Making the Next Telecom Revolution a Reality

One of the easiest ways of reaching the unbanked especially those in the rural areas is the deployment of Mobile Money Transfer (MMT). Mobile money transfer is a technological and financial empowerment tool used in connecting the unconnected with money via telephony. It has been used successfully in several developed and emerging markets to speed up the development of financial inclusion and mobile connectivity.

With the disaggregation of traditional brick-and-mortar financial services delivery models, MMT is offering access to a far more effective channel to serve customers that were previously deemed non-profitable by banks. MMT represents an exciting opportunity fuelled by a largely unmet mass-market demand for financial services and supported by a business case that also benefits the core business of mobile network operators.

Mobile money has demonstrated strong traction in the financial and telecommunications markets. It has a business model that scales, offers sustainable financial incentives for agents to promote the service, has a wide acceptance network, and has recently engaged with banks to offer core financial services. In that respect, it has a significant impact on the value chain and existing delivery models while advancing financial inclusion.

Since sending and receiving money via mobile telephone is now cheaper than other alternatives. MMT is beginning to be seen as a way to help people send and receive money, both domestically and from abroad. It is now a fact that you can make low value transactions more easily and cost effectively than ever before through mobile phones; this is one of the reasons why mobile money is booming and fast becoming a more integral part of emerging economies.

MMT has made the money transfer market more competitive and the mobile phone has offered an alternative, convenient and cheaper way to remit money almost instantly in the palm of your hand. This is why foreign investors have been showing interest in the emerging mobile money business in Nigeria especially with the release of guidelines by the Central Bank of Nigeria (CBN) and the eventual issuance of approval-in-principle to 16 companies to operate mobile money networks in the country.

Those granted the approvals include Stanbic IBTC Plc, Ecobank Plc, Fortis Micro Finance Bank, United Bank for Africa Plc/Afripay, Guaranty Trust Bank Plc/MTN and First Bank of Nigeria Plc. Others are Pagatech, Paycom, M-Kudi, Chams, Eartholeum, e-Tranzact, Parkway, Monitise, FET and Corporeti. The CBN’s provisional licence instructs the 16 operators to roll out mobile money networks across the country within a period of four months. Through the networks, customers will be able to use their mobile devices to send and receive monetary value.

While the euphoria surrounding the move to start implementing mobile money in Nigeria is still in the air, confusion surrounds who has the regulatory oversight of such a multi-billion dollar market and those that should really be in the driver’s seat of such a huge business. At the moment, the CBN says it has sole responsibility and has gone ahead to issue provisional licences to companies some of which are still grappling with the challenges of implementing mobile money payments, a skill which is new in these climes, but which is very necessary for the project to succeed.

While the introduction of mobile money since long overdue, is commendable, the question to ask is: could there have been such a thought in Nigeria in the first place if there were no mobile telephony in place? Prior to the introduction of GSM in Nigeria, could anyone have dreamt of mobile money transfer? It stands to reason therefore, that the mobile telephony network is the platform on which the mobile money project will ride on. Yet, while the CBN has, going by the banking regulations, domesticated the right over money transactions, thereby issuing the provisional licences, where is the place of the telecommunications regulator, the Nigerian Communications Commission (NCC)?

If, as it is well known, the NCC has achieved so much in taking Nigeria from the backwaters to the front burner in telecommunications regulation, achieving what was thought unachievable in record time, with over 90 million mobile subscriptions in 10 years, will an ambitious project such as mobile money transfer really succeed with only the CBN regulating its implementation without the NCC lending its wealth of experience and expertise in telecom?

In Africa, Asia and South America where MMT has become successful, it has been driven mainly by mobile telecommunications companies. In Kenya for instance, M-Pesa, the most successful MMT case study in the world, is run by Safaricom, Kenya’s largest mobile operator. In Philippines, the first country in the world to implement MMT, Smart Communications and Globe Telecom run Smart Money and GCASH respectively.

Mobile money pioneers in Africa such as Safaricom, Airtel, MTN, Orange, Orascom have over the past few years successfully deployed MMT platforms across their operations, albeit in different nomenclatures. It is strange that mobile network operators (MNOs) in Nigeria were excluded from the provisional licence granted by CBN. In other countries like Cameroun, South Africa, Kenya, Tanzania, Ghana, Zambia, Uganda and Mozambique where MMT is active, it is mobile operator-led.

It beats imagination that those that CBN issued provisional licences do not have the mobile networks or the subscriber base to attract users. They also do not have any foothold in the rural areas where the majority of potential MMT users reside. By excluding the mobile network operators, the CBN seems to have planned to fail from the beginning.

It would have been easier for the mobile network operators to create mobile wallets for their subscribers, deploy Near Field Communications (NFC) technology in handsets for effective implementation of mobile money even if they are to do this with third parties who have MMT licence from CBN, but who have no mobile network, subscriber base, have no wide penetration and are relative unknown. MMT requires massive awareness, which mobile operators, in tandem with the NCC, have already created with their coverage and national penetration.

The most successful mobile money transfer platforms in the world are run by mobile network operators. The inability of the 16 licensees to carry out pilots of MMT within the four months provisional period given has shown that CBN’s move is a wrong one. The CBN issued the provisional licence for a four-month in December 2010; this lapsed in March 2011, but was extended by two more months to May 31. From this June, the CBN will have to carry out an audit of the licencees and announce in July those that will get full licence.

We therefore, call on the Federal Government to revisit the various models for MMT such as mobile operator-Centric Model, Bank-Centric Model, Collaboration Model and Peer-to-Peer Model or just adopt the most popular model that has been successfully implemented in Africa. If the CBN does not correct itself by having a rethink on its criteria for selecting MMT operating networks before issuing the full licence by July, the government’s effort in MMT may result in a colossal failure that may take long to repair.