Why mobile money scheme is struggling to thrive in Nigeria

Lack of awareness, limited knowledge about mobile money services, even among those familiar with the service providers and low level of trust in the scheme introduced by the Central Bank of Nigeria few years ago have been identified as some of the hitches mobile money operators are struggling with in Nigeria.

The introduction of mobile telephony in Nigeria, which has grown to 146 million, according to the Nigerian Communications Commission (NCC), its rapid growth and adoption and the identification of person to person payments necessitated the adoption of the mobile channel as a means of driving financial inclusion in Nigeria.

But despite the euphoria that greeted the scheme, which the Central Bank of Nigeria (CBN) said has recorded a total transaction of N700 billion since 2012, the majority of the citizens still show a preference and trust in traditional banking services. In fact, less than 15 percent of Nigerians have heard of mobile money services in a country that boasts of 76 million bank accounts.

This preference is underpinned by their perceptions of banks as institutions with proven financial records, established brands and a physical presence that provides reassurance. Mobile money services, on the other hand, are deemed vulnerable to mobile network fraud and poor network quality, especially in a country like Nigeria that lacks the basic infrastuctures.

So far, 23 mobile money operators have been licensed and over 80,000 mobile agents to provide the service in the country. Some of them include Parkway Projects, AfriPAY, GTMobileMoney, FirstMonie, PocketMoni, Paga, Fortis Mobile Money, *909# Mobile Money, Monitize, my.wallet, Ecobank Mobile Money, QikQik, Teasy Mobile, Mimo, EazyMoney, PIDO, VTNetwork and Cellulant.

Being African biggest economy in term of gross domestic product (GDP), a population of over 170 people and over 80 percent mobile phone penetration, Nigeria can be said to be tailor-made for mobile money success, but it does appear no one has been able to crack it well.

This, the Electronic Payment Providers Association of Nigeria (E-PPAN) has lamented, attributing the slow pace of mobile money adoption in Nigeria to inefficient advocacy strategies among operators and government.

According to the Executive Secretary of the association, Mrs. Mrs. Onajite Regha, mobile money and other form of mobile payment were expected to foster the financial inclusion of the unbanked populace, facilitate economic activities and deliver on employment and economic growth in the long run, but said lack of acceptance still greet the scheme.

“Despite the efforts by key players in the banks, telecom and the mobile payment service providers (MPSP) in promoting and offering mobile payment options, absence of widespread customer acceptance still greet the innovation,” she said recently at a two-day Mobile Money Africa International conference tagged ‘Charting Africa’s Cashless Future.’

One other drawback of the scheme is that each of the players approached the market with different expectations without a collective awareness creation, which is key to the success of service in Nigeria.

Another reason adduced by industry watchers is that the number of providers licensed to operate mobile money services is making it difficult for any of the provider to get traction. As there are numerous startups, each with their own pricing scheme and capabilities. This has created a significant confusion in the market given that there are multiple value propositions and no real interoperable services available today.

“Imagine you were given eleven ways to transfer money, but not only do you have no idea which of the eleven methods your friends, family, shopkeepers and employees were using and/or eligible for, but none of them work together. For this reason, the CBN would do well to whittle down the licenses,” argues Christina Tubb in a response to a poser ‘Why has mobile banking or mobile money not taken off in Nigeria?’

Another commentator, Toffene Kama believes that too much regulation on the part of the regulatory authority killed mobile money service before it took off in Nigeria. He argues that the CBN started on a wrong note by licensing a fixed number of players, thereby limiting innovations.

“Regulation first does not allow unexpected innovation and this is particularly the case in Nigeria. We simply need an independent regulatory body and not government,” he said. He added that mobile money is more cultural and Nigeria being so diverse should focus on inventing their own way and not systematically copying Safaricom and Kenya.

Out of the 23 mobile money licensees, only a few can be said to be on the ground running. Paga by Pagatech is singled out in this regard. In the last few years, Paga has been able to double its footprints across the country with about 9,000 agent networks and has handled transactions worth a billion dollars.

Launched in 2011, Nigerians can conveniently say Paga has tried to overcome the lukewarm reception to mobile money in Nigeria with strategic partnership with banks and telcos, including investors. Paga boasts of over 3.4 million users and 3,600 SME clients.

Recently, Paga secured a $13 million series B financing from Adlevo Capital, with participation from Omidyar Network, Goodwell West Africa, Acumen Fund, and Capricorn Investment Group.

According to Tayo Oviosu, the fund will be used to grow the Paga mobile peer-to-peer platform and consolidate on its agent network across Nigeria. “Our recent financing will help us continue to build towards our vision and support the strengthening of our agent network,” he said.

                                                                                                                        Written by Martin Ekpeke