Nigeria: How mobile banking can promote financial inclusion in Nigeria
By Ben Uzor Jr, Businessday Online
With about 67 percent of Nigeria’s adult population being unbanked, and a meagre 30 percent of the adult population with bank accounts, the pain still resides in the neck of financial experts to seek ways to foster financial inclusion and aid the unbanked.
Mobile banking through cell phones, however has been identified as a feasible tool to provide basic financial services to millions of the unbanked in urban and rural communities in Africa, and will become a booming industry, experts revealed at the recently concluded Unbanked Africa Summit held in Lagos last week.
Analysts said that the major obstacle to having a bank account include irregular income, unemployment and distance to the bank branch, especially to the rural population. Badewole Olufemi from GTBank said that mobile banking was a way of getting banking to the rural channels where banking services can not be reachable. Presently, there are only 22 million individuals who have a bank account out of the 150 million population but there are more than 80 million mobile phone users, which provide huge opportunity for the development of mobile banking.
“Telecommunication companies have wide reach so there are places where an operator can reach but a bank cannot. Mobile banking enables you do branchless banking. You can perform basic transactions with your mobile phone anywhere in Nigeria”, Oluwafemi said. This, he further added was the rationale behind GTBank partnering with MTN to roll out mobile money in Nigeria.
According to him, mobile banking will enable financial institutions get more customers in the country because MTN covers 70 percent of the Nigerian population. Nigerian Postal Service, which has outlets all across Nigeria, is also searching for partners to take advantage of the mobile banking to reposition the national postal network, the deputy postmaster general Yashim Isa Bitiyong revealed at the summit.
Moreover, low literacy, poor network coverage in remote villages, high cost of mobile printers and large number of people without cellphones are the challenges facing the mobile banking practitioners, Derick Kwaku Denkyi, chief executive officer, G-Life Financial Service in Ghana said. The firm aims to see banking delivered to the doorsteps of 70 percent of unbanked population in Ghana.
It is the first Micro Finance Institution in Ghana to deploy mobile phone banking services in the delivery of its Microfinance operations. Now over 15,000 people are trading on their platform, both depositing and withdrawing.
Security is however another concern for mobile banking across the globe but Ivan Komarov from the United States (US)-based mobile service provider Global USSD, is quite optimistic.
“Around the world we have about 100 mobile money implementation already working. I haven’t really heard about any major problem of someone for instance making a decision to shut down the service because it’s too insecure,” he said. The Central Bank of Nigeria (CBN) has been making efforts under the Payments System Vision 2020, to promote and entrench electronic payments, as the major channel for payment and settlement, by all economic agents, away from the current dominance of cash based transactions.
In this regard, mobile phone was identified as a channel for effecting electronic payment between person-to-person. The CBN has given approval-in-principle to about 20 mobile payments operators to enhance the person to person payments services in Nigeria to commence operations.
Tayo Oviosu, CEO, Pagatech, an electronic financial services firm and one of the firms given the approval in principle by the Central Bank, said given the poor number of Nigerians, electronic banking takes advantage of the wider coverage by mobile phones. “There are very few people that have formal access to financial services, only about 20 per cent of Nigerians have access to formal financial services and 90 per cent of the bank accounts have less than ₦5000 in their accounts.
This shows that majority of the money in Nigeria is outside the banking industry and this poses a very real challenge to banks today. They open bank branches everywhere, yet the issue remains unaddressed”.
“However, this is not the case with the number of mobile phone users.
About 60 percent of Nigerians are within the cell phone coverage. This is an opportunity and a way of bringing financial services to the unbanked, through their mobile phones”. The one-day Unbanked Africa Summit attracted about 100 experts from banks, mobile technology developers and mobile network operators from Nigeria, Ghana, Zimbabwe and the United States.