Will mobile money deepen financial inclusion in Nigeria?

Nigeria, a country with a vast population and diverse economy, has long struggled with financial inclusion. A recent report by Stears Data has shed light on the challenges faced by the nation in adopting mobile money services. The report points to inadequate regulation and policy as major barriers to the widespread adoption of mobile money in Nigeria. However, it also highlights the potential of mobile money to significantly deepen financial inclusion in the country. Ugonna Iheme, the Advisory Lead at Stears Data, discussed the findings of the report in a recent interview with CNBC Africa. Iheme emphasized the importance of recent developments, such as MTN and Airtel obtaining Payment Service Bank licenses, in driving financial inclusion in Nigeria. These licenses are specifically tailored to reach grassroots and rural areas, where traditional banking services are often inaccessible. One key point highlighted in the interview is the critical role of access points in driving adoption of mobile money services. The presence of agents in rural areas is essential for providing financial access to underserved communities. By leveraging mobile and digital technologies, companies like MTN and Airtel have the potential to establish a network of access points across Nigeria, thus expanding financial inclusion. Despite the promising outlook, challenges remain in ensuring the sustainability of mobile money services in Nigeria. Limited access to smartphones and the need for simplified financial services for feature phones are key factors to consider. Additionally, the report points out that while mobile money services offer payments and savings options, the lack of credit services restricts the full potential of financial inclusion. Mobile money adoption in Nigeria currently stands at below 10%, lagging behind countries like Kenya and Uganda where adoption rates have been more significant. However, the report suggests that the involvement of major telecom companies in Nigeria's mobile money sector could lead to a surge in adoption. Companies like MTN and Airtel, with their widespread market penetration, have the potential to drive rapid adoption of mobile money services. In looking towards the future of financial services in Nigeria, traditional banks are expected to play a pivotal role in driving financial inclusion. While mobile money services provide accessibility and convenience, banks offer a secure and regulated environment for financial transactions. Collaboration between banks and mobile money operators is crucial for creating a comprehensive financial ecosystem that caters to the diverse needs of the Nigerian population. The interview also touched upon the importance of competition in the financial services sector. While the current focus is on expanding the market and increasing adoption of mobile money services, competition is expected to intensify in the future. With Payment Service Bank licenses restricting certain services, such as credit provision, the landscape is set for collaboration and competition among different financial service providers. Overall, the report by Stears Data highlights the immense potential of mobile money in deepening financial inclusion in Nigeria. As the country continues to navigate regulatory and policy challenges, the involvement of major telecom companies and traditional banks is set to drive significant progress in expanding access to financial services across the nation.