GSMA: Investment brings Nigeria into mobile money reckoning


Series of new investments and new licensing in the mobile money ecosystem have lifted Nigeria from oblivion to become one of the drivers of mobile money in Africa, the GSM Association (GSMA) has said. The global body of GSM service providers in its 2020 ‘State of the Industry Report on Mobile Money’ said that Nigeria, which recorded N5.1 trillion mobile money transactions in 2019, was now living its true status as a giant in Africa.

Mobile money as a payment service allows people to receive, store and spend money using their mobile phones. According to GSMA, mobile money agents have seven times more reach than ATMs and 20 times more reach than bank branches, hence, it is considered as the best to achieve financial inclusion. Last year, the body in its report identified Nigeria as one of Africa’s sleeping mobile money giants.

The country, which is home to the continent’s largest adult (114 million) and unbanked population (60 per cent), was said to have huge potential that was yet to be utilised. However, in this year’s report,GSMA said Nigeria had ‘woken up’ as there have been notable traction in the country’s payment space, primarily through the emergence of app-based wallets. “Growing investment in this area has been complemented by significant strides in smartphone penetration, which has increased from 12 to 40 per cent in just five years.

“In November, Nigeria-based Interswitch became one of Africa’s most valuable fintechs after Visa joined a host of investors to take a minority stake in the company, which is now valued at one billion dollars. 2019 also saw a strategic partnership between online payment company, Flutterwave and China’s Alipay, which is effectively connecting African ntrepreneurs to over one billion Chinese customers,” the body said. GSMA added that with the recent introduction of Payment Service Banks (PSB), there is a growing appetite from local mobile network operators (MNOs) and their subsidiaries to launch mobile money services.

“In September 2019, the Central Bank of Nigeria granted Approvals in Principle (AIP) to two local mobile operators, 9Mobile (9PSB) and Glo (Money Master PSB). “In August 2019, a subsidiary of MTN Nigeria began offering mobile money transfers through its agent network weeks after receiving a super-agent licence.

“The current foothold and subscriber base of these MNOs put them in a strong position to rapidly scale mobile money services, including in underserved parts of the country and among feature phone users,” the report stated.

The telecommunications body said growing investments in the mobile money ecosystem was boosted last year by the sum of $210 million raised by two fintech companies in the country to provide mobile money services. According to GSMA, the two fintechs, OPay and PalmPay, entered the market with strategies focused on both tech-savvy and underserved consumers. “OPay raised $170 million, funded by Chinese-owned consumer internet company, Opera, and backed by nine Chinese investors. After launching a super app strategy very similar to GoJek in Indonesia, OPay is now expanding its services to offer payments via a USSD channel and target feature phone users.

“In addition, PalmPay raised $40 million in capital from China-based device maker, Tecno, as well as NetEase and MediaTek. This partnership provides PalmPay access to Tecno’s online and offline distribution networks, through pre-installing the app on all Tecno phones and converting Tecno retail stores to agents,” the report said. It added that within a year, Nigeria’s payment landscape had seen big-ticket investments and a host of new entrants. “Ultimately, this begs the question of which platform fintech or mobile money will take the lead in acquiring and serving Nigeria’s vast unbanked population sustainably,” it said. Last year, Nigeria recorded its highest annual value of mobile money transactions as deals valued at N5.1 trillion were consummated through the platform. Compared with the value of deals in 2018, which stood at N1.8 trillion, the 2019 figure represented 183 per cent growth. Data released by the Nigeria Inter-Bank Settlement System (NIBSS) showed that the volume of mobile money deals also increased significantly from 87.1 million in 2018 to 377.3 million in 2019. Similarly, the number of enrolled mobile money agents in the country also grew from 38,416 in 2018 to 266,039 in 2019, while the number of customers using the platform increased from 8.5 million in the previous year to 15.3 million in 2019. Some industry analysts attributed the growth recorded last year to the entrance of the largest telecommunications operator, MTN Nigeria, into the ecosystem. MTN was last year granted a licence through its subsidiary, Y’ello Digital Financial Services, to offer financial services over mobile.