What is the best Regulatory Model that would enable Mobile Money thrive in Nigeria?

Since the emergence of mobile money, financial systems regulation has been a keenly discussed theme due to the critical role it plays in the economy in general. Across several markets, mobile money growth has been possible through various engagement models including partnerships between the old guard and new entrants all with the approval of the respective regulators.

To be fair, regulators have an incredibly difficult job — they have to balance the safety of the financial system as well as grow an innovative ecosystem of new entrants and business models. There’s a thin line between cultivating an enabling regulatory environment and a restrictive one.

According to GSMA, from a regulatory perspective, one basic requirement for mobile money to succeed is to create an open and level playing field that includes non-bank mobile money providers such as mobile network operators (MNOs). The level of openness and inclusiveness in the mobile money ecosystem has been interpreted in diverse ways by regulators in our different benchmark markets: Kenya, India, Bangladesh and Ghana.


A major part of mobile money’s success in Kenya is that unlike Nigeria, Kenya’s regulatory environment is truly open to all comers. The Central Bank of Kenya permits the participation of non-banks, including MNOs, in the provision of mobile money right from the onset. In fact, Safaricom, an MNO, kicked off the mobile money phenomenon with the launch of M-Pesa in 2007. Piggybacking on the telecom agent network already established and an aggressive “send money home” campaign, mobile money was able to permeate the country.

It is also interesting to note that, it was not until August 2014 that a formal legal framework to address the operation of mobile money in Kenya, the National Payment Systems Regulations, was introduced. Between 2007 and 2014, the Central Bank of Kenya (CBK) simply issued letters of no-objection to operators which stated the market conduct requirements and monitoring obligations for mobile money providers. Experts are of the opinion that the period between 2007 and 2014 allowed the CBK enough time to observe the supply and demand dynamics of mobile money and could thereby codify into law, the regulatory practices that have evolved since the introduction of mobile money in 2007 and give further legitimacy to the existing business models. In this case, regulation followed innovation and consumer adoption processes, learned and evolved!


India’s regulatory environment permits banks and non-banks, including MNOs to offer mobile money services. But the journey there has several chapters. Post-2010, India’s e-commerce sector witnessed rapid growth, which in turn led to an influx of digital financial services businesses. This prompted regulatory intervention by the Reserve Bank of India (RBI), India’s governing bank, in the DFS sector.

Nevertheless, RBI’s recognition of the role of mobile money in onboarding financially excluded populations, led to the conceptualisation of Payment Banks in February 2015 when the regulator invited applications for licenses. Payment banks are licensed to operate current and savings accounts and supporting payment services (remittances, deposits, withdrawals) and debit card operations. They are specifically prohibited from engaging in any credit (loans, credit card) services. Eight (8) successful applications were licensed and now operate, these include Bharti Airtel, an MNO, Paytm and India Post.

Today, the Indian mobile money market includes includes mobile network operators as well as deposit money banks (21 public-sector and 26 private-sector). Prior to this, MNOs were required to partner with banks. While these tweaks and innovations were being introduced into the market, the government was also working in tandem with the RBI. In 2016, the infamous demonetisation exercise went live. A bodacious move, the scheme triggered an uptake in the number of mobile money users in the following months.


Since the introduction of mobile money in 2011 till date, Bangladesh has operated a bank-led regulatory model that forbids the direct participation of non-bank operators (independent companies and MNOs). Hence, ten (10) banks currently provide mobile money in the region while other players have had to partner with banks in order to offer theirs. In all, Bangladesh has a total of 19 providers.

Like Safaricom in Kenya, Bangladesh has a dominant mobile money operator — bKash, the second largest mobile money provider in the world — which is responsible for over 80 percent of the country’s mobile money transactions. Through

The situation in Bangladesh is an interesting one to observe. While the country is a global leader in number of mobile money accounts (Bangladesh accounts for more than 8 percent of total mobile money accounts globally) majority of users still access the services via over-the-counter (OTC) transaction. i.e. most transactions are person-to-person transfers foregoing advanced functions such as purchasing goods, receiving salaries and taking loans. In short, while the regulatory environment has been able to drive mobile money penetration, it hasn’t resulted in innovative use.

According to CGAP, Bangladesh’s central bank has also advocated strongly for bKash and other mobile financial service deployments to gain access to the USSD channels of Mobile Network Operators (MNOs). This has opened up access to a large subscriber base (bKash can connect with 98% of the mobile phone subscribers in Bangladesh) and provided the connectivity necessary to grow fast.


Ghana presents a textbook case of a regulatory environment that has evolved over time and with positive results.

At the onset, only banks and deposit-taking financial institutions were permitted to lead mobile money operations in Ghana while MNOs were to act as agents making available their platforms. This was a problematic arrangement for the MNOs as the business case wasn’t strong enough for them. Eventually, the banks managed the mobile money service and also owned the agent networks and customers.

This stalemate continued until 2015 when the Bank of Ghana (BoG) changed the regulatory framework guiding the delivery of mobile money. The new guidelines explicitly stipulate that non-bank entities can be licensed and supervised by the Apex Bank as dedicated mobile money providers. MNOs in particular are required to set up subsidiaries that would engage in the business of mobile money, licensed and supervised directly by the Bank of Ghana and allowing market-led solutions to interoperability.

This tweak to the regulatory environment produced positive results.

In Conclusion

In our journey across these four mobile money markets, you will notice several important trends:

First, timing. Where innovation precedes regulation, it is easier for the innovation to evolve and achieve sustainable equilibrium as can be observed in the Kenya situation. Where regulators desire to replicate Kenya’s success with mobile money, they must take this into consideration and compensate with relaxed policies and avoid policing providers to death.

Secondly, regulatory model. Mobile money usually struggles in markets where mobile network operators are prohibited from participating. In such markets, to see any measure of significant traction, considerable amount of resources have to be invested in a dominant player. On the other hand, partnerships rarely work. It is either you get behind the dominant player or allow multiple independent players to participate.

In Nigeria, the CBN has created a “window” for non-banks (except MNOs) to participate in the mobile money market which is a critical first step. But this is still just a first step. There’s more to be done before we have mobile money success. According to Graham Wright, GMD of Microsave, “If you look at all the unsuccessful mobile money deployments that haven’t taken off around the world, it is almost always because mobile operators and banks half-went into it and didn’t spend enough to reach the scale they need.”

With the 2020 deadline fast approaching, it is time we went all in!



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