It has been suggested that some of Nigeria’s telecommunications companies may be unable to enter the mobile money market after the decision by the country’s central bank that new entrants must guarantee a significant capital base.
According to Reuters, Nigeria’s central bank plans to grant more licences for payment service banks – but will require a minimum capital base of $13 million.
The bank also requires that applicants set up separate companies that can guarantee the minimum capital requirement before telecommunications firms, banking agents, retail chains and postal services can apply for licences to become payment banks. Each new group must be run as an entity that is independent from the controlling company’s existing operations.
Mobile money has been successful in Africa – in Kenya and the east African region in particular. Such services help telecommunications companies to diversify their offering in a highly competitive market where prices for basic services are falling. They also benefit the unbanked. It’s therefore hard to see why Nigeria’s regulatory environment is so far making things difficult for new players to enter the market.
In fact, when the central bank issued preliminary guidelines for payment banks in 2018 for discussion, telecommunications companies in particular argued that they were not banks and did not need a capital base.
However, news reports indicate that while new payment methods might prove popular with the 90 million or so Nigerians who do not have a bank account, lobbying from lenders who do not welcome this form of competition may have affected the regulatory approach to potential new entrants.
The central bank has granted three licences so far – to 9PSB, a unit of local telecom firm 9mobile, and two others. MTN, Nigeria’s biggest telecommunications firm, already offers a mobile money transfer service but has yet to receive approval. Whether many other companies will apply for licences is an interesting question.