- The move is a step closer to Nigeria’s bid to liberalize its financial services sector, shifting away from a total dependence on banks including new business models and distribution channels.
Nigeria’s recent decision to grant payment service bank licenses to MTN and Airtel, can be a game changer according to the views of Economic experts. The move is a step closer to Nigeria’s bid to liberalize its financial services sector, shifting away from a total dependence on banks including new business models and distribution channels. Both Telco’s have received final authorization from the Central Bank of Nigeria (CBN). The idea is to enable MTN and Airtel to expand and reach out to more remote, lower income and unbanked customers. Almost two-thirds of the country’s 106 million adults live in rural areas.
Nigeria now has 5 PSBs, including MTN, Airtel join Glo, and 9Mobile. The country launched the PSB license in 2018 modelled on India’s Payment Banks introduced by The Reserve Bank of India in 2015 to extend banking to rural areas, serving migrant workers and low-income families. Only 45% of Nigerian adults have bank accounts, while 36% are still completely financially excluded, according to official statistics.
PSBs facilitate deposits and withdrawals, cross-border remittances, and can issue debit cards. It should have a minimum 25% of operations in rural areas. As per the CBN guidelines, minimum capital of 5 billion naira ($13 million) is required to operate a PSB.
Analysts are upbeat about the development as these Telco-owned PSBs, will be in a position to offer cost-effective financial services to their combined customer base of 198 million subscribers. However, experts caution that strategic partnerships will be essential including partnering with banks, micro credit lenders, and insurance companies for long-term success.
Read Also; https://trendsnafrica.com/mtn-has-a-huge-exposure-in-nigeria-ceo-mtn-kari-toriola/
https://trendsnafrica.com/airtel-nigeria-gets-spectrum-license-renewed-for-10-years/
