Empowerment opportunities in mobile money

In less than two decades, mobile phones have evolved from being symbols of status for the rich and famous to tools of empowerment for the world’s poorest people. These phones more than make up for inadequate infrastructure such as bad roads and high cost of mobility, allowing information to move freely, making markets more efficient, creating job opportunities and avenues for entrepreneurship. Not surprisingly, the impact of this evolution has had a direct effect on global economic growth, more significantly in developing countries like Nigeria. According to World Bank reports, extra 10 phones per 100 people in a typical developing country boosts the economy’s GDP by 0.8 percentage points.

Enhancing Financial Innovation & Access (EFInA), an organisation committed to deepening financial inclusion in Nigeria, reported that only one in five Nigerian adults has a bank account, with approximately one bank branch and one ATM for every 10,000 people. This report is indicative of a population that is highly marginalized in the area of access to financial services. On the bright side, one in every two Nigerians has a mobile phone. With phones now so commonplace, a new opportunity for access to financial services for the unbanked beckons: mobile money, which allows cash to travel as quickly as a text message.

The possibilities in mobile banking are endless. Across countries in Africa, corner shops have become locations where people can buy airtime to top up their telephone credit. Mobile money services allow these small vendors to act somewhat like bank branches. They can take your money and by sending special codes, credit the funds to your mobile money account. The account holder can then transfer money (again, via to other registered users, who can withdraw it by visiting their own local corner shops. Funds can even be transferred to people who are not registered users via simple process where they receive a text message with a code that can be redeemed for cash at ATMs or agent locations Funds can also be sent to bank accounts. And mobile wallets can be linked to ATM cards for convenience.

Successful examples of mobile money implementations in Africa have been recorded by financial service providers such as Standard Bank of South Africa. The bank, in partnership with MTN, Africa’s biggest mobile network operator, has already launched a highly successful mobile-money service in Uganda. It also has its mobile payment service operational in Ghana, South Africa, Kenya and Nigeria and is currently working towards expanding its mobile payment footprint across the entire continent.

Recognizing the penetration and wide acceptance of the mobile phone services and in a bid to extend banking services to a wider segment of the Nigerian public, Stanbic IBTC Bank, a member of Standard Bank Group, alongside 20 other financial and non-financial operators, were granted licenses by the Central Bank of Nigeria to operate mobile banking services in the country, after identifying mobile telephony as an opportunity for advancing financial inclusion.

Subsequently, Stanbic IBTC Bank, in partnership with telecom operators, launched its ground-breaking Stanbic IBTC MobileMoney solution, enabling customers to open a bank account and conduct financial transactions using just their mobile telephones. Obinnia Abajue, Executive Director for Personal and Business Banking, Stanbic IBTC Bank said that the partnership with the telcos had provided a platform to bring low-cost, secure and convenient financial services to the unbanked while providing a viable solution to the challenge of reaching individuals outside the economic mainstream.

“At Stanbic IBTC Bank, we believe that access to basic financial services will facilitate economic empowerment. With Stanbic IBTC MobileMoney, traders, artisans, market women, farmers and under-banked individuals can access traditional, low-cost financial services for business development via a channel that they can trust and embrace without fear of losing their money,” he said.

The concept of performing real-time mobile financial transactions is clearly becoming increasingly acceptable in Africa. In fact, there is a latent and growing demand for mobile money services in developing countries where financial infrastructure is not readily accessible, bringing with it new opportunities for employment and entrepreneurship. The ability to transfer funds via a mobile phone in ‘under-banked’ regions also translates into time and money savings by helping people avoid many hours of travel in order to make payments or cash withdrawals while facilitating financial inclusion.

Airtime vendors are not left out of the income generation franchise. Airtime reselling extends the dealer network of the operator to smaller population centers by allowing any subscriber to become an airtime reseller. An airtime reseller purchases airtime from the operator distribution network at a discounted price on his mobile handset. He then sells airtime, once again, to end subscribers at the full price, keeping the markup and thereby earning an income. In addition to creating an entrepreneurial framework, the telco benefits from reduced overhead and distribution costs, as well as the elimination of theft and fraud associated with distributing physical vouchers.

Software developers have also benefitted from mobile money as more and more websites are upgrading to accommodate the conduct of mobile financial transactions.

Clearly the mobile payment system holds great potential for economic development and empowerment and may be one of the largest employers of labour in the near future. With its advent in Nigeria, the wireless paradigm is indeed changing once again, and subscribers, dealers, operators, banks and money transfer agencies are well positioned to reap benefits from the convenience and revenues these services generate.

IMANAH is a communication specialist based in Lagos