Nigeria is preparing rules that will allow wireless carriers to transfer cash, softening a previous policy that protected the turf of banks in Africa’s most populous country.
The central bank may have realized it can’t rely on lenders alone to achieve its objective of extending services to the 50 million adults still without a bank account in the nation of about 200 million people. Telecommunications firms, including South Africa’s MTN Group Ltd., are now interested in applying for licenses that will allow them, and even supermarket chains, to create units that can collect deposits and maintain savings accounts.
The regulator late last year released guidelines on how Payment Service Banks will operate to reverse a drop in access to affordable financial products. It had previously blocked network operators from getting licenses to move money for customers without using a bank.
But, with 162 million active lines between the nation’s four wireless carriers, the regulator is opening up the field in a bid to more than double its financial inclusion rate to 80 percent by 2020.
“These guys are going to grab all the bottom-of-the-pyramid transactions,” said Bismarck Rewane, chief executive officer of Financial Derivatives Co., a risk advisory group based in Lagos, Nigeria. “This is a disruptor to the traditional way of doing things.”
Banks still have some shelter from full-blown competition as the new policy won’t enable licensees to lend, pay interest or accept foreign-currency deposits. It also requires that at least one quarter of access points be located in rural areas, which are currently under-served.
“I don’t think everyone will say, ‘this is the perfect document,”’ said Usoro Anthony Usoro, the General Manager of mobile-financial services for MTN Nigeria, the market leader with 67 million mobile subscribers. “It’s a first step towards bringing all players in. We expect that the CBN will keep listening to customers, to potential participants in that space and will keep improving the policy.”