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Mobile Money: CBN Defends Restrictions on Telecom Firms

05 May 2013

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CBN Governor, Sanusi Lamido Sanusi

Festus  Akanbi


Amidst the spirited efforts of Nigerian telecoms operators to drive the Mobile Money Payment introduced by the Central Bank of Nigeria (CBN), there are indications that the apex bank is not likely to rescind its decision in the nearest future.

One of the justifications for a bigger sphere of influence in the mobile banking landscape given by the telecom firms is the fact that the banks which are currently driving the process rely heavily on infrastructure of the telecoms firms to do the business of mobile money banking.

Speaking at a recent forum, the Director, Tele Banking, Globacom, Tunde Kuponiyi, said mobile money is a telecommunication-driven retail network, hence the need for a bigger chunk of the business for the telecoms firms. However, Director of Communication of the CBN, Mr. Ugo Okoroafor, in an interview with THISDAY at the weekend, said it was not a mistake that the apex bank chose to make mobile money payment in Nigeria a bank-driven one.

Okoroafor explained that the decision of the regulatory authorities was informed by the need to monitor the amount of cash in circulation, saying this could only be possible when all aspect of banking is handled by banks.

“The only way to monitor the volume of cash in circulation is to allow banks to drive the mobile money payment,” he said.
It was gathered that the telcos were not licensed for mobile money services because the CBN decided to adopt a bank-led model, which required that only financial institutions could carry mobile money licences. What it also means is that all the telecoms companies are offering mobile money services in partnership with licence holders.

Speaking in the same vein, Group Managing Director, Guaranty Trust Bank, Mr. Segun Agbaje said telecoms companies cannot drive the process given some risks associated with mobile money payment.

When confronted with the complaints of telecoms operators that their role was insufficient to justify their investment in the infrastructure, which banks rely upon to drive the business, Agbaje said there are other major factors which the CBN had to put into consideration before deciding that the process should be bank-led.

Kuponiyi had argued that, “The Telco is an infrastructure service provider. Mobile payment relies about 90 per cent on the telecommunication industry. “We are satisfied with the given regulatory framework, because the mobile money is a value added service. We believe there should be greater involvement of the telecommunication companies in this field,” he said.

He said though the major business of telecommunication firms is communication, “the Central Bank should see how with the use of financial inclusion, there can be increase in subscription, that is, an increased subscriber communication and enhanced usage of airtime.”

He said Globacom had been able to bring on board about 11 mobile payment licensed agents to give the firm’s customers more platforms to choose from in carrying out their mobile money transactions.

“The Central Bank should allow us advertise, and the airtime issue should also be looked into.  “They say telcos are not supportive. But the fact is that our resources are being used during these transactions, and despite this, some transactions are not even commission based. Who would pay that price,” he asked.

Mobile money or mobile payment involves the use of mobile phone or personal digital assistant for initiation or confirmation of payment transactions. It supports ‘person to person {P2P)’ transfers with immediate availability of funds for the beneficiary. Some of the operators are Stanbic IBTC Bank Plc, Ecobank Nigeria Plc, and Fortis MFB, UBA/Afripay, GuarantyTrust 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 introduction of mobile money system is therefore expected to eliminate the rigours of cheque writing, visiting banks and restriction of access to services only during the banking hours while making banking services available to many who are not currently banked by providing services to them through their mobile phones and other Personal Digital Assistant devices.

Meanwhile, a CBN source said when the issue of granting licences for mobile money came up, it was debated thoroughly and agreed that mobile operators should not be burdened unnecessarily with offering mobile money services.

The source explained that, “Since August 2011, the Central Bank of Nigeria has licensed 20 mobile payments service providers, however, since then there has been no significant adoption of mobile payment services, despite the potential market size of $7.2bn by 2015.”


The source said the key to success in mobile payments in Nigeria would not be based on only the technology or connectivity; it will be the business model. “However, a consolidation of existing licensed players as a result of competition is expected in the near future,” he said.

Tags: Business, Nigeria, Featured, CBN Governor, Sanusi Lamido Sanusi

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