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CBN to revoke unused mobile money licences

By on April 19, 2015

Indications emerged on Friday that the Central Bank of Nigeria had commenced the process of revoking licences of dormant mobile money operators.

Saturday PUNCH learnt that the regulator took the decision due to the urgent need to review mobile money services and seek ways to improve on them.

The CBN is worried that mobile money services in Nigeria have yet to achieve 30 per cent growth since 2012 despite licensing over 18 mobile payment services providers.

“No other country in the world has such a high number of mobile money providers and that is why we are worried about the slow growth of mobile money services. Whereas in Kenya, through Mpesa, the mobile money service has continued to do so well,” a source privy to the CBN operations said on the condition of anonymity.

He added, “Just as the CBN did in the case of microfinance banks, it may have no option but to take back some licences if it finds that those licences are not being used to provide mobile payment services to people in the rural communities.”

The 18 licensed mobile payment services in the country comprise banks and companies established for the purpose under the 2009 Regulatory Framework for Mobile Payment Services.

Further findings showed that only bank licensees were using their licences effectively to provide mobile services while leveraging their existing bank customers.

It was discovered that only a few, non-bank mobile money licensees were doing well.

The spokesman, CBN, Mr. Ibrahim Muazu, was not immediately available for comment. His telephones lines were switched off.

However, the Executive Secretary, Electronic Payment Providers Association of Nigeria, Mrs. Regha Onajite, has confirmed the ongoing CBN’s review of mobile money operations.

She said, “We must realise that a lot of mobile money operators didn’t know that mobile money is capital-intensive when they went to pick their licences. The CBN has started a review of mobile money segment to see how it can improve the system and see how licences given to the operators can be put to proper use.”

Onajite added, “Lack of shared agent network and apparently high pricing for telecoms services needed by the mobile money licensees to deploy their services, coupled with inadequate financial muscle, have been the bane of mobile money operators in Nigeria.”

More so, the Chief Executive Officer, Nigeria Interbank Settlement Systems, Mr. Adebisi Shonubi, had lamented the current prostrate position of most of the mobile money operators, especially the non-bank licensees.

While assessing mobile money operations in the country, Shonubi said that the operators were licensed principally to serve as transaction channels for deepening financial inclusion in rural areas across the country.

He, however, noted that the non-bank licensees had turned away from their core mandate of driving financial inclusion in the rural communities, noting that “they now operate in the cities to compete with the same customers being targeted by the big commercial banks.”

Shonubi also attributed the development to what he called “misconception and misunderstanding” of the objective of the licences given to the mobile money operators.

He said, “I think a lot of the mobile money operators have some misconceptions about their licences. Some of them believe they got a banking licence. Yes, you get a financial licence but mobile money is not a banking licence.

“In essence, they are transaction companies. For instance, customers have the balance with the bank but we are creating a platform for them to transact on it through mobile money.”

He also noted that most of the licensees picked up the licences very cheap without knowing what to do with them.

Shonubi explained, “Because of the initial low cost of getting the licence, a lot of people ran into it without understanding that it is a retail business and retail business takes a long time to grow. So, many of them were not adequately capitalised. For that reason, they always look for the closest thing they can hang on with to do their business.

“That means, rather than go to the village and there are only 100 people there, they chose to start doing their businesses in the cities, where there are thousands of people, half of whom already understand what the technology is; since most of them have smart phones, mobile money operators considered it easier to do business with them.”

 

[Punch]