GaudiLab/Shutterstock.com MTN Nigeria and Airtel Africa – two of Nigeria’s largest telecommunications companies – announced in November they have received approval in principle from the Central Bank of Nigeria (CBN) to operate payment service banks (PSBs).
PSBs offer financial services, including deposit-taking from individuals and small businesses, providing payment and remittance services, issuing debit and prepaid cards, running electronic wallets, and other services. The CBN PSB Licence prohibits the banks from engaging in granting any form of loans, advances or guarantees directly or indirectly to customers.
The approval granted to the telcos is the first step in the process to get the final approval from the CBN. To get the full licence, the telcos will need to fulfil certain regulatory requirements stipulated by the CBN within six months.
“We will now work closely with the Central Bank to meet all its conditions to receive the operating licence and commence operations. The final operating licence will enable us to reach the millions of Nigerians that do not have access to traditional financial services,” said Airtel Africa’s chief executive officer, Segun Ogunsanya, in a statement on 5 November.
MTN will operate through MoMo Payment Service Bank Limited while Airtel will operate through its Smartcash Payment Service Bank Limited. Covid-19 boosts uptake of digital technologies in Africa
Tom Minney • 13 min. read Bridging the financial inclusion gap
According to Enhancing Financial Innovation and Access, an organisation dedicated to deepening Nigeria’s financial sector, about 38m Nigerians, representing about 36% of the adult population of the country, do not have access to financial services.
Paul Alaje, senior economist at SPM Professionals, says traditional retail banking it is not enough to help the CBN achieve its target of reaching 95% financial inclusion by 2024.
The CBN wants things to change. In 2012, it adopted the National Financial Inclusion Strategy (NFIS). The NFIS was built on four strategic areas of banking – mobile banking and mobile payments, linkage models, and client empowerment – to ensure that over 80% of the bankable adults in the country have access to financial services by 2020.
In 2018, the NFIS was revised and the CBN decided that PSBs will be a critical element of banking sector growth given the wide reach and robust networks of telcos.
Olushola Teniola, former president of the Association of Telecommunications Companies of Nigeria (ATCON) and Nigeria national coordinator for the Alliance for Affordable Internet, says that the ability of telcos to […]
