The need for efficient distribution of relief to the most vulnerable people in the society could see states easing the path to mobile money for mobile network operators (MNOs).
Godwin Obaseki, Governor of Edo State, on Saturday, said his government was collaborating with four telcos to create a social-register to identify 125,000 people who need relief.
A social register is a gateway for registered poor and vulnerable households to access social interventions or welfare packages by the government, philanthropists, NGOs, and businesses.
The national social register is being coordinated by the National Social Safety Nets Coordinating Office (NASSCO) and it contains the names of about 2 million families.
The difference with the Edo State register is in the application. While the federal government chose to disburse cash physically and ignore electronic transfers, Edo State’s partnership with telcos will enable the government to make cash transfers directly into the virtual bank accounts of recipients.
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“We intend to create mobile wallets to be used in money transfers to support these people,” Obaseki said while speaking at the first digital edition of The Platform Nigeria, a leadership programme organized by the Covenant Christian Centre (CCC).
The telcos will be collaborating with financial institutions in the state to create the mobile wallets. Although the governor didn’t clarify on the modalities for the collaboration, the banks are likely to be depositories of the money while telcos provide the phone numbers that would be used as wallets.
Mobile money allows users to store funds in a secure electronic account, linked to a mobile phone number. In some cases, the mobile money account number is the same as the phone number, but not always. The service allows users to store, send, and receive money using their mobile phones. They can buy items in shops or online, pay bills, school fees, and buy airtime.
In Nigeria, banks and fintech companies are championing the mobile money drive. In 2019 Nigerians opened more mobile money accounts in than any other year, according to a new report from GSMA. , Nigeria isn’t pulling its weight in the African market.
Since 2018, telcos in Nigeria have been waiting to be issued a Payment Service Bank (PSB) licence by the Central Bank of Nigeria (CBN) to enable them to kick-off mobile money services in the country.
A PSB license allows non-financial services companies in Nigeria to among other things; maintain savings accounts and accept deposits from individuals and small businesses; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and prepaid cards, and operate an electronic purse or wallet.
The CBN through its National Financial Inclusion Strategy (NFIS) plans to ensure that 80 percent of Nigerian adults are included in the financial net by the year 2020. Although the financial services regulator appears reluctant in letting telcos be part of the market in Nigeria, it, however, agrees that their involvement is critical to deepening financial inclusion. Hence, in 2019, the apex bank issued a super agent licence to MTN and approval in principle for a PSB licence to Gloworld, Unified Payments, and 9Mobile.
The CBN also reviewed charges and fees for banking services as part of measures to reduce the cost of financial services and encourage more people to use them.
But according to data compiled by Enhancing Financial Innovation and Access (EFInA), which has covered the country’s financial inclusion space in the last 12 years, the CBN’s target is unlikely to be achieved; financial exclusion in Nigeria is widening.
“What we saw between the 2016 and 2018 data was that more people were becoming financially included but not at the same pace as the population growth rate which is why the 80 percent target of financial inclusion for this year or conversely the 20 percent exclusion target is unlikely to be met if we are all particularly realistic,” Dayo Odulate-Ademola, Head of innovation at EFInA said at the Social Media Week, in February 2020.
In an article the group published before the lockdown was declared in Nigeria, EFInA also noted the impact of the coronavirus pandemic on household incomes and how an increasing number of people are unable to access financial services as a result of the restriction of movement.
“Longer-term, we run the risk of more Nigerians becoming financially excluded as a result of this crisis, at the exact moment when they as individuals and the overall economy would need their participation the most,” said Ashley Emmanuel, Head of Programmes at Enhancing Financial Innovation & Access (EFInA).
Edo’s partnership with the telcos is arguably the first time a state government is directly involved in pushing mobile money to its citizens. The success of the programme serves as a template for other states, thereby increasing the number of people embracing electronic transactions and financial services.
“Accelerating the deployment of Payment Service Banks may be one of the most efficient ways to expand financial access following the COVID-19 pandemic and set the “digital rails” that Nigerians can use to access other services that will improve their lives, such as pay-as-you-go solar solutions,” Emmanuel said.
