Nigeria lags Kenya, Ghana, others in mobile banking

mobile banking

The use of mobile phone to access financial services ranks sub-Saharan Africa (SSA) countries amongst the highest in the World. The only current notable exception is Nigeria, a recent survey by EFG Hermes, an Egyptian investment bank present in the Middle East and North Africa region, shows.

According to the EFG Hermes survey (Mobiles: Deepening financial inclusion, but at a high cost) on mobile banking across Frontier markets, in Nigeria, the value of mobile payments is insignificant, as the preferred payment platform is NIPs (NIBSS Instant Payments).

Figures by the investment bank analysed by BusinessDay revealed that Nigeria only recorded 8 percent of its population who used their mobile phones to access their bank accounts in 2018.

Kenya remained the continent’s leader in mobile banking. The 2018 report published recently by the Egyptian bank shows that 72 percent of the banking population used their mobile phones to access their accounts, nearly three times the global average that stood at 25 percent.

This means that seven out of every 10 Kenyans are using their mobile phones to access their bank accounts for services to save or get loans coinciding with a change by the lenders and micro-financiers to adopt mobile and digital platforms that cut on operational costs.

Uganda was the closest to Kenya at 47 percent while Tanzania followed at 37 percent.

The average percentage of the banking population in the Sub-Saharan Africa (SSA) stood 21 percent while globally the Americas that include the US had 68 percent usage of the platforms, according to the report by EFG Hermes.

“Although credit penetration across our focus countries in SSA continues to lag global levels, the use of mobiles to access financial services ranks our countries among the highest in the World,” the report read.

Nigeria, Africa’s most populous nation, was ranked at bottom position in the mobile account pyramid, sharing space with South Asia, the data revealed.

Most of the consumers in the SSA countries, the report notes, can now access services such as opening of new accounts, applying for loans and making payments for utilities through the use of mobile phones, increasing financial inclusion.

‘’Whilst we are very encouraged by the depth of mobile banking across our universe of SSA countries, we believe that now is the time to focus on the costs and would encourage both the central banks and ICT regulators to review the cost of this financial inclusion,’’  EFG Hermes said.

EFG Hermes said in the report that mobiles will play an increasing role in financial inclusion because of the infrastructure gap and low penetration of salaried workers which is unlikely to change materially in the near term. Encouragingly, it noted, this is already happening as per the World Bank’s latest Findex Data Survey.

“With the development of NIPs (NIBSS Instant Payments), a shared agency network and low cost framework, Nigerian banks should remain dominant in the retail payments space for the benefit of its low-income users. Its spirit of ‘fair play’ and open competition is the difference and should be an example for the rest of SSA,” the report mentioned.

Nigeria currently has 36.8 percent of its adult population excluded from the financial cycle, this translates to a population of 36.6 million adult Nigerians who at the moment are not included in the financial net.

However, the central Bank of Nigeria (CBN) has a target to include 80 percent of its adult population into the financial cycle by the year 2020.

This leaves the apex bank with an exclusion gap of 16.8 percent, estimated to be bridged in less than two years for it to meet its 20 percent exclusion target.

Checks by BusinessDay revealed that the Telco-led model in driving financial inclusion in African countries reported tremendous progress owing to the already existing large customer base of the Telcos.

With the aim to meet its target, Nigeria’s apex bank proposed Payment Service Bank (PSB), an initiative that will enable companies outside the financial industry to acquire mobile money license which  will allow them to carry out payment services like: maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and pre-paid cards; and operate electronic purse.

Nigeria’s bank-led financial inclusion model has been argued by industry sources as one of the reasons for the lag in the country’s inclusion rate.

Thus, the proposed PSB by the apex bank has been seen as a welcomed development considering it will avail other businesses, especially the Telcos the opportunity to partake in providing payment services.

At least 30 business names have since applied for registration as payment service banks since the CBN proposed the PSB in October last year, but the regulator is yet to give license to any of the applicants.

 

Endurance Okafor