorandum of Understanding (MoU) between
CBN and NCC recommended. Similar to: NCC/NLRC and CPC.
o MoU should clearly specify roles and responsibilities of
each party. Thus:
NCC to oversee technology and Telcos compliance
with CBN prescriptions.
CBN to be responsible for operational oversight,
including risk management and AML compliance, etc.
Collaboration between the CBN and NCC is key
for MM success.
Structured and Flexible Regulation Master Key for
unlocking MM Industry Potentials Contd
As an evolving industry, flexibility in the choice
of guiding regulatory models is strongly
recommended.
If one model is not working, we should be bold
to try another one till right fit is found.

Ghana - Bank of Ghana currently reviewing service model
and consulting widely across different sectors of the MM
Industry.
Pakistan - provides for 6 months review period.
Practices in other jurisdictions:

Conclusion

o Recommended work arounds are interim measures aimed at
kick-starting slow MM uptake.
o Collaborative regulation by the CBN and NCC critical for
effective industry co-ordination.
o Long term solution is to review current Regulatory
Framework by empowering stakeholders capable of driving
service uptake. This will ensure the realisation of Federal
Government goal of financial inclusion.
o Telcos operating model has consistently demonstrated
capacity to address the four constraints identified above.
o Regulatory Framework should be reviewed to allow greater
Telco involvement to conclusively eliminate these
constraints.
THANK YOU