Nigeria’s steady growth in smartphone penetration, from 12 per cent to 40 per cent in five years, is attracting investments in mobile money, the latest study by the GSM Association has indicated.
The GSMA said it identified Nigeria as one of Africa’s sleeping mobile money giants last year with potential for the roll-out and adoption of mobile money services.
ALSO READ: Nigeria’s Internet Traffic increase by 10%
In the 2019 State of the Industry Report on Mobile Money, the association said there had been notable traction in Nigeria’s payment space, with the emergence of app-based wallets, one year later.
Analysts at the GSMA noted that in November, Interswitch became one of Africa’s most valuable fintechs after Visa joined a host of investors to take a minority stake in the company, which is now valued at $1bn.
They added that in 2019, a strategic partnership between online payment company, Flutterwave and China’s Alipay, effectively connected African entrepreneurs to over one billion Chinese customers.
The study found that excessive dependence on the Nigeria’s smartphone users would continue to exclude the unbanked, many of whom were more likely to be users of feature phones.
“As these and other new fintechs scale, the question remains whether they will acquire customer segments outside Nigeria’s urban and tech-savvy hubs like Lagos,” the report said.
However, the association said with the introduction of Payment Service Banks, there was growing desire by mobile network operators and their subsidiaries to launch mobile money services.
In August 2019, a subsidiary of MTN Nigeria began offering mobile money transfers through its agent network weeks after receiving a super-agent licence.
Also, in September, the Central Bank of Nigeria granted Approvals in Principle to two local mobile operators, 9Mobile (9PSB) and Globacom (Money Master PSB).
“The current foothold and subscriber base of these MNOs put them in a strong position to rapidly scale mobile money services, including in underserved parts of the country and among feature phone users,” the study said.
It pointed out that players such as OPay and PalmPay entered the market with strategies focused on both tech-savvy and underserved consumers.
OPay raised $170m, and launched a super app strategy had started expanding its services to offer payments via a USSD channel and target feature phone users.
Also, PalmPay raised $40m in capital from China-based device maker, Tecno, as well as NetEase and MediaTek in the past year and had converted Tecno retail stores to agents.
“Within a year, Nigeria’s payment landscape has seen big-ticket investments and a host of new entrants. Ultimately, this begs the question of which platform — fintechs or mobile money — will take the lead in acquiring and serving Nigeria’s vast unbanked population sustainably,” GSMA said.