The South African telecommunications giant MTN will soon offer financial services to its 67 million mobile customers in Nigeria and aims, far beyond, the unbanked population.
A “mini-revolution”, an “upheaval”, “a tornado” … In Nigeria, the information is widely commented on the country’s economic media. In fact, MTN Nigeria, the country’s largest telecommunications operator, has announced that it has obtained the approval of the Central Bank to engage in the provision of financial services. This is the first step in the transformation of the South African giant who wants to deploy in mobile money. You have to know that in Nigeria banking regulations are very strict. Only licensed banks, or financial technology companies in partnership with banks, were allowed to use mobile money, telecommunications operators were excluded.
Greenlight from the central bank
Listed on the Nigeria Stock Exchange, the group announced its intention to apply for a mobile banking license in Nigeria to launch the service in 2019. Yello Digital Financial Services Limited (YDFS), the name of the new service, has been licensed “super-agent” from the Central Bank of Nigeria, said MTN Nigeria CEO Ferdi Moolman. “This is a very important first step in leveraging our infrastructure to evolve our financial technology initiatives. We have also applied for a payment service banking license, which will allow us to eventually offer a broader and deeper range of financial services to these communities and we are still hopeful that we will get approval soon,” said Moolman.
This license comes after the reforms of the Central Bank of Nigeria last October, allowing telecom operators to obtain banking licenses and mobile money to strengthen financial inclusion. Indeed, commercial banks have failed to achieve the goal of inclusivity. This is mainly due to high operating costs for the opening of new accounts or the operation of ATMs in urban and rural areas, etc.
— MTN Nigeria (@MTNNG) July 31, 2019
Exploit the immense potential of Fintech
Over the past 18 months, sub – Saharan Africa has become one of the fastest-growing Fintech poles in the world in terms of investment. The numbers exploded in 2018 to reach $ 357 million. Start-ups from Kenya, Nigeria and South Africa account for the largest share of funding. This trend continued until 2019, with a number of highly publicized transactions. There are currently nearly 400 million mobile money accounts registered in sub-Saharan Africa, nearly half of the global total. In Ghana, Kenya and Zimbabwe, more than 60% of adults have a mobile money account. Internet and mobile phone are revolutionizing the relationship to the bank. In addition, the rest of the continent, the largest players in mobile money all belong to telecommunications operators. The country and its more than 190 million inhabitants were a little exception.
Nigeria lagging behind financial inclusion
In several countries of the continent, the actual use of mobile money ranges from fast cash transfers to the facilitation of daily bill payments and even to business development. For example, in Ghana, the service has been adopted for investment. And MTN knows something about having made in this country its stock market introduction with a subscription via a mobile wallet. Interested investors were able to subscribe to the offer of securities by Mobile Money. Ghana has meanwhile become the fastest growing market in Africa, with the number of registered accounts multiplied by six between 2012 and 2017. However, Nigeria is lagging behind other African countries in financial inclusion. The number of adults with a bank account has fallen to 40%. More than half of Nigerian adults – 60 million people – do not have access to financial services.
It is unlikely, however, that MTN is the only telecommunications operator to obtain the famous license in Nigeria. Supported by new financing of $ 1.25 billion, Airtel Africa announced in late 2018 its intention to ” achieve rapid growth ” with Airtel Money, its mobile payment service, across the continent.
Nigeria is MTN’s leading market with double-digit growth rates and more than 67 million subscribers in 2018 (42% of the national telecommunications market) out of its 217 million subscribers worldwide. Once its banking license is obtained, MTN intends to rely on the Paga network. From the name of the largest financial technology company in the country. In ten years, this model-based structure of PayPal, Alipay or M-Pesa has formed a solid network of 17,000 agents and reaches 9 million users in ten years. But his new alliance with MTN will not be easy. For several years, the MTN group has had legal problems in Nigeria, where the prosecutor General’s Office sent him a note intending to recover a sum of 2 billion dollars (1.73 billion euros). The group should be back in the courts by October 29, 2019.