A number of recent announcements suggest that Nigeria is set for a mobile banking boom, with several banks looking to secure a share of previously unbanked or underbanked consumers. The latest announcements from First Bank and Standard Chartered suggest that the popularity of mobile banking in Africa is spreading beyond Kenya.
In Nigeria seven banks, including Standard Chartered and First Bank, have been awarded licenses to develop a mobile banking and payments system. This follows the launch of the Central Bank of Nigeria's "Cash-Less Lagos Project" on January 1, 2012. The project introduced daily cash withdrawal limits and from March 30, 2012 will involve charges on cash withdrawals above a lower daily limit of NGN50,000 ($318). This will make it increasingly difficult for banked consumers to obtain cash to make payments, encouraging them to switch to cashless transactions. With mobile banking schemes also having proved popular in other countries with large unbanked populations such as Kenya and Brazil, there is good reason to believe that the combination of the two developments may provide a good foundation for success in Nigeria.
After receiving a provisional Mobile Payment System Provider license in December 2010, followed by a full license in August 2011, Monitise has been working on developing the background network required for mobile payments to launch in Lagos. The licensing of a range of issuers, with four further banks still under consideration, places mobile payments near ready for a full commercial launch. The only remaining question is whether Nigeria's project will prove as successful as M-Pesa in Kenya.
Payment cards have previously struggled in Nigeria due to the lack of extensive payment infrastructure and consumer fears about cashless transactions. Stories of transaction errors are commonplace. As almost two thirds of Nigerians already have and use mobile phones, mobile payments may be better received by consumers than cards as the technology simply offers another service within a popular pre-existing product.
M-Pesa has also announced that it is expanding its coverage into Tanzania and South Africa, with plans for further expansion in Africa. Meanwhile, Absa launched its first near field communication product in December 2011. The combination of these with the latest developments in Nigeria suggest that Africa as a whole may bypass payment cards altogether, and instead see a large-scale adoption of mobile payment systems.