Whether it is to reach for more financial inclusion or to open up the heavily regulated Nigerian banking sector, Nigeria’s apex bank is already facing the heat of global digital disruption in the financial services sector. From now on, banks in Nigeria would no longer be required to have a separate license to operate a mobile banking app.

Here Is Why This Change Is Significant

• Before now, to operate a mobile money service in Nigeria, the operator shall, among other things be : 
• (a) Be licensed by the CBN on such terms and conditions as the Central Bank shall desire.

• Such terms and conditions usually involve the presentation of evidence of the formation of the Consortium that will deploy the project (Certificate of Incorporation) 
• The Consortium’s profile and functional contact e-mails and telephone numbers 
•  Securities features that will be put in place 
• 3 years Financial projections for the company 
• Draft agreements with the following: a. Technical Partners b. Participating banks c. Switching company/(s) 24 d. Merchants e. Telcos f. Any other party 
• Tax Clearance Certificate for three (3) years of each party in the Consortium 
• Project Deployment Plan (time, location, operation, etc.) 
• Payment of non-refundable Application fee of N100,000.00 (One hundred thousand naira) made payable to the CBN 
• Evidence of Shareholders’ Fund of N2 billion before a license is issued
• This document, and may be reviewed from time to time. 
• Be issued a unique Scheme Code by the NIBSS for managing interoperability.

But all that is about to change

Going forward, once the Central Bank of Nigeria is satisfied that your current license to provide financial services in Nigeria suffices, the need to procure an additional license for your business would be obviated.

“You do not need authorisation from the CBN to go into Wallet services or mobile money schemes. All you need is to notify the CBN your current license suffix,” CBN Department of Banking and Payment System said at the First Bank cross border seminar for Banking and Telecom Regulators from sub-Saharan Africa.

• Banks Are Being Reluctant Investing In Mobile Money Because The Heavy Regulations Don’t Make Any Case For Profitability
•  Many institutions in Nigeria are using prepaid payment cards and the mobile phone as a means of providing financial services to the previously financially excluded. 
• While not a bank account in the traditional sense, mobile wallets, and prepaid card products provide individuals with a safe electronic store of value and electronically initiated and accepted payment transactions and funds transfers. 
• In 2015, the CBN published both a Regulatory Framework for Mobile Money Services in Nigeria and Guidelines on Mobile Money Services. 
• The Regulatory Framework makes provision for only two specific models, namely bank-led, or non-bank led (a corporate organization duly licensed by the CBN). 
• Mobile money was one of the major segments of the Nigeria e-payment ecosystem primed by the CBN to drive its financial inclusion vision, in which 80 percent of Nigerians will be established in the national banking system by 2020. 
• However, mobile money operators (MMOs) have had little success in supporting the country’s financial inclusion targets. 
• This is mostly due to a lack of proper understanding of the conditions of their licenses, limited funds, poor infrastructure in rural areas, and limited customer access due to limited agent network rollouts. 
• Most of the licensed Mobile Money Operators in Nigeria are believed to have remained inactive and many have yet to officially commence payment platform operations. 
• Consequently, the CBN took the decision to raise the capital requirements for licenses from N500 million to N1 billion at the end of December 2017 and now to N2 billion, with a caveat that any operator that fails to meet the 1 July 2018 deadline for the new capital requirements will have its licenses revoked, further reducing participation.
• The implication of these for Nigerian banks is that from now on, they would no longer be required to have a separate license to operate a mobile banking app.
• However, on the other hand, the situation of non-bank led organizations involved in mobile operation remain heavily uncertain, as they may be required to still apply for and obtain licenses.

Cold Feet On Digital Currencies

Expecting Nigeria’s apex bank to adopt cryptocurrencies? This still remains a dream. 

The apex bank’s position on the adoption of digital currencies still remains that: 

“We [CBN] have not made up our mind on what steps to take but I am not sure or believe that the CBN will ever go crypto.

“We know what they are doing in Sweden and China. We are not running on the same parameter and so based on financial inclusion, adopting digital currency will mean a number of our population will be excluded.”

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

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