Weak Mobile Money Penetration Worries NCC

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Emma Okonji

The abysmal low mobile money penetration in the country has become a source of concern for telecoms operators and the telecoms industry regulator, the Nigerian Communications Commission (NCC).

The Central Bank of Nigeria (CBN), four years ago, introduced the cashless economy, designed to drive financial inclusion.

Although adoption rate of cashless economy in Nigeria through various channels like Automated Teller Machine (ATM), Point of Sales (PoS) machine and other electronic transfers via internet banking, has been tremendous and commended, but the adoption rate of mobile money transfer, via mobile phones, has been very slow, and it is currently put at 1 per cent penetration, compared to Kenya’s mobile money penetration that is currently over 60 per cent.

The executive Vice Chairman of NCC, Prof. Umar Garba Danbatta, who raised the concern in Lagos, told THISDAY that NCC was beginning to get worried about the low mobile money service penetration in the country.

According to him, “The mobile money service penetration is just 1 per cent, whereas Kenya has a mobile money service penetration of close to 60 per cent. The mobile money service in Kenya is driven by telecommunications operators and not financial sector driven, like in the case of Nigeria. But the irony of it all is that the financial sector, which currently drives mobile money penetration in Nigeria, leverage on the telecoms sector to drive the initiative, which was introduced by the Central Bank of Nigeria in 2012.”

Danbatta is of the opinion that if the CBN had allowed the telecoms sector to drive the initiative, instead of the banks, the penetration rate would have improve greatly.
Before now, the telecoms operators have raised the concern about the cashless initiative of the CBN, insisting it should be driven by the telecom operators and not the banks. But the CBN said the decision was taken to make the entire process of cashless economy bank-led, since it has to do with managing public funds, of which the expertise remains in the hands of the financial sector.

Although the motive behind the introduction of cashless economy by the CBN was to reduce the amount of physical cash circulating in the economy, and to encourage more electronic-based transactions, designed to drive development and modernisation of payment system, as well as to reduce the cost of banking services and to drive financial inclusion, the telecoms industry players are of the view that the adoption rate of mobile money is too slow, blaming the situation on the structure, which mandates the banks to drive the entire process.

According to Danbatta, attempts by the CBN to get telecoms operators to serve the super agents of the banks, were resisted by the NCC, because “we were concerned about capacity. We were concerned that the additional capacity that the banks will bring on board the telecoms platform, may affect service quality, since the telcos are not directly involved in the entire process of driving mobile money in Nigeria.”

He further said: “We however said to the operators, that if they could convince us that they have the capacity to carry additional loads on their networks, to address the challenges of super agents of banks, then the NCC would grant their request. But now, there is a provision in the licence that was given to the operators, which states the condition under which the licences could be used according to law.”

He said the NCC is making move to address the situation and that the commission is currently engaging the CBN to see how to improve on mobile money service provision in the country, with a view to improving financial inclusion.

Danbatta who spoke at the 12th workshop organised by NCC for the judiciary in Lagos, said the telecoms sector is dynamic and growing very fast in terms of subscriber number, infrastructure and the level of competition. Such significant growth, he said, has also brought about new challenges that needed better understanding of the judiciary to handle.

“What we have come to understand is that some of the issues that are generating the challenges, need to be properly understood by the judiciary for proper adjudication and for that to happen, there is need for proper interpretation of the laws governing telecommunications in our country and the judiciary needs to also have deeper understanding of the technicalities of the telecoms law to enhance better adjudication and better resolution,” Danbatta said.

For us to have better resolution based on proper adjudication, we need to establish important synergy with members of the judiciary, to enable them understand better, the rules of engagement, in order to enable them adjudicate in a way and manner that will show openness and transparency in their judgement. It is for this reason that we have organised the workshop for the judiciary and this is the 12th in the series since inception, Danbatta added.