Nigeria: 20 Years On: Telcos Attain 297m Phone Lines, Fail On Financial Inclusion, Security

In spite of these gaps, the telecommunications revolution has been eventful. Between January and August 2001, when the Digital Mobile License (DML) auctions were conducted for the rollout of services and August 2021, some 297.3 million telephone lines have been connected with current active GSM subscriptions now about 187.3 million lines.

Whereas SIM registration in Nigeria dated back to about 10 years ago when the Nigerian Communications Commission (NCC) mandated telecoms operators to register all SIMs on their respective network, the impact of this ongoing exercise that has gulped billions of Naira is yet to be felt, as criminals continue to hold victims to ransom.

According to the Enhancing Financial Innovation and Access (EFInA), only 67.5 million (64 per cent) of the 105.5 million adult population were financially included in the year 2020. EFInA also stated that 36 per cent of Nigerian adults remained completely financially excluded as of the end of 2020.

Checks by The Guardian showed that in the same 2020, which was the year of the pandemic, mobile network operators (MNOs), that is the quartet of MTN, Airtel, Globacom and 9mobile, activated 18.6 million new telephone lines on their various networks.

EFInA, in a recent report, titled: ‘Access to Financial Services in Nigeria 2020 Survey,’ revealed that the growth marginally increased from 63.2 per cent to 64.1 per cent in the period under review.

It informed that in 2016, 58.4 per cent of Nigeria’s 96.4 million adults were financially included, comprising 38.3 per cent banked, 10.3 per cent served by other formal institutions and 9.8 per cent served by informal service providers.

The survey noted that in 2020, the most populous black nation had planned to capture 70 per cent of its adult population in the formal financial services sector and 10 per cent in the informal sector, but the novel coronavirus dealt a great blow to the mission.

Giving more insight, EFInA’s Chief Executive Officer, Ashley Immanuel, observed that amid the challenging economic circumstances, financial inclusion continued to grow incrementally, with more than half of Nigerian adults using formal (regulated) financial services for the first time.

She said, at the current progress rate, the National Financial Inclusion Strategy targets of 2020 would not be met until around 2030. Immanuel, however, submitted that the country could achieve the goals much faster if it followed paths taken by other African nations, especially their mobile money strategies.

Indeed, mobile money, which should have given a fillip to financial inclusion in Nigeria, owing to the huge number of mobile phones in the country, refused to gain traction.

Though, the forecast is placing smartphone usage in Nigeria at 140 million by 2025, with an assurance that more people will turn to these devices for social and profitable reasons, the success story of India’s financial inclusion drive, which leveraged the use of smartphone, holds lessons for Nigeria.

Over 332 million Indian citizens have already opened mobile phone-based financial accounts under the government’s mass financial inclusion programme, Jan-Dhan Yojana. As a result, the share of Indians with at least one financial account has more than doubled to 80 per cent since 2011.

The Global System for Mobile telecommunications Association (GSMA) observed that while Kenya boasts of 66.6 million mobile money accounts; South Africa, 41.5 million; and Ghana 34.3 million, Nigeria trails with a paltry 15.3 million. The reason is not far-fetched, if the explanations of the GSMA are anything to rely upon.

GSMA believes that anywhere mobile money thrives, it is always led by the telecommunications companies. Unfortunately, Nigeria’s operation is bank-led rather than telco-led. There are only two telecom operators, Globacom and 9mobile among the hordes of mobile money service providers in the country, which are majorly banking institutions.

Moreover, the two most experienced mobile networks, operating mobile services across Africa, MTN and Airtel, are not even licensees in Nigeria, and the GSMA feels this is an anomaly.

Head, African Operations, GSMA, Akinwale Goodluck, noted that effective regulation and liberalisation are key factors to mobile money growth.

Goodluck lamented that Nigeria was lagging behind in mobile money penetration when compared to other African countries like South Africa and Kenya, but advocated a deliberate policy to open the market, grant more licenses and make Nigeria’s mobile money revolution telco-led.

