Nigeria stands a better chance of actualising its 2024 financial inclusion target and boosting the micro, small and medium enterprises (MSMEs) ecosystem, as Globacom’s Money Master joins the emerging league of payment service bank (PSB) providers in days ahead.
In a bid to grow the number of financially included people, the Central Bank of Nigeria (CBN) had released an exposure draft in October 2018 in which it proposed Payment Service Banks aimed at deepening financial inclusion in Nigeria. Globacom’s entry into the league of PSB providers explains the priority attached to the matter.
The CBN in 2020 gave an official nod to telecommunication operators’ (telecos’) push to offer mobile money services after the apex bank had issued Approval-in-Principle (AIP) to three subsidiaries in September 2019. The three firms were Hope PSB, a subsidiary of Unified Payment, Globacom’s Money Master and 9Mobile’s 9PSB.
It later granted final PSB licences to MTN Nigeria and Airtel.
A PSB licence allows the companies to, among other things, maintain savings accounts and accept deposits from individuals and small businesses, which is covered by the deposit insurance scheme; carry out payments and remittance (including cross-border personal remittance) services through various channels within Nigeria; issue debit and prepaid cards, and operate an electronic purse or wallet.
The structure of the PSBs include the fact that they shall among other requirements operate mostly in the rural areas and unbanked locations targeting financially excluded persons, with not less than 25 percent financial service touchpoints in such rural areas as defined by the CBN from time to time.
The apex bank had a target to ensure that 80 percent of the country’s adult population was financially included in the financial cycle by the year 2020. The target was missed. The CBN in a circular in July 2018 lamented that Nigeria was not meeting any of the financial inclusion targets agreed and contained in the 2012 Financial Inclusion Strategy.
Not only was the country not meeting its targets, but it was also declining in growth. For instance, while Nigeria achieved 60.3 percent in 2012, it declined to 58.4 percent in 2016 against a target of 69.5 percent translating to financial exclusion of about 41.6 percent. The CBN in 2019 revised the financial inclusion target to 2024 with 95 percent attainment.
Imperative for Globacom’s entry
As a foremost telecoms and digital service provider, Globacom has recorded huge growth in its subscriber numbers. According to a recent report published on Nigerian Communications Commission (NCC)’s website, Globacom added a massive 2,103,721 new customers in July as subscribers root for its services. This raised its subscriber base to 58,330,200 from 56,226,479 the previous month. Analysis of the data showed that the performance represents 83 percent of the total number of 2,523,276 new phone users recorded in the country in July.
This contributed to the jump in the total number of subscriptions to telecommunication services across the mobile networks of MTN, Glo, Airtel and 9mobile to 208.6 million during the review period. The corresponding figure for June was 206 million. Glo’s impressive performance contributed to the boost in the country’s teledensity, which measures the number of active telephone connections per 100 inhabitants living within an area and which rose from 108.15 per cent in June to 109.47 per cent in July 2022.
MTN came a distant second after Globacom with 392,440 new subscriptions in July, while Airtel was third with 90,955 new customers. However, 9mobile recorded a loss of 63,840 subscribers as its base fell from 12,659,356 in June to 12,595,516 in July.
So far this year, the mobile network operators have gained a total of 13.5 million new subscribers, with the number of phone users in the country rising from 195,128,265 at the end of December 2021, to 208,604,996 at the end of July 2022. This is a departure from last year when the operators lost close to 20 million subscribers as a result of the ban on new SIM registration.
The NCC report shows that Globacom has played a major role in leading this growth. Its remarkable performance in the industry is believed to be a result of the continuous network upgrade and extension of 4G data coverage to more cities across the country. The company which turned 19 on August 29, 2022 also offers subscribers innovative products with unmatched value.
