Kenyan telecoms giant, Safricom is considering the various options to bring its popular mobile money product to other countries including Nigeria. The move to expand into new markets may be due to increasing pressure from regulatory authorities in its home country of Kenya, to open up its platform to other operators, and dictate prices. While the service has been quite successful in East Africa, mobile money has struggled in Nigeria.
Critics opine that regulations put in place by the Central Bank of Nigeria (CBN) have stifled mobile money from taking off properly. The CBN has granted mobile money licences to over 20 companies, but few have made significant traction. Telecommunications companies are the main drivers of mobile money in other climes but have been restricted to just provision of infrastructure.
Nigeria also has its fair share of mobile money operators in Nigeria with over 20 small to medium size operators competing for market share and relevance. Examples are Paga, Pay Aptitude, Simple Pay, PayStack, Flutterwave, Konga Pay etc. Paga, one of the biggest operators, has over 6.4 million customers and 11000 agents. These numbers are a drop in the ocean compared to the country’s population of over 170 million people.
Chart: Value of Mobile, POS and Internet Transactions in Nigeria 2012 – 2016
Data shows value of FinTech driven transactions has been on a steady growth path since 2012
Commercial banks seem to be more interested in pushing USSD banking and their apps, than mobile money schemes in Nigeria. Understandably so as data from commercial banks annual reports also showed that about N134 billion was earned from E-business Income for the year ended 2016 and represents a 41% increase from the N94.1 billion reported in 2015.
Vodacom, Safaricom’s dominant shareholder, has limited operations and visibility in Nigeria, so the company would have to rely on other telecoms operators in the country to piggyback its operations. According to this Bloomberg report, the company is considering a deal with MTN to ride on its platform rather than compete directly with it in other African Countries. Nigeria is MTN’s largest market, giving MPESA a rapid in road into perhaps it’s potentially largest market.
Safari’s expansion to the country will have positive effects on the economy. The company will have to employ staff and embark on advertising campaign to create awareness. Agents that will sign up for its mobile money scheme, will earn additional income.
Safaricom is Kenya’s biggest telecom operator with over 16 million subscribers as at 2016. The company began operations in Kenya as a fully owned subsidiary of Telkoms Kenya. British telecommunications giant Vodafone bought a majority stake in the company in 2000. The company has since sold 35% of its stake to South Africa owned Vodacom. M-Pesa which is a mobile phone based money transfer, financing and micro-financing solution was launched in 2007 by Vodafone in Kenya and Tanzania. The service has been enormously successful with over 10 million active users and has since been expanded to other countries including Afghanistan, India and South Africa.