Mobile money account ownership in Nigeria grows by 6% despite various concerns

Omoleye Omoruyi
The mobile money market in Nigeria is expected to grow at a rapid pace in 2023, with a projected CAGR of 29.3% during 2023-2028.

In a report titled ‘The State of the Industry Report on Mobile Money 2023,’ GSMA said among all adults that are aware of mobile money and have used mobile phones, mobile account ownership has spiked from 16% to 22% in 2022.

In 2022, registered mobile money accounts rose 13% year-on-year from 1.4 billion in 2021 to 1.6 billion in 222, partly due to regulatory changes in Africa, especially in Nigeria and Ethiopia.

Ethiopia and Nigeria have mobile money and digital financial services (DFS), albeit with limited reach. They are considered medium prevalence mobile money markets by the GSMA.

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Mobile money is a digital service allowing individuals to conduct financial transactions using mobile devices, such as smartphones and tablets. This service provides a convenient and cost-effective way for users to deposit and withdraw money, transfer funds to other mobile money accounts, pay bills, purchase goods and services, and access loans and insurance without needing a traditional bank account.

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One of the key drivers of the growth of the mobile money market in Nigeria is the expanding adoption of mobile-based financial services due to limited access to brick-and-mortar financial institutions, particularly in rural areas. The rising internet connectivity and the growing adoption of smartphones are also driving the market for mobile money in Nigeria. Also, consumers are becoming increasingly aware of the benefits of mobile money services, such as 24/7 availability, lower transaction costs, and ease of accessibility.

Mobile money

In addition to these factors, financial institutions are leveraging mobile money platforms to offer insurance and loan policies, presenting remunerative growth opportunities for the market.

E-commerce platforms also integrate with mobile money services to offer cashback, discounts, and rewards during purchases, bill payments, and travel bookings.

The widespread adoption of international money transfer services is also expected to spur the demand for mobile money in Nigeria.

The mobile money market in Nigeria is poised for strong growth in 2023 and beyond. The increasing adoption of mobile-based financial services, rising consumer awareness about the benefits of mobile money, and the integration of e-commerce platforms with mobile money services all contribute to this growth. As such, the future looks bright for the mobile money market in Nigeria.

The challenges of mobile money

Some of the challenges facing mobile money in Nigeria include poor mobile network infrastructure, security concerns, cost of services, and poor complaints resolution.

In some regions of Nigeria where financial exclusion is highest, infrastructure such as power, roads and even mobile network connectivity are deficient and have significant implications on mobile money access and quality. Another challenge faced by Nigerians is their ability to access national identity documents.

One way that mobile money challenges are being addressed in Nigeria is through the introduction of Payment Service Banks (PSBs) by the Central Bank of Nigeria (CBN) in 2018.

PSBs aim to leverage businesses’ strengths, such as mobile network operators, while maintaining a bank-led rather than a telecoms-led banking model. Due to their established distribution channels, wide geographical presence, resources and expertise in downstream operations, mobile network operators and businesses such as wide-reaching retail outlet chains are most likely to be able to establish successful PSB subsidiaries.

Mobile money

PSBs differ from traditional banks in several ways, as they are a type of bank that operates on a smaller scale by harnessing technology services via mobile and agency banking to mobilise deposits and facilitate transfers from unbanked customers in rural areas and any location where they exist in Nigeria.

Unlike traditional banks, PSBs cannot issue credit cards, and customers can only keep a limited sum in a payment bank account. The key objective of setting up PSBs is to enhance financial inclusion by increasing access to deposit products and payment/remittance services to small businesses, low-income households, and other financially excluded entities through high-volume, low-value transactions in a secured technology-driven environment 

Going deeper into Financial exclusion

A survey conducted in 2008 by a development finance organisation, Enhancing Financial Innovation and Access, revealed that about 53% of adults were excluded from financial services.

Industry operators in the financial technology (fintech) space say 50% of the Nigerian population are financially excluded from various financial services despite economic growth and technological advancement.

BusinessDay

Some identified causes of financial exclusion in Nigeria include insufficient bank branches, high banking fees, stringent identity verification, and financial illiteracy. Despite Nigeria’s 126 million internet connections, as much as 37% of the adult population was unbanked in 2018.

In 2023, however, data from the nationally representative 2022 GSMA Consumer Survey shows that access and usage of mobile money in Nigeria has grown since the recent PSB launches. One reason is that 81% of mobile money users say, “Mobile money helps me save time.”

Activity rates in West Africa increased consistently between 2018 and 2022 and are now approaching Sub-Saharan African activity rates.

GSMA

GSMA also states that “Not only are more people registering for mobile money accounts, but many who have signed up are actively using mobile money for their everyday needs – more than users have in previous years.”

The number of mobile money accounts in Nigeria was over 60 million in 2022, according to Statista. And according to a report by IMARC Group, the Nigeria mobile money market is expected to exhibit a CAGR of 29.3% during 2023-2028. 

In addition, data from the Nigeria Inter-Bank Settlement System (NIBSS) has shown that the volume of mobile money transactions for February 2023 rose by 70% to 183.69 million compared to 108.13 million recorded in January 2023.

The increased volume of transactions was directly linked to the scarcity of cash in the economy, forcing many Nigerians to use electronic payment channels to pay for their daily transactions.

There is an expectation that mobile money will get even bigger in Nigeria.

How do you open a mobile money account?

To open a mobile money account in Nigeria, you can download the mobile money app of your preferred provider and follow the instructions to register.

For example, Opay is a leading mobile money company in Nigeria that allows you to digitally send and receive money and create simple financial access for everyone. 

Alternatively, you can open a bank account on your phone in Nigeria by following these seven steps:

  1. Choose your desired Nigerian bank.
  2. Use your phone to dial your bank’s USSD code.
  3. Select the option to open an account.
  4. Enter your name, date of birth, or other required information.
  5. Create your PIN.
  6. Receive 10-digit NUBAN by SMS.
  7. Visit a local branch to link BVN if necessary.

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