CBN Defends Bank-Led Mobile Money, Says It Will Protect Users’ Money

Godwin Emefiele, CBN Governor

THE Central Bank of Nigeria (CBN) has once again defended the bank-led model of mobile money, emphasizing that it protects users from losing money.

According to the bank, there is the possibility of users losing money under the telecommunication companies (telcos) led model that is why the CBN at the moment prefers the former.

CBN Governor, Mr Godwin Emefiele who made this declaration on Thursday said if such happens, it could pose a problem for the CBN.

In his keynote address at this year’s Businessday financial inclusion summit held in Lagos, Emefiele said, “That is why the apex bank at this stage will not allow telecommunication companies to lead mobile money in Nigeria. That is the reason we decided to grow from the bank-led,” the Governor stated.

While commending the Kenyan telcos-led model, Emefiele said though Kenya has done very well as there has never been any reported risk of financial lose from that end, the reality is that Nigeria is a different environment.

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Describing digital financial services as payments, savings, loan or insurance products, which are provided through electronic platforms, such as mobile phones, the Internet, or electronic cards, the Governor said digital financial services can promote financial inclusion, because they are capable of dismantling the existing barriers to financial inclusion.

He identified one key barrier to financial inclusion, in line with Nigeria’s National Financial Inclusion Strategy, as the remoteness of access to financial services, adding that several people do not use financial products because they live too far away from a physical financial access point such as bank

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branch, an insurance agent or Automated Teller Machine (ATM).

Digital financial services according to Emefiele, transcend such physical barriers as they can be accessed through virtual channels such as mobile phones, which today are everywhere.

“We have noted commendable innovations in the industry today, whereby financial institutions have begun to leverage the mobile platform to open accounts and conduct transactions, enabling existing clients and previously excluded population to access financial services in a more convenient manner.

“Digital financial services can also reduce other barriers to financial inclusion, such as high cost of transaction or transportation costs while also saving valuable travel time. It can also bring about substantial benefits for financial services providers, and the economy as a whole, beyond financial inclusion. It can boost a country’s Gross Domestic Product (GDP) significantly and more sustainably,” said Emefiele.

For instance, he referred to McKinsey’s study which shows that digital financial services can increase Nigeria’s GDP by 12 per cent or US$88 billion by the year 2025. There are three channels through which digital financial services are predicted to affect GDP.

In terms of the latter channel, digital financial services have the potential to create three million new jobs in Nigeria by 2025. For financial services providers, digital financial services are estimated to reduce the cost of providing financial services by 80 to 90 per cent compared to the cost of a traditional bank branch.

The Central Bank of Nigeria he noted, and other stakeholders have implemented several initiatives to drive the adoption of digital financial services in the country.

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These are: For instance, the Bank introduced the Cashless Nigeria Project, under pilot in six states and the FCT, which stipulates a cash handling charge on daily cash withdrawals above a minimum amount in order to encourage usage of electronic payments. The Bank also released Guidelines on Agent Banking and Mobile Money Services in Nigeria and has licensed 22 mobile money operators. The regulatory framework for licensing super-agents in Nigeria aims at extending agent networks and usage of mobile money in Nigeria.

“In the same vein, we have also launched a Digital Financial Services Project in collaboration with the Federal Ministry of Finance and the Bill & Melinda Gates Foundation, with the objective of improving the efficiency of public expenditure. In collaboration with the Nigerian Communications Commission (NCC), the bank has established a Joint Technical Taskforce on Mobile Money in order to ensure a favorable regulatory environment for digital financial services in Nigeria,” he recalled.



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