Mobile money has been a major game changer in African economies. In 2010 M-PESA for example continued to make major headlines and win awards for it’s success in it’s wide acceptance and usage in Kenya. Mobile money has been hailed as the best tool to bring financial inclusion to the many unbanked in Africa and other developing regions.
It has been speculated by many that 2011 could be the year that Nigeria really breaks through in terms of mobile money. Nigeria, has a massive population upwards of 140 million, of whom a very small percentage is currently able to access financial services through more ‘mainstream’ financial institutions such as banks. Contrary to this the lion’s share of the population has access to mobile phones (up to 85 million active lines, just over 50% of the population).
These two characteristics of the Nigerian population place the western African country in a very unique position, where by sheer numbers and potential volume of transactions, mobile money could really take off. Back in 2009 Emmanuel Okoegwale mused concerning the potential for mobile money success in Nigeria:
In Nigeria where electricity and transportation are unreliable, the mobile phone is a driving force for change – and not just for voice calls. Mobile phones can address one of the biggest cost barriers in the value chain.
The success of M-pesa in Kenya (over 2 million users) has demonstrated the strong compelling need for a platform that can empower Africans to make transaction cashless and without need to visit a Bank. Nigeria’s seeming slow uptake of mobile payment presents a huge opportunity that can revolutionize the payment world, create new set of mobile entrepreneurs and new Business models in a market of 54 million mobile subscribers and an addressable market of 140 million people.
Well, 2011 just could be that year for Nigeria. The Central Bank of Nigeria (CBN) has licensed a number of mobile money services already and it looks like it’s going to be a tight race to grab the market. With this in mind we thought we’s take a quick look at just four of these solutions – eTranzact’s M-Teller, Monetise, Paga and M-NAIRA:
M-Teller is one of the very recently licensed mobile money solutions in Nigeria. M-Teller is built to be network independent and bank independent i.e. you don’t have to be subscribed to a specific mobile network operator such as is the case with M-PESA and Safaricom and neither do you need to have an account at a specific bank.
eTranzact M-Teller service is a mobile money service designed to provide secure, cost effective and convenient mobile money services for the banked, under-banked and unbanked (people or enterprises that have no or only limited access to banking services). It is also a branchless banking business, meaning that its services are designed so that customers can generally conduct transactions without the need to visit bank branches, but simply by using their mobile phones to conduct transactions. These services include person-to-person payments, bill payments, buying of airtime, funding of their accounts and withdrawals from their accounts or mobile wallets.
With eTranzact M-Teller service, eTranzact Agents are able to open new accounts for customers, using the mobile application on their phones. In addition, an eTranzact Genesis Card will be issued to all customers upon registration.
eTranzact already claim over 50,000 agents across Nigeria where users can go to register and transact. A user will need some basic documentation and pay a fee for registration.
Speaking about the Mobile Money Solution in Lagos , Mr. Valentine Obi, the Managing Director of eTranzact said, “The eTranzact Mobile Money Platform is multi network capable and interfaces seamlessly with third party payment schemes. eTranzact Mobile.
According to Mr. Obi, “the Mobile Teller solution would also create job opportunities for thousands of Nigerians around the country both for educated and uneducated people as they would become eTranzact Mobile Tellers.”
The eTranzact Mobile Teller solution offers unique services such as: Instant Account Issuance, Person-to-person payments, Person-to-Business such as Cable TV payment, Post-paid payment, Mobile Top-Up, Funds Transfers to mobile phones and bank accounts, School fees payment etc.
Monetise Group’s Monetise
Monetise is a product from the mobile money solution provider Monetise Group. The CBN granted Monetise a provisional license to to introduce payments by mobile phone across the country back in December 2010. The project is being funded in part out of an award the Monetise Group received back in 2009 from the Africa Enterprise Challenge fund. According to a press release:
Monitise is delighted to have the opportunity to work with local partners to enable anyone in Nigeria with a mobile handset to access financial services.
The project will be in part enabled by the US $1.5m of development funding made by the Africa Enterprise Challenge Fund to Monitise in 2009.
Monitise’s technology enables users to securely manage their money on their mobile phones and take advantage of a number of services including:
- Adding money to their handset’s mobile wallet or making withdrawals at a countrywide network of processing agents
- Transferring money to other people or organisations over the handset
- Obtaining their balances via SMS text alerts
- Future services will include savings, insurance and pensions
Lee Cameron, Chief Commercial Officer of Monitise, said: “In conjunction with our local partners, we are delighted to be able to offer Monitise’s technology in to this well regulated environment, empowering the millions of Nigerians who cannot access, or simply do not have, a conventional bank account – what we know as the ‘unbanked’ – to enjoy the security and benefits of inclusion within the financial world.