“Recall that Globacom brought the innovation of ‘per second billing’ which could be considered a rescue mission that saved Nigerian telecom subscribers when the other network service providers came with the intention to kill”, said Mike Akalagu, a telecom firm operator in Lagos. Akalagu observed that Globacom’s penetration speed is a huge plus to its PSB which will be massively embraced by the subscribing public. “My fear is whether Globacom can cope with the demand for its PSB services, especially in the countryside where rural bank branches are diminishing because Globacom’s Money Master is definitely going to play a huge role in driving financial inclusion”, Akalagu told THEWILL in a note.
Experts observed that quite a number of people do not own bank accounts due to the lack of information or sensitisation on the ease and importance of opening an account and most banks are more focused on reaching the already-banked rather than the unbanked percentage of the population.
They further argued that even with the whole trying to make the bank processes easy as it is now, there is no incentive to pretty much address the ignorance on the streets. We hardly see banks hosting seminars on how to open a bank account in those low-income areas and that is just focusing on those that already have some sort of knowledge about how the banking app and account opening works.
MSMEs’ Feeding Sopt
The financing and capacity building support offered by the CBN and other specialised development banks to micro, small and medium enterprises (MSMEs) will enable the operators to step up their activities in the real sector value-chain. This is more significant in the backward integration scheme where MSMEs have played active roles to support the Fast-Moving Consumer Goods (FMCG) firms which are currently challenged as reports have shown.
Backward integration is a practice where companies are encouraged to cultivate their own raw materials locally and purchase from their local suppliers or establish farms to grow produce for their factories. The government put the measure in place to save foreign exchange, create jobs, boost productivity and grow the GDP. The FMCG firms wholly embraced the scheme and the result has been satisfactory. The SME operators who keyed into the initiative, especially those in agribusiness and transportation, have also benefited immensely through the support of the manufacturing firms.
For instance, under the backward integration initiative, Nestlé Nigeria established a project that engages 5,000 smallholder farmers for the supply of raw materials for its agro-business operations. Nigerian breweries have stepped up production of sorghum and cassava to boost local raw material supply for its plants using local farmers.
FrieslandCampina WAMCO Nigeria has developed its local raw milk sourcing, an initiative that has provided a source of sustained income to almost 2,000 farmers (including 900 women). Flour Mills of Nigeria Plc has invested in local farms and other agricultural projects to cultivate raw materials for most of its processes. Cadbury Nigeria established a cocoa processing plant in Ondo. The government has also benefited by way of tax revenue, employment generation and technology.
With Globacom’s Money Master coming on board the MSME operators will be empowered to play an active role in the backward integration scheme which will guarantee job creation and boost the economy.
In a press statement released in Lags recently to mark Globacom’s 19th anniversary of operations, having commenced operations on August 29, 2022, Deputy Chief Operating Officer of Globacom, Mr. Bisi Koleosho, expressed appreciation to Glo subscribers and all Nigerians for their faith in the company, and restated its commitment to the provision of world-class communications and digital services. This, he noted, is in line with the corporate promise Globacom made at launch to build a robust communications and technology infrastructure that would consistently deliver value to its esteemed customers.
“As we celebrate our remarkable achievements these past 19 years, we wish to thank our subscribers for keeping faith with us these past 19 years. We assure them that Globacom will remain a catalyst for socio-economic empowerment not only in Nigeria but also in Africa”, Mr. Koleosho said, adding that the company is constantly investing massively in new technologies to exceed customer expectations.
He disclosed that Globacom has been carrying out an aggressive roll-out of network equipment and upgrade of its sites to 4G-LTE across the country in order to continue to offer high speed and quality data experience to its over 56 million subscribers. The process covers the entire scope of telecoms infrastructure upgrade from the core network to access network, transmission and IP network, fiber network, metro access and backbone infrastructure.
It also involves rollout of new sites to increase network coverage in areas that need improvement and to also densify and ease off already congested areas. “This ultimately improves customers’ network experience and satisfaction in terms of service delivery, network quality and coverage”, Mr. Koleosho explained.
About the Author
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
