MICROCAPITAL BRIEF: Rejecting Kenya’s M-Pesa Model, Central Bank of Nigeria Bars Telecommunications Companies from Becoming Licensed Mobile Money Operators

The Central Bank of Nigeria (CBN), the country’s central banking authority, reportedly has decided that telecommunications companies will not be allowed to become licensed mobile money operators for fear that they will limit competition within the industry. CBN Deputy Governor Tunde Lemo reportedly said that licensed mobile money operators will be required instead to negotiate with telecommunications companies regarding the use of their mobile networks. Mr. Lemo went on to compare the Nigerian situation with Kenya’s M-Pesa, a mobile money service administered via Safaricom, a Kenyan telecommunications company. According to Mr. Lemo, “I am sure if the Kenyan central bank had to do it again, they would do it differently because what [M-Pesa] has done is to create one big monopoly for the country. A single operator controls 90 percent of that country’s mobile money payment, [which] is not really good […] for any economy.”

As of November 2012, CBN reports total assets of NGN 13.3 trillion (USD 82.4 billion). As of September 2012, M-Pesa serves approximately 19.2 million clients through 45,540 agent outlets.

By Lena Phillips, Research Associate

About Central Bank of Nigeria (CBN)

The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the act of parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of November 2012, CBN reports total assets of NGN 13.3 trillion (USD 82.4 billion).

About M-Pesa

M-Pesa is a Kenyan mobile money service. The “M” stands for “mobile,” and “pesa” means “cash” in Swahili. Launched in 2007 by Safaricom Limited, a Kenya-based cellphone service provider, M-Pesa was developed by Vodafone Group Private Limited Corporation, a British multinational mobile network operator. As of September 2012, M-Pesa serves approximately 19.2 million clients through 45,540 agent outlets.

Sources and Additional Resources:

MobileMoneyAfrica.com Article, “Nigeria Will not Licence Telcos for MobileMoney,” Tribune.com Article, “Raising finance: Tameer Microfinance taps capital market”, http://tribune.com.pk/story/493971/raising-finance-tameer-microfinance-taps-capital-market/

MicroCapital.org Article, 14 December 2012: “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN): Telecommunications Company May have Violated Mobile Banking Regulations,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-telecommunications-company-may-have-violated-mobile-banking-regulations/#more-21642

MicroCapital.org Article, 2 November 2012: “MICROCAPITAL BRIEF: Vodafone’s M-Pesa Mobile Money Service to Expand International Options with HomeSend Partnership,” https://www.microcapital.org/microcapital-brief-vodafones-m-pesa-mobile-money-service-to-expand-international-options-with-homesend-partnership/#more-20869

MicroCapital Universe Profile: Central Bank of Nigeria, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29

MicroCapital Universe Profile: M-Pesa, http://microcapital.org/microfinanceuniverse/tiki-index.php?page=M-Pesa

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