To the Nigerian Coordinator, Alliance for Affordable Internet (A4AI), Olusola Teniola, personalisation of mobile services and the advent of Internet services rendered on a mobile device lend itself more to a telco-driven Digital Financial Services (DFS) model as opposed to a bank-led model.

Teniola said the successes in other jurisdictions speak to the evidence and it’s only a matter of time for this to be the universal model to reach the unbanked.

“It is clear that telecoms and IT platforms have positively impacted and changed the banking sector in a way and manner that the operators in the financial sector didn’t expect and to a large degree are unprepared for. Automation, Fintech and mobile devices have changed the financial landscape and the key to that has been the telecoms’ revolution and consumer changing habits,” he stressed.

Speaking with The Guardian, Associate Dean, Lagos Business School, Prof. Olayinka David-West, said the impact of mobile telephony in the last 20 years has been phenomenal.

David-West said: “It is one of the sectors we had hoped using mobile phone penetration to bridge the gap of providing access to financial services or digital financial services because we felt that if distribution was an issue, we can’t have a bank branch in every local government area, but then we can have a bank branch in everybody’s pockets, and the technology to do so with the mobile phone is available.”

She recalled that even globally, financial inclusion number as far back as 2007 were about 2.5 billion, but because of mobile telephony and access, the figure dropped to about 1.7 billion, which has been the used case across the globe according to World Bank numbers.

According to her, lots of countries, including USA, and other developed countries, had financial inclusion challenge, but was a bit more accentuated in African markets because of population size and distribution capabilities.

David-West, a Professor of Information Systems, said Nigeria has been trying to close the financial exclusion gap as far back as over 10 years ago, around 2009 when mobile money started.

According to her, four things are critical in this space, which are access, usage, quality and affordability. She stressed that in bridging the financial inclusion gap, it is also important to understand financial literacy.

“From the consumer side, you need to look at the cost. What is the cost to an average Nigerian? Remember cash is free, so when I pay you N10, it is N10, it doesn’t reduce in value, but if I say I want to pay you by mobile, what I pay in N10 is reduced to N9. So, there is that cost of usage.”

Weighing in on the bank-led or telco-led mobile money saga, David-West said there are some markets that have bank-led mobile money, for example Bangladesh is one of them, and there, it is about scale.

“To be honest, the CBN has backtracked and supported the establishment of payment service banks, which are subsidiaries of telecoms firm. The CBN wants to be able to regulate financial institution very well, while telecoms is done by the NCC.  So, the CBN has said as telco subsidiaries, you can come into the business and do it as Payment Service Banks (PSB).

“We already have three licensed payment banks, which are 9PSB, HopePSB and Money Masters PSB. The only two players that didn’t get payment licensed PSB were MTN and Airtel.”

SPEAKING on the security challenge, a security expert, Dennis Amachree, blamed the telecoms providers. He said: “The problem of inability to tract kidnappers lies with telecom providers, which still sell lines without proper documentation. Customers are required to show genuine photo identification before lines are issued, but such requirement are brushed aside if the customer does not have it.”

“The government was threatening to sanction telecoms companies, which still issue unregistered number, but as usual in Nigeria, enforcement becomes the problem.”

Defending the telcos, a senior telecoms expert, who spoke on condition of anonymity because of the sensitivity of the matter, said every user of the network is traceable.

He explained that there is Geolocation map, which shows people at a central point, and does so at the nearest metres, explaining where devices are at a particular location.

The expert said the matter then lies on what is done by the security operatives after they are provided with necessary information.

“When you then find out somebody has been kidnapped, the issue is what you do with the information provided. I think that is where the problem is. We can see that somebody is held, and kept somewhere, but in hostage situation, you can’t go forcefully so as not to endanger the life of the victim. This has been the major problem. There are devices that can check people. So, we can say there are surveillances. Operators have the mechanism to monitor users.

“I must also say this, in number of cases, the bandits use the number of victims to call for ransom from the relatives, which makes it more complicated. Yes, we can identify hostage and where the victim is kept, but when you identify where the victim is kept, you can’t just jump on them because of the lives of those involve.”

On the way forward, he said Nigeria’s security operatives must up their games, adding that the bulk lies with them and they need to make use of the information made available to them by network operators.”