Mobile money struggles despite N1.1trn market potential
Despite the promise and enthusiasm that attended the launch of mobile money systems in Nigeria two years ago, the service is still struggling to gain a foothold in the country.
This is against the backdrop of the huge potential market size, which is expected to grow to N1.1 trillion by 2015.
Industry experts and analysts say this is because banks, mobile money operators and other players have failed to clearly define, articulate and communicate the benefits of using the service to prospective customers.
Analysts have also identified regulatory issues, absence of interoperability amongst disparate mobile money systems, and poor agent networks, as some of the drawbacks to the speedy adoption of the service.
“Mobile money is not getting traction in Nigeria and across West Africa...there are regulatory issues particularly amongst West African countries which have not allowed mobile money to grow as much as we would have liked it in the telco space,” Wale Goodluck, corporate services executive, MTN Nigeria said in an interview.
In December 2012, the Central Bank of Nigeria (CBN), said the total value of transactions carried out so far by mobile money operators was N17.3 billion. A recent survey conducted by Enhancing Financial Innovation and Access (EFINA), has revealed that there are about 400,000 mobile money subscribers in Nigeria, out of a population of 167million.
In contrast, two-thirds of Kenya’s 29 million mobile subscribers use mobile money. Femi Adeoti, chief executive officer of Inlaks Computers said that with Nigeria’s huge mobile subscription base, currently at 114 million, the country could surpass the success of Kenya’s M-PESA, if appropriate policies that would drive the right solutions are put in place. He added that it would be necessary to give ample support to network and licensed mobile money operators. The CBN had in 2011 licensed 16 operators to provide mobile payment services in Nigeria. But analysts say poor infrastructure has contributed massively to slow adoption.
Henrietta Bankole-Olusina, head of mobility for Accenture Nigeria, said investment in infrastructure alone cannot spur growth of the service expected to aid financial inclusion by extending banking and payments services to millions of the unbanked.” We can invest in infrastructure all we want, but if we don’t have the right business models, we will not achieve desirable results. An effective business model and a clear customer value proposition is what this sector requires to stimulate growth. We have a myriad of operators offering the same standard of products. “Nobody is telling the consumer about what values they can derive from using the service”, Bankole-Olusina said at a forum in Lagos.
Lending his view, Franklin Chidi, an electronic payment expert and blogger, said a large number of banks have for several years, supported mobile banking and money transfer services using phones, browsers or application installed on Blackberries, iPhones and Andriod phones. “The reality is that many of the early adopters who typically help spread the phenomenon are the young and upward mobile, who are not yet jumping on the mobile money bandwagon because they have an alternative that still works for them.”
“Traction in mobile payment in Nigeria remains very low. Interoperability is a serious issue. The likelihood of growth is clearly reduced”, Chidi added.
“Only four out of the 20 licensed mobile money operators are interoperable, as the industry is currently fragmented ,with disparate mobile payment systems that don’t talk to one another, Bankole-Olusina said. The potential in the mobile money market is huge, but it is a capital-intensive, thin margin business, said Chuma Ezirim, head of e-banking at FirstBank. “There is need to manage the expectations of some stakeholders, especially on the viability of the Mobile payment deployment. The growth period might be longer than expected because of the complexity of the ecosystem.”
