Telecoms companies and banks have rolled out their own mobile-money transfer networks, but mobile subscribers have been slow to take up this service.
On Awolowo Road, the main commercial thoroughfare in the Ikoyi area of Lagos, Monday Uba is an agent for one of the mobile-money operators in Nigeria.
From his small kiosk standing adjacent to the entrance of a gas station, he performs the basic services of airtime vending, money transfers and bill payments.
His experience since becoming an agent a year ago has been rather disappointing, as he explains with stooped shoulders. "I have not transferred for one day since I started. All is just airtime purchases. We have not done any money transfer or any bill payment."
Although more Nigerians have embraced the idea of performing financial transactions through the use of mobile phones, mobile money is yet to gain traction as operators grapple with the challenges of deploying infrastructure, rolling out agent networks and educating consumers on the benefits of mobile-money services.
The Central Bank of Nigeria (CBN), in its report on the mobile-money ecosystem for 2011, revealed that mobile payments (which the CBN defines as person-to-person transactions over the mobile phone infrastructure) account for a fragment of total electronic payments.
The figures showed that the N21bn ($131m) of mobile payments, despite being a 200% year-on-year increase, was equivalent to just 1.3% of total electronic payments.
According to Enhancing Financial Innovation and Access (EFInA), a financial sector de- velopment organisation funded by the UK's Department for International Development, 69% of Nigeria's population lacks access to formal financial services.
This led the CBN to consider ways of achieving inclusion for those outside the formal financial system. In 2011, the government granted 11 licences to companies, including banks, to carry out mobile-money services.
Five schemes – run by eTranzact, Pagatech, Stanbic IBTC Bank, UBA and a partnership between MTN, GTBank and Fortis – were operational by the end of 2011, and another eight have launched since.
Paga, one of the most popular schemes, is available across all mobile platforms and had 230,270 users at the beginning of October. In July, it secured an undisclosed capital injection from Omidyar Network, Adlevo Capital and Acumen Fund.
There are signs Nigeria may be one of the first countries to tackle the lack of interoperability between schemes.
In September, United Arab Emirates-owned mobile operator Etisalat launched its own SIM-based service called EasyWallet, allowing existing subscribers to tie into the range of mobile-money schemes run by banks and third parties.
A snapshot of the sub-sector performance from January and June shows considerable growth. In January, schemes processed a total of 35,971 transactions valued at N227m. By June, this had increased by about 350% to 161,786, while the transaction value had increased by more than 900% to N2.4bn.
Of the total figure reported for June, Stanbic IBTC and Pagatech accounted for N1.9bn or 78% of the total transaction value.
Big challenges remain for operators, not least an insufficient network of agents.
Recent estimates from the CBN show that there are more than 6,000 agents, but stakeholders say that about 50,000 are required to cover the market.
Perhaps the most significant challenge is how to get consumers to utilise money-transfer services, as well as other services that attract charges such as cash withdrawals and account balance enquiries.
Despite these teething problems, the landscape for mobile-money services in Nigeria still looks promising, especially considering the size of the market.
At 964,800 registered subscribers in June, which is roughly 1% of Nigeria's current mobile subscriber base, the market is still largely untapped●