Mobile Money: A Tale of Two Countries

Mobile Money is a developing platform that started as a payment service from your mobile and is now evolving into a platform to include other financial services. You can access your money anytime, anywhere without having to go to a traditional bank. This is widely used in the UK but for low-income people in other countries, it can be the lifeline they need. The low-income population in some countries are also known as the ‘un-banked’. The ‘un-banked’ do not have access to a bank account and, therefore, no access to the services offered through a bank. With mobile money opening the door for those in need of banking services, it is becoming more and more of a necessity. It can empower the unbanked population by providing basic financial services and financial inclusion. This can help businesses grow and make trade easier.

We will look at two countries in Africa to investigate the best mobile solutions. Kenya is the largest economy in East Africa. Nigeria is the largest economy in West Africa, and in Africa as a whole. You would think that, due to the economic standings in Africa, these countries would have similar experiences with using mobile technology but these 2 countries have experienced very different outcomes when it comes to the Mobile Money industry.

Kenya’s mobile money is being led by the telecom industry and has had great success. Safaricom entered the market in 2007 and invested in a strong infrastructure, including an awareness campaign. The ownership of mobile phones by the ‘un-banked’ led Safaricom to be the leader of the industry. Safaricom can even facilitate a limited range of loans, savings, insurance products as well as financial transactions. The platform is used by many in Kenya, not just the poor, ‘un-banked’ population.

While Nigeria also has a large ‘un-banked’ population and heavy use of mobile devices, the experience is quite different from Kenya. This is basically due to it being based on a ‘bank-led’ model rather than a telecommunications model like Kenya’s mobile money model. In fact, the telecommunication companies in Nigeria have been restricted to providing the infrastructure for Mobile Money, through which bank services can be offered. The Nigerian Central Bank (NCB) has heavily legislated the mobile money industry, making it less attractive. They claim that they have done this to avoid money laundering and also due to concerns about a loss of control. All of this control and restrictions on the telecommunications industry has left little incentive for them to be proactive in offering services. Even MTN, a South African telecommunication company with successful Mobile Money platforms in a number of other countries has fallen into difficulties with the Nigerian Government.

This model in Nigeria is doing the population a disservice and the numbers show this as fact. In 2014 a survey indicated that only 0.8 million adults use mobile money. This is in a population of approximately 178 million. Nigeria now needs to catch up, otherwise the unbanked population will be suffering the consequences of not having basic financial services for years to come.

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