This article is part of our #FirstWord series to provide context on trending news.
Africa’s largest telecoms company, MTN, says it will be applying for a mobile money banking licence next month to enter the financial service sector.
MTN Group CEO, Rob Shuter announced at a telecoms conference in Cape Town, South Africa on Tuesday, November 13 2018. According to him, MTN will start mobile money from June 2019.
“We will be applying for a payment service banking licence in Nigeria in the next month or so, and if all goes according to plan, we will also be launching Mobile Money in Nigeria probably around Q2 of 2019,” - Rob Shuter.
What is mobile money?
Mobile money is a financial service that allows people to save, receive and send money using their mobile phones. In place of bank accounts, phone numbers are used for transactions.
Presently, more than 90 million Nigerians are unbanked, meaning a substantial part of the population don’t have bank accounts or don’t use financial institutions to save and borrow money.
Most of these people are rural-dwelling low-income earners who earn little and so save little and cannot afford the transaction costs attached to banks.
This means that there’s a market for mobile money in Nigeria. The unbanked population can partake in financial services through their mobile phones.
Regardless of MTN’s dispute with the Nigerian authorities who claim it illegally repatriated $8.1bn in profits and currently owes $2bn in taxes, the group is moving on with its mobile money plans. Banking on its large market share, MTN hopes to convert customers to its money service.
In Ghana, the group has already successfully launched an IPO mainly through its mobile money service.
It is also unlikely that MTN will be the only telecoms operator applying for the mobile money license in Nigeria. Stakeholders have suggested that telecoms across Africa are getting into new sectors, and given the close competition within them, they’re likely to delve into similar operations.