The Central Bank of Nigeria (CBN) and the Nigerian Communications Commission (NCC) have signed a memorandum of understanding with respect to mobile money. Executive Vice Chairman of the Commission Dambatta disclosed this while meeting with the United Nations Special Advocate on financial inclusion Queen Maxima of the Netherlands.
How will this work ?
The mobile operators will be able to do this through a Special Purpose Vehicle (SPV). Current guidelines prevent telcos from directly owning mobile money operations.
Why are both agencies collaborating ?
CBN Governor Godwin Emefiele, at the event said the apex bank was targeting a financial inclusion rate of 80%, up from current levels of 41%. According to him, the subscription rate for mobile telephony has had a greater success rate in terms of subscription and penetration.
Implications of the move
Telcos establishing mobile money services gives them access to more revenue, as well as data on consumer spending habits which would enable them to create even more specific products.
A few road blocks ahead
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Mobile money operators that have been licensed by the CBN, may oppose the move as this could lead to heightened competition. A previous framework for telcos to carry out mobile money operations has not been effective. Commercial banks in the country could also push back at the move, as this would encroach into their space. The banks have invested greatly in USSD platforms.
A recent move by the Federal government to seize funds in accounts with incomplete BVN/KYC requirements may also make Nigerians hesitant to patronize the formal banking system.