The Central Bank of Nigeria has said its decision not to allow telecommunication companies lead mobile money model was to protect customers from losing money as it would not be able to regulate the telcos.
The apex bank had refused to permit the telcos-led model of mobile money which has been successful in Kenya as it said it would not be able to protect depositors’ fund under the model. Instead it had adopted a bank-led model which will allow banks to collaborate with telcos in providing mobile money services seamlessly.
According to the Governor of the CBN, Godwin Emefiele, the apex bank does not have control over the activities of telecos and cannot guarantee the safety of depositors’ funds. He however noted that digital financial services such as mobile money are critical in achieving the desired level of financial inclusion in the the country.
Emefiele while speaking at the Businessday Financial Inclusion Summit in Lagos noted that digital financial services can lead to the financial inclusion of up to 46 million individuals in Nigeria, and up to 1.6 billion people globally by 2025.
Asides this, he said digital financial services can also bring about more benefits beyond financial inclusion for financial services providers and the economy at large saying it can boost a country’s GDP significantly and more sustainably.
Citing a McKinsey study, the CBN governor said digital financial services can increase Nigeria’s GDP by 12 percent or $88 billion by the year 2025 and create three million new jobs in the country by 2025.
He explained that this is achievable through increased productivity with time and cost savings of businesses and financial services providers and reduced leakages in government expenditure.
He noted further that increased investment in physical capital through additional formal deposits and lending as well as increased time savings of individuals are added benefits of digital financial services.
“For financial services providers, digital financial services are estimated to reduce the cost of providing financial services by 80 to 90 percent compared to the cost of a traditional bank branch,”he said.
The CBN governor noted that due to the potential of digital financial services in Nigeria, the apex bank and other stakeholders have implemented several initiatives to drive the adoption of digital financial services in the country.
He stressed the need for stakeholders in the industry to work together in order to reap its benefits of digital financial services as there are issues which require the attention of several stakeholders in order to increase adoption of digital financial services in Nigeria.
In a recent study by Harvard Business Review, Nigeria was identified as a country with a higher-than-average cost of cash but which needs to invest in digital readiness in order to unlock maximum value of digital financial services.