7 Years After: Have Mobile Money Startups Helped Increase Financial Inclusion in Nigeria?

A 2011 Roland Berger strategy report draws a conclusion that 77.0 per cent of Nigerians save for emergency purposes and, so, any infrastructure that supports the ability to withdraw funds quickly and easily will serve the populace well. The report also noted that cash availability was important and, as such, challenges of insufficient funds at ATMs and POS must be avoided, in order to build the trust and confidence of the populace in these payment channels.

In order to promote Mobile Payment in Nigeria, the Central Bank of Nigeria, in August 2011, had granted licenses to 14 mobile payment providers. By end of January 2012, the 14 mobile payment operators were reported to have recorded 35,971 transactions worth 228 million NGN. With over 80 million Nigerians known to carry a mobile phone compared with the 25 -30 million banked Nigerians, patronage of this mobile payment has the potential to grow at geometric progression, with a potential transaction value of N6.5 billion daily and N1.17 trillion in 6 months. The National Bureau of Statistics released a report of electronic payment channels in the Nigeria banking sector Q3 2016,  which revealed that the Nigerian Banking Industry conducted 10,865, 588 mobile payment transactions in the third quarter of 2016, a significant increase from the 8,643,518 in the second quarter of 2016. By inference, therefore, mobile payment transactions increased by 30,107 percent, between January 2012 and Q3 of 2016.

At the Unbanked Africa Summit held in Lagos in 2011, participants had projected that mobile banking through cell phones remained a feasible tool to providing basic financial services to millions of unbanked people in urban and rural communities in Africa.

Seven years down the line, there is still a challenge in Nigeria. While the core goal had been to remove barriers which clogged access to financial services by millions of Nigerians, still, Mobile Money appears not to be making expected headway, especially in the areas of bottom of pyramid (BOP) adoption and penetration.

Does the average Lagos danfo driver have access to traditional banking services? IMAGE:nigerianobserver.com

According to a research by the Central Bank of Nigeria, access to a well-functioning financial system, by creating equal opportunities, enables socially and economically-excluded people to integrate into the economy and actively contribute to economic development. Ultimately, this ensures that the financial system will play its role of inclusive growth -a major challenge of emerging and developing economies.

Once access to financial services improves, inclusion aggregates several benefits to the consumer, regulator and the economy alike. The consequence of financial exclusion is to minimize the scale of economic activities that can be financed and, hence, limit the potentials for higher economic growth. Financial inclusion requires that attention be given to human and institutional issues, such as quality of access, affordability of products, sustainability, and outreach to the most excluded populations. Financial inclusion guarantees improved abilities of poor people to save, borrow, and make payments throughout their lifetime. Apart from the regular form of financial intermediation, financial inclusion takes care of:

  • Basic no-frill banking account for making and receiving payments;
  • Savings products suited to the pattern of cashflows of a poor household;
  • Money transfer facilities;


  • Insurance (life and non-life).

In an interview, the Founder/CEO of Reach Technologies, JR Kanu expressed his opinion on why Nigeria has not reached the stage of advancement or scale which presently obtains in the Kenyan mobile money market , especially with M-PESA.  “The general understanding of the issue is that you need a better working relationship between the telcos and the banks and the telcos are not empowered to be as flexible with this form of banking because the CBN also wants to be careful about Nigeria’s banking provisions and structure. Finding a way to make all the players in this sector happy, while keeping the system safe is a really tough one”, he said.

When asked about a projection of the Nigerian mobile money market in the next 5 years, Kanu said, “Let us have it first. We do not have mobile money really. So let us have it and then we can start making projections.”

So, which way forward?

Many mobile money startups in Nigeria are still chasing after the already-banked and over-banked segments of the population, when the focus should be segments lacking access to banking and unreachable segments of the society. Mobile money providers need to set their sights on their true market, the raison d’être. They need to stop marketing the service to those who do not really need it, else they might not grow or create sustainable impact.

The clarion call: stop targeting the elite, but, rather drill down to the bottom. M-PESA in Kenya is a success, because it has reached out to those who truly need to be integrated, such as the beer parlour manager, noodle seller, small kiosk owner, livestock farmer and that petty trader at the weekly village market, among others. The relevance and place of mobile money is better appreciated from the perspective of volumes of hitherto financially-excluded peoples who might now have access to mobile money services.

The upper rungs of the consumer market, understandably, are already being served by commercial banks. Until the danfo driver (who ferries passengers across Lagos roads from sunup to sundown and, therefore, never has time to visit a bank) has a mobile money account and until kith and kin in the villages, irrespective of geographies, can access financial services via their mobile phones, the purpose of mobile money in Nigeria has not been realized.

(READ: Mobile Money: How Well Have African Countries Fared?)

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Chiamaka Akuba51 Posts

Chiamaka Akuba is a graduate of Mass Communication of the University of Lagos, Nigeria. She is passionate about emerging markets and entrepreneurship and is actively working with the industry. She loves her conversations challenging and can’t help laughing when you call her ‘Honourable Writer of the Federal Republic'. Chiamaka is a Staff Writer at Outrepreneurs.

  • Oluwaseyi Adepoju

    Great insight!

  • Seye Ayorinde

    Great read.


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