Regulating Mobile Money in Nigeria

Africa and Nigeria particularly is about to witness a new revolution that is comparable to the advent of Mobile phones but this time around, the growth will be exponential, rather than organic. Mobile Money Transfer and Payment, is coming to 55 million subscribers, soon. Mobile payment firms in the likes of Tagattitude of France - Near data sound Transfer Mobile payment systems , MTN, Zain and others are getting ready to enter largest mobile market in Africa.

While the Tagattitude model is more of providing mobile authentication solutions to the Financial Institutions and Non financial Institutions, others like, recently licensed MoneyBoxAfrica, will actually engage the end user and provision services directly. Nigeria, currently has no mobile payment systems provider with significant National Footprint in a market of 55 million subscribers and addressable market of 140 million people. The opportunities are immense with strong value realization.

The growth of the Nigeria Mobile subscription base has been very impressive in the last Nine years, from 450,000 fixed lines to 55 million mobile subscribers, is no mean feat. Mobile payment is poised to drive subscription uptake further in coming months as Mobile payment systems becomes part of the financial channel.

According to the GSMA, Mobile Money transfer services includes services whereby customers use their Mobile device to send and receive monetary value. The market for mobile money transfer leverages the ubiquitous of the mobile phone and the interoperability of the technology to provide easy to use and secure mechanism for millions of people, worldwide. In Countries like Philippines, where Mobile payment and Transfer was quick to gain ground, 40 percent of day-to-day transactions had already moved to the mobile which is quite significant.

Mobile Payment and Transfer will significantly help in financial inclusion in a country like Nigeria with only 20 million bank accounts and 55 million mobile users,lower cost of transactions since small value transactions can take place without the need to leave the comfort of the home or office, drive growth and development especially amongst the financially excluded lower segments of the economy which do not have the basic requirements to open a Bank account.

The Traditional financial regulations is no longer appropriate for the new emerging mobile money transfer and Mobile payments in Africa. The telecommunications giants, despite their inadequate knowledge of financial systems had seen the clear and present disconnection in Payment systems and financial inclusion in Africa and hence are foraging into domains that are not originally theirs. MPESA is telecos owned money transfers outfit. The major hindrance to emergence and success of Mobile money transfer and Mobile payment will be Regulations. Regulations are not catching up with the speed of Innovations in the Mobile Arena in Africa.


The convergence of mobile services and financial services has now evolved into
three models which are, Mobile operator- agents model, Bank Operated model and Mobile operator - Bank model, in Africa.

Aside the licensing of Mobile money operators in Nigeria, the regulator should Endeavour to put in place a money laundering mechanism that will enable them monitor cross border transfer as such that the mobile is not used as a channel to abuse financial systems and circumvent National economic laws. This will help prevent future issues that will negatively affect this evolving system.

Third party Agent monitoring is also key as some models will require independent agents like the Mpesa Model in Kenya. There is need to closely monitor the level of involvement and how they carry out their businesses.

License cost is another area where the regulator will need to do a deep dive study. Some of the technology providers will not necessarily provision services to end users and that means they cannot be licensed but the operating partner can be licensed. Scope of their engagement and volume should also form the basis of such licensing regime since most of them might not be able to reach a National spread or cross border. Licensing cost may significantly inhibit the emergence of this sector if not properly matched

Lastly in mobile payment and transfer, the risk is inherently lower than normal traditional Banking and hence the level of regulation should be appropriate to the level of risk and not trying to adopt what presently obtains in normal traditional Banking to Mobile Money.

The time to proactively put in place a workable regulatory systems that will enable the ecosystem evolve into an African Model is now.

Emmanuel Okoegwale
NettleAfrica Telecommunications and policy Scholar.
emmanuel@gomobileng.com