Nigeria:Operators Urged to Improve Investment in Mobile Money

JAN 24,2014.

THISDAY 

Banks and other mobile money operators have been advised to significantly increase their investment in mobile money technology so as to encourage more users of that means of money transfer.

A Lagos-based research and consulting firm, Ciuci Consulting, stated this in a report titled: “Making Mobile Money Move: Keys to Accelerating the Growth/Development of the Mobile Money Industry in Nigeria.”

For instance, it showed that Safaricom invested over $30 million into M-Pesa, Vodacom spent $25 million, while MTN Uganda invested about $10 million in its initial investment in that space.

The report added: “What is crucial to mobile-money success is the willingness of the business to make significant upfront investments and patiently wait for impact at scale.

“In the past, successful mobile-money companies have committed more funds than expected to make mobile money move. Mobile banking is not simple; it requires a thorough, careful understanding of customers and agents, as well as a willingness to invest in the buy-in of both these groups. If companies are not willing to invest and stay committed, it becomes difficult to grow and develop the industry.”

The report stated that in a country of over 160 million people, with an adult population of about 87.8 million, the banking sector could only boast of 22 million bank accounts, while more than 50 million people that have mobile phones lack access to basic banking services.

It also noted that a lot of low-income earners save and transfer money either through friends, families or through informal society, saying that such transactions are always associated with costs and are highly susceptible to theft.

The Central Bank of Nigeria (CBN) had licenced 20 Mobile Money Operators (MMO) to deliver mobile payment solution to the banking and non-banking community. Most of the banks also offer such service.

“Given the current realities within the mobile money market in Nigeria, the MMOs have not reached a sustainable scale in the growth and development of the mobile money technology. The players have not gained much traction for financial services beyond simple transfers and payments.

“A critical examination of the success story of Kenya’s M-Pesa money-transfer service, which inspired many recent deployments around the world, reveals there are three critical success factors to implement after a provider has launched its deployment and starts to face execution problems. They are: effectively manage the agent network, create a compelling product and sustain corporate commitment,” the report stated.

It also pointed out that there was need for increased marketing efforts by MMOs to build a customer base of frequent users.