Rural Area usage of Mobile Money Transactions costs Nigeria N6trn

Nigeria’s bank-led annual mobile money transactions are said to be at a very low level in the rural areas, recording about 93.5 percent, or over N6 trillion lower than Kenya’s telecom-led mobile money operations which service a large segment of the rural agricultural economy.

According to the Central Bank of Nigeria (CBN), the total value of mobile money operations in Nigeria between 2012 and 2014 was about N430 billion.

This two-year total for Nigeria is about 93.5 percent (over N6 trillion) lower than Kenya’s one year mobile money transactions.

Findings of the United States Agency for International Development (USAID) on scalable ICT applications for agriculture, show that M-Pesa, a mobile money product run by a leading telecom company in Kenya, processes transactions worth $4.98 billion (N996 billion) annually, which is about 17percent of total registered mobile money accounts in Kenya. This indicates that total mobile money transactions annually come to about $29.29 billion (N5.85 trillion) in Kenya.

Industry watchers believe that the situation arose because the model adopted by the CBN, gave banks the lead role in mobile money operations, though telecom companies have wider reach, even in the rural areas, with up to 500 times more airtime reseller outlets than all of the total bank branches and ATM centres.

Though Nigeria’s Gross Domestic Product (GDP), population and mobile telephone penetration (130 million subscribers) are the largest in Africa, majority of rural businesses, which have been the main success drivers of telecom-led mobile money operations in Kenya and other East African countries, are not using the service in Nigeria.

Abiodun Oyelekan, a rural-based farmer and head, Lagos apex Federated Fadama Farmers’ Association (FFFA), said banks had indeed approached farmers to create awareness on the use of mobile money.

“But I have not subscribed because it is not yet popular and hardly is anyone using it. So, if I attempt to transact business with it, people would end up demanding cash or payment through the already available traditional channels.”

Funmi Onajide, general manager, corporate affairs, MTN Nigeria, attested to the fact that the current operation of mobile money in Nigeria is bank-led.

Quoting from a report by Enhancing Financial Innovation & Access (EFInA), Onajide said, “…out of a total demographic sample of 93.5 million adults, only 33.9 million are banked, while the others are either financially excluded totally, or are engaged through informal financial channels like savings clubs/pools, esusu, ajo or moneylenders, as well as remittances through informal channels via a transport service or recharge card.

“Essentially, this means that  approximately, only one in five Nigerian adults has a bank account, with approximately one bank branch and one ATM for every 10,000 people.”

But this unbanked group of people, in the rural areas, using these informal financial channels, had adopted mobile money usage in Kenya and other East African countries.

For instance, Ensuibikko, a mobile money platform in Uganda, enables rural farmers to save, borrow money and repay loans to their cooperatives.

They also make purchases and get paid by others in the network through SMS.

Gerard Otim, co-founder, ‘Ensuibikko’ said it enabled them to use SMS to register their cooperatives, apply for loans, receive and pay the loan, while also sending their savings by mobile money at the same time.”

On reasons the the CBN gave banks the lead role, Onajide said, “The CBN gave four major reasons for the exclusion of a telco-led Mobile Money initiative in Nigeria. It was perceived that the telcos may have undue advantage in ruling out any form of competition against its own product through either blocking out the other players in the industry or overpricing its network access, so as to give its own product undue commercial advantage.”

Onajide, however agrees that a telco-led mobile money economy is the way forward and a good move for the attainment of mobile money vision in Nigeria and that strong collaboration among all the stakeholders is key to that success.

OLUYINKA ALAWODE