Photo: Aerial view of the Central Bank of Nigeria on June 30, 2019.

Islamic Finance

Central Bank of Nigeria sets capital rules for mobile money licences

Published 01 Sep,2020 via The Nation - THE Central Bank of Nigeria (CBN) said it will grant more licences for payment service banks (PSBs) but set a minimum capital base of N5billion which could deter telecoms firms and some other potential new entrants to the digital financial services sector.

The apex bank, in a circular on Monday, said telecom firms, banking agents, retail chains and postal services could apply for licences to become payment banks. To do so, they must set up a separate company for it with a minimum capital of N5 billion and run it as an independent entity from their operations.

The bank has granted three licences so far, one to 9PSB, a unit of local telecom firm, 9mobile, and two others.

The Federal Government wants to open up its digital financial services sector, which will help millions who do not have bank accounts. But regulation has been caught up with intense lobbying from lenders seeking to protect their turf in the wake of intense competition and weakening asset quality.

MTN, Nigeria’s biggest telecoms firm, which is yet to receive approval, last year launched a mobile money transfer service, targeting those without bank accounts in a bid to secure the central bank’s approval for a payments licence.

It is estimated that more than half of Nigeria’s population of 180 million do not have a bank account.

The success of mobile money in east Africa has convinced investors and the industry that financial services are the next growth area for the telecoms sector, where prices for basic services are falling.

Analysts say the licensing cash requirement risks putting off telecom companies. When the CBN issued preliminary guidelines for payment banks in 2018 for discussion, telecom companies argued that they are not banks and do not need a capital base.

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Lucas Ajanaku