The financial services sector in Nigeria hitherto has experienced operational challenges, but the advent of information and communications technology (ICT) has revolutionized the system. With an almost seamless operation, the financial sector has definitely witnessed significant improvement with ICT. However, there are still some challenges.
The Nigerian banking system is evolving with the introduction of the automated teller machines (ATM), the use of debit cards, internet banking, mobile banking, point of sale terminals (PoS), agent banking amongst others which is seeing more people being financially included.
However, with over 153 million Nigerians having access to mobile telephony and about 97 million connected to the Internet, Nigeria still lags behind many advanced nations in the area of financial inclusion- citizens with bank accounts and making transactional services with formal financial institutions.
Despite the presence of bank cards such as Verve, MasterCard, Visa issued by deposit money banks as well as e-payments switches like eTrazanct, Interswitch, Nigerian Interbank Settlement System (NIBSS) and numerous e-payments solution providers in the country, the number of underbanked and unbanked still outpaces those in the formal sector.
According to latest data provided by NIBSS, the custodian of banking industry data, out of over 182 million Nigerians, total bank accounts in the country stands at 95.25 million as at November 2016. Of this figure, only 64.61 million accounts are active while the number of accounts with Bank Verification Number (BVN) stands at 49.14 million.
This shows that 48.4 per cent of total bank accounts and 24 per cent of active bank accounts in the country are still without BVN. What is needed now is partnership by the regulators and the telecom companies to bridge the above gap and bring the rest of the unbanked into the formal sector.
By this, the adoption of e-payments in like Nigeria if pursued vigorously on a level playing ground will translate into further cost savings, increased economic activity and capital accumulation for individuals and corporate citizens in terms of profits and increased revenue for government.
A cross-sectional analysis of 50 countries suggests that consumer spending increases by 0.5 percent for every 10 percent increase in the share of e-payments in a country. The explosion being witnessed in Nigeria’s e-commerce owes its success to the revolution in the telecom industry by operators like MTN, Glo, Airtel and Etisalat.
Without access to internet and mobile telephony provided by telecom operators, companies like Konga, Jumia, Yudala, Uber would not be making billions in revenues. However, there is still much to be done by the government if they carry telecom operators along in policy making and implementation to ensure the success of financial inclusion policies.
A case in point is the poor implementation of Mobile Money in Nigeria. Using a Bank-led approach has denied millions of Nigerians yearning for the same mobile money success stories heard in countries like Kenya and Uganda from replicating itself in Nigeria. It is difficult to count by the fingers, mobile money licencees who are really successful in Nigeria even those who got licences that are still operating.
Leaving out telecom operators from being major drivers of mobile money transaction (MMT) over the last six years has made a mockery of the scheme. It is only when telecom companies can drive the scheme in Nigeria, not banks, that it can succeed.
The implementation of the Federal Government’s Treasury Single Account (TSA); and migration of all payment cards from magnetic stripe technology to Chip-and-PIN, otherwise known as EMV, due to the weaknesses of the former, has led to transformation of e-payment sector because it is driven by ICT with support from telecom companies.
Operators like MTN, Glo, Airtel own the fibre optic backbone on which Nigerian banks ride to ensure that ATMs, PoS, mobile and internet bank are always-on and efficient. This goes to show that without the telecom companies, banking would still be in the realm of the brick and mortar fashion of old.
The success of Nigeria’s technological revolutions in telecoms and banking industry cannot be complete without MTN Nigeria which is today the biggest ICT Company in West African region. The operator has extended its footprints into information technology, cloud-based services, managed services and web hosting and web development services.
MTN’s interests cuts across smart city solutions, SMEs, mobile banking and micro insurance where it is partnering with Lagos State government, Diamond Bank and Mansard Insurance to provide link millions Nigerians on its network. Also, MTN has the largest data centre in Africa from where it controls and monitors on real-time its entire base stations and fibre networks in the country supporting the telecom and banking industry as well as its cloud businesses.
MTN aims to transform into a financial technology (FinTech) operator through mobile money, e-insurance, e-commerce, cloud business, web services and last mile banking. It has made a raft of appointments in recent months over these and what better way than to enhance its investments in its biggest market, Nigeria.
Need For Government Support
MTN is taking advantage of opportunities presented by a rapidly changing ICT sector as it diversifies deeper into digital commerce and mobile banking. It is foraying into digital services, ranging from e-commerce to digital media and mobile financial and lifestyle services. At the moment, MTN Nigeria is the largest music distributor in Africa.
Its investments in Mobile Money and Africa Internet Holdings (AIG) provide an exciting platform for the next phase of evolution of the mobile telecoms sector. As Systemspecs Limited, developer of Remita, the platform used by the federal government TSA project, prepares to launch a mobile version, financial inclusion using mobile phones beckons
A level playing and the importance of the part of government, that operator is the biggest investor in Nigeria’s economy should be uppermost in the minds of policy makers. Support particularly from government for telecom operators is needed at this time that they find it difficult to source for foreign exchange to rollout their networks should be encouraged so that they can do more to serve the system.
For government to accelerate development of Nigeria’s microenterprises, reach millions of Nigerians and stimulate economic activity at the base of the pyramid, learning from and partnering with telecom operators can help government reach the underbanked and financially handicapped faster.