The volume of mobile money transactions processed in Nigeria is gathering momentum after a slow start as operators adopt new innovations.
In June, the Central Bank of Nigeria (CBN) reported that licensed operators had processed transactions amounting to N64 billion in the previous 12 months, however 60 percent of the total had taken place in the final three months.
More recently, the CBN provided a figure of N10.1 billion ($63m) as processed mobile money transactions for the month of August.
“The rate of growth of (mobile money) has gathered momentum,” said FBN Capital analysts, in a research note released on October 8. “New applications abound: one such is the recent deal between a household name in finance and a mobile operator to take insurance to the mass market.”
The growth of mobile money is however coming off a low base.
Tunde Lemo, deputy governor, CBN, told a conference in Abuja recently that Nigeria boasted less than 6,000 bank branches, 12,000 ATMs, 200,000 point-of-sale (PoS) terminals, more than 100 million active mobile lines and less than 20 million bank accounts.
This is the marriage of telephony and finance at which the mobile payment operators licensed by the CBN play the role of go-between.
Mobile money furthers the expansion of the cashless economy, enlarges the formal (tax-paying) sector and connects the rural population with the rest of the country, countless studies have shown.
An increasingly cashless economy may help the CBN to counter money laundering.
A CBN circular of September 30, which tightened its monitoring of the import and sale of foreign currency banknotes, has a similar agenda.
The CBN licensed 16 mobile money operators in 2011, while the majority are peripheral one (Paga) is pre-eminent. Its business plan assumes a total of 33 million users of mobile payments in Nigeria in 2015, compared with just 400,000, according to an industry report released in April.
If Paga’s projected users of mobile payments are achieved, it will represent a stunning rate of growth, considering Nigeria’s late uptake of mobile money.
In Kenya, two thirds of the 29 million mobile subscribers are said to use mobile money. “Nigeria lags behind East Africa, but probably started 10 years behind,” noted FBN Capital. The use of mobile phones for financial transactions is expected to grow globally.
According to Jupiter Research, nearly 400 million mobile phone users worldwide are expected to use their handsets for mobile money transfer by 2018, up from just 150 million this year.
However, opportunities for Nigerian investors to benefit from the growth in mobile money are limited, according to FBN Capital, noting that “while no obvious opportunities in listed equities present themselves, this trend in mobile money gives the portfolio investor additional evidence of rising consumption and disposable incomes.”
Author: BALA AUGIE
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