“We are committed to bringing the latest developments in mobile money management and payments to the unbanked across not just Africa but India and South East Asia as well.”
Prateek Shrivastava, Managing Director of Monitise Africa, said: “Of Nigeria’s 149 million strong population, 19 million have bank accounts, but 75 million have mobile phones – which amply illustrates the potential of mobile payments services across the country.”
The first phase of the Monitise service will be launched in 2011 directly to consumers. In parallel the service will also be offered on a white label basis to the country’s banks and financial service providers.
We wrote about this particular service back in December, 2010 once they got their license from the CBN.
A statement on Friday quoted the Chief Executive Officer, Pagatech, Mr. Tayo Oviosu, as saying that the Central Bank of Nigeria recently licensed the company to roll out mobile money services across the country.
Oviosu said Paga would inaugurate four products – money transfer, bill payments, mobile phone airtime top-up, and merchant payments – directly targeted at resolving problems Nigerians had to contend with as regards cash.
Pagatech carried out a pilot of the service from September, 2010 in preparation of national roll-out in 2011.
With only about 70 participants in the Pilot of Paga since September, there has been over N2.2 million in transaction volumes and over 100 bill payments for Nigeria’s largest non-telco private sector biller.
At launch, Paga aims to have at least 5,000 qualified merchants.
With a growing team of 23 persons, and a “Super Stars” sales team, Paga seems to be recruiting merchants to join the network on a daily basis.
And just to make it clear that they’re very serious, the company would be moving into their new office in January 2011.
Finally, M-NAIRA is a solution offered by a web and mobile company based in Abuja, E-Soft. The service is also based on an agent model where users go to an agent to open accounts and transact. Account opening is free of charge.
M-NAIRA is an innovative mobile money and payments solution which converts any mobile phone to a micro bank for the unbanked. The new mobile savings and payment system is based on scratch cards and enabled by any SMS enabled mobile phone.
The Road Ahead
It’s evident that 2011 will prove to be a competitive season for mobile money players in Nigeria. The race is on. Perhaps the two things around which mobile money success hinges on, based on the case of M-PESA and others are a) a strong agent network and b) policy, of course having a strong fincancia backing also contributes to a large extent. Looking at the Nigerian case in the light of these two considerations: First of all it appears that the Central Bank of Nigeria has been very forward looking in terms of setting appropriate policies for mobile money in Nigeria.
The Nigerian Financial Regulator, Central Bank of Nigeria had since last year released the regulatory framework to guide the operations of potential mobile money operators in Nigeria. The policy guidelines though with some flaws but like all regulatory positions, prevailing situations always shape and influence review on a consistent Basis or on a need arise Basis.
CBN has clearly stated that the Banks are favoured ahead of MNO’s in the countries Mobile Money space. MNO’s will have to work with a licensed financial institution, therefore commercial Banks, micro finance and discount houses. MNO’s in Nigeria are not known, not to be in the drivers seat for their own deployments but the regulators stand on this may not be final but it holds for now. Though the Banks do not understand ‘low value’ and ‘High volume’ Business platform required to run MMT platforms but capacity can be sourced elsewhere and quickly.
As Emmanuel Okoegwale writes concerning CBN’s role in increasing financial inclusion in Nigeria:
The authorities are quite mindful of such challenges in Nigeria and in the last few decades, efforts has been channeled to community, rural and micro finance Banking but all met with little or no success. The MFI’s in Nigeria are largely concentrated in the urban areas and they equally compete with the large commercial banks in urban districts for a share of the market at the detriment of the rural unbanked. It is common place to see MFI’s build their branches close to the LCB’s,in same architectural style with grand furnishings and to cap it all, benchmark their service requirements like commercial Banks.
The Central Bank of Nigeria in its wisdom decided to take a deep look at mobile financial services and the last twenty four months, efforts and resources are being channeled in the sector with a view to opening more opportunities and creating formal financial access for the unbanked in rural and urban areas using the mobile channel.
As for agent networks, simply put, an agent-based mobile money roll out will rise and fall on the quantity and quality of service offered by the agent network. Part of the reason why Safaricom has a strong following on M-PESA, other than their being the dominant service provider and getting into the market first with M-PESA, is the fact that they managed to quickly roll out a strong agent network covering the entire country. This increases the entry and market penetration barrier for other players. So far it appears eTranzact are well ahead in terms of recruiting agents around Nigeria.
The next 12 months will be quite interesting for mobile money in Nigeria, again potentially, the volumes transacted could be staggering. We’ll keep an eye on this one throughout the year.