Capital, Infrastructure Bane of Mobile Payment In Nigeria

JUNE 23,2014.


Inadequate capital and the poor infrastructure facility have been identified as some of the challenges of mobile money operators in the country. This was made known by the director Banking and Payments System Department of the Central Bank of Nigeria (CBN), Dipo Fatokun.

Fatokun while speaking on “Issues and Challenges of Implementing Mobile Payment Services in Nigeria” at a round table discussion organized by the Nigeria Deposit Insurance Corporation (NDIC), noted that many of the mobile money operators have now discovered that they need more funding than they initially forecasted.

According to him, the mobile money operators have inadequate capital having spent more on agent network, marketing amongst others than they budgeted for at the beginning, adding that this had led to inadequate agent network in the country.

Noting that currently the country has about 65,000 agents, he said “there is a difficulty in reaching the unbanked especially in remote areas as agents are not available. Apart from being concentrated at the urban areas at the moment, the agents are grossly inadequate.”

Fatokun also added that aside the low number and lack of wide spread of agent networks in the country, mobile money operators also face the challenge of “poor quality of agents as mobile money operators had to build networks from the scratch with little or no previous experience.”

He also listed infrastructural challenges such as the poor power situation in the country as well as telecommunications network, just as he stressed the lack of awareness, customer education as well as lack of trust in mobile money as a valid payment tool.

He said findings from a study carried out in March this year by EFInA on “Maximizing the Uptake of Digital Financial Services through Consumer Perspectives”, indicated that the overall awareness of mobile money remains relatively low. According to him, the top three reasons for not using mobile money were lack of trust, lack of know-how and unreliable GSM networks.

“In the same vein, Nigeria’s leading opinion polling and research organization NOI Polls Limited noted in its poll released in August 2013 in Abuja that 59 per cent of Nigerians are not aware of the mobile money services and that only 13 per cent of the 41 per cent who are aware of it, are using it.”

Stating that the CBN will continue to play its part in striving to build more confidence in the system through its various policies as well as its oversight function in the industry, Fatokun said “the general perception of users of mobile money service as indicated by the majority is that it is easy to use, it is secure, service providers are easily accessible, it saves cost and it saves time. It is hoped that with the growing rate of awareness and education, penetration rate will be on the increase.

Also speaking at the roundtable discussion on mobile payment services, the managing director and chief executive of the NDIC, Alhaji Umaru Ibrahim, said the corporation is working to address the challenge of security of funds on the mobile payment platform.

He noted that the NDIC is considering extending the deposit insurance coverage to mobile banking subscribers, “with each subscriber guaranteed up to the sum of N200,000 or N500,000 as applicable to microfinance, mortgage and deposit money banks in the event of a bank failure.

Alternatively, if a bank fails, then the insured mobile money account can be transferred to another sound bank. This is to further engender public confidence in the system thereby promoting financial stability.

He however raise some issues in mobile financial services and the use of agents to enhance financial inclusion some of which he listed as “role of agents, their liability and the optimal funds to hold service customers; the operation or relationship between banks and telecommunications companies.”