Abstract
Nigeria, like many developing economies has been fighting financial exclusion through different mechanisms and with financial inclusion target set at 80% by 2020 by its National Financial Inclusion Strategy, mobile money has been identified as a platform for achieving this goal. Consequently, twenty-one mobile money operators were licensed by the apex bank (Central Bank of Nigeria) to provide mobile money services to millions of Nigerians as a means of bridging the gap between the financially served, the under-served as well as the un-served. Using empirical evidence from two nationwide mobile money adoption and financial inclusion surveys, and a synthesis of technology acceptance and use models, this chapter explores the causes of mobile money adoption and extent of use across the adult population. It further provides recommendations to policy makers, mobile money operators and agents as well as institutions that support the enhancement of financial inclusion towards optimizing the benefits of mobile money and realization of the 80% financial inclusion target.
TopIntroduction
The Bill and Melinda Gates Foundation [BMGF] (2013) reports that more than two billion people globally are outside the formal financial sector and are either financially excluded or underserved. Increasing access to quality and affordable financial services accelerates the well-being of households, communities, and economies especially those in the developing world. One promising way to deliver financial services to the poor both profitably and at scale is through digital payment platforms delivered through mobile telephony. With many challenges and difficulties, including infrastructure, policy and regulatory constraints, associated with access to financial services through the bricks and mortar model, driving financial inclusion using mobile money has been considered a veritable approach, especially for rural dwellers.
The Central Bank of Nigeria licensed twenty-one mobile money operators (see Table 1) to provide mobile money services to millions of Nigerians as a means of bridging the gap between the financially served, the underserved and un-served. However, unlike some Kenya where 70% of the population are active mobile money subscribers with just six licensed mobile money operators, Nigeria, with more MMOs has less than a million (about 0.8%) adult as active mobile money subscribers (EFInA, 2014) indicating low adoption and acceptance of mobile money, most prominent in rural areas where bank penetration is low (Kama & Adigun, 2013, p.33; KPMG, 2015, p.13).
MNOs and financial institutions remain key drivers of mobile services although this is dependent on the licensing and regulatory framework in place. To determine which of these categories is first mover in terms of deployment is largely the dictate of regulatory authorities (Lal & Sachdev, 2015). In Nigeria, MNOs provide voice, data, auxiliary services including mobile payments, in partnership with banks and other third parties. MNOs have the infrastructure and capacity to operate at scale, yet, great challenges to adoption and use of services continue to threaten operations and growth of the sector.
Table 1. Registered Mobile Money Operators in Nigeria
Source: Central Bank of Nigeria
This chapter explored causes of mobile money adoption in Nigeria alongside recommendations to policy makers, mobile money operators, agents and institutions promoting financial inclusion. The state of Nigeria’s mobile money services is established through a quantitative analytical approach using data from EFInA’s Access to Finance and InterMedia’s Financial Inclusion Insight nationwide surveys.
Key Terms in this Chapter
Financial Inclusion: This is a state in which all bankable members of an economy have ease of access to and use available formal financial services at an affordable cost.
Mobile Money: The use of a mobile phone to conduct financial services using electronic accounts (e-wallet).
Financially Served: This refers to banked individuals with access to a bank account either with a deposit money bank (DMB) or microfinance bank (MFB) or who make use of services provided by other financial institutions such as insurance companies or pension schemes.
Financially Excluded: These are unbanked members of an economy without access to any form of financial services.
Mobile Money Adoption: This refers to a state in which mobile money service is accepted as either an alternative or supplement to existing financial service products.
Financially Under-Served: These are members of an economy who are under-banked with access to informal financial services only.
Mobile Money Services: These include the range of financial services offered by MMOs, such as cash-in, cash-out, utility/bill payments, remittances (domestic and international), airtime top-up, savings, credits, etc.
Mobile Money Operator (MMO): This is a licensed mobile money service provider that develops and deploys financial services through mobile phones and mobile telephone networks.