The trouble with mobile money, By Jerry Uwah




The world is revolutionizing its payment system at an electronic speed.  The new concept is about bringing banks to the people rather than bringing people to the bank. It has become increasingly glaring that the people have refused to go to banks.  Statistics on the global phenomenon are astonishing.  Developing nations are the major culprits with sub-Saharan Africa as the centre of financial services abhorrence.
There is a mutual repugnance between banks and the poor which translates into a huge disincentive for going to bank. The poor lack the financial muscle to muster the funds for the opening balance of a bank account. Besides, they cannot meet the stringent identification procedure for opening an account.

Banks consider the poor as very unprofitable customers. The same paperwork involved in signing up a customer with 10-digit deposit is used for somebody with N100.  And the poor are more cantankerous than the rich.
The result is that while mobile phone, which emerged in some countries just 10 years ago, has recorded 73 per cent global penetration, banking services which are centuries old, have less than 49 per cent penetration.
Six billion of the earth’s estimated seven billion people have access to mobile phones, compared to only three billion people with access to banking services.

The statistics on Nigeria is even more petrifying. Mobile phone which emerged in 2001 has mustered 113 million subscribers for more than 120 million active lines.
Banking service is more than 120 years old in Nigeria. As at the last count in the first quarter of 2014, some 59 million out of the nation’s estimated 88 million adults had no access to banking services.
The yawning gap between mobile phone penetration and access to banking services is a source of concern to the regulators of the nation’s financial system because the Federal Ministry of Agriculture has clipped the wings of fertilizer subsidy scammers with the so-called electronic wallet, the equivalent of mobile money floated by the Central Bank of Nigeria (CBN).

The CBN wants more people in the nation’s banking net for obvious reasons. Liquidity control would be easier if most of the cash in circulation is in banking vaults. Besides, more funds would be available for lending to the deficit segment of the economy. In accordance with the global trend of taking bank to the people since the people have refused to go to banks, the CBN in 2010 introduced mobile money as a payment system
Mobile money is targeted mostly at the poor rural dweller that not only lacks the opening balance for initiating a bank account, but lives too far away from the nearest bank branch. But the obstacles to mobile money penetration are horrendous.
The CBN rolled out the system with the registration of 23 operator-led and bank-led models. Unlike conventional financial services rendered by banks, mobile money is rather simplistic.

A subscriber registers with an agent with a token fee. When he is ready to send money to a loved one, a code is generated and sent to the beneficiary’s mobile phone. The beneficiary takes the code to the agent in his community, and he is paid without recourse to a bank.
A parent in the rural area with no bank account could as well send money to his cash-strapped son in the city through the same channel without leaving the village to a bank branch some 40 miles away.
Ironically, unlike the tremendous acceptance that greeted mobile phone services, mobile money has been greeted with monstrous apathy. Only 9.9 million subscribers had registered as at the last count in the last quarter of 2013 and the volume of transaction is abysmal.
The abysmal patronage of mobile money in Nigeria is a strange development. Nigeria’s economy is about 10 times the size of Kenya’s.
However, a World Bank report indicates that 61 per cent of Kenyan adults are on mobile money subscription list compared to 10 per cent in Nigeria.
Researchers trace the nation’s apathy to the novel payment system to everything from poverty and inadequate publicity to dearth of consumer trust. The case of Kenya would probably rule out poverty as a factor in the apathy to mobile money. The average Kenyan rural dweller may be poorer than his Nigerian counterpart.

That leaves inadequate publicity, power failure, unreliable telecommunication networks, poor spread of agent network, low capital outlay of the operators and lack of consumer trust as the major reasons for the scornful consumer approach to mobile money.
The low spread of agent network is something of a catch-22 situation.  No one knows how to tackle it. The 65, 000 agents so far registered are frustrated by poor patronage which has inadvertently blocked the chances of more agents signing up. The low profit margin of the business is equally a disincentive to the agents. Besides, the amount required as start-up capital for such a low profit margin business may be another obstacle to moves to attract more agents. No matter the enormity of the obstacles, in a world where everyone is taking banks to the people, it is in the best interest of the CBN to make mobile money as attractive as mobile phones.

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