When the Central Bank of Nigeria (CBN) launched the pilot of the cashless policy in January 2012, it was after an extensive study of evolving trends across the globe. The conclusion was that Nigeria, Africa's most populous nation and then second largest economy, must vigorously pursue the cashless initiative if it hopes to significantly reduce cash-based transactions. A number of compelling reasons underlined this quest. An all-time high of N192 billion would have been incurred that year on cash management, a considerable increase over the N114.5 billion spent in 2009, while another N27.3 billion would have been spent on cash-in-transit and N69 billion on cash processing, according to CBN records. This was besides other incidentals such as robbery, fraud, revenue leakages, and inefficient treasury management.
On the flip side, the country's population estimated at 150 million people, credited with an unprecedented use of cell-phones with over 90 million active mobile phone lines represented a huge market that could be leveraged for economic benefits via mobile payment transactions.
It was not surprising therefore that the cashless policy, complemented by mobile money services, was widely applauded and quickly embraced by key stakeholders, notably financial institutions, telecom operators and other service providers. Indeed, it was not long after the cashless policy became operational that the telecom firms went into partnerships with financial institutions to leverage the huge potential in mobile banking services. In any case, mobile banking is crucial in deepening mainstream banking by drawing the unbanked and under-banked segments into the formal banking system, while also enabling the economy to shift to more efficient and reliable modes of payment. It was thus in recognition of these benefits that Stanbic IBTC Bank, for instance, launched its mobile money services in partnership with all the four telecom networks in Nigeria, MTN, Airtel, Glo and Etisalat, few years ago. Nonetheless, doubts were expressed about Nigeria's readiness for a cashless economy, which was mainly due to the unavailability of requisite infrastructure, POS terminals and low literacy level. There was also the argument that ongoing reforms had generated ample momentum to leverage on all forms of e-payment, especially mobile payment, to enhance financial inclusion and facilitate Nigeria's transformation from cash-based to a cashless economy.
However, few years after, there are clear indications that both the cashless policy and mobile payment system are becoming increasingly entrenched in Nigeria's economic matrix. The cashless policy, selectively experimented in six states, goes nationwide from July 1, 2014. The mobile money platform has brought about transparency in transactions, improved remittances and economic activities across various sectors of the economy, both in urban and rural areas. Part of this was achieved through the collective efforts of regulators, licensed operators and other stakeholders who in various ways helped to create awareness and enlightened Nigerians about the benefits of mobile money. This has been instrumental in driving its acceptance, and subsequently unraveled its enormous benefits to the economy. Only recently, Save the Children, an international non-governmental organization (NGO), appointed Stanbic IBTC Bank to disburse £30million (N8.1billion) in monthly stipends through its mobile money and revolutionary biometric payment solutions to a targeted 60,000 - 90,000 pregnant and nursing mothers over the next five years. The disbursements, which commenced in April 2014, will be officially launched very soon.
The grant disbursement program, which the NGO is executing on behalf of its donor agencies and the Department for International Development (DfID), is meant to support pregnant women in extreme rural areas who ordinarily do not have access to formal financial services with monthly stipends to enable them take care of themselves during pregnancy and also after child birth to guard against infant and maternal mortality across five selected local government areas (LGAs) within Zamfara and Jigawa States. The integrated biometric mobile payment solution for this project will capture the biometrics of the beneficiary as well as other personal details such as the level of education, gestation in months, household size, next of kin, pictures and thumbprints. Similarly, Stanbic IBTC Bank has entered into several strategic partnerships in which its partners, which include a microfinance bank and the Kano State Scholarship Board, will leverage on its unique bulk payment solutions to distribute bursaries and micro loans to multiple beneficiaries, numbering over 10,000 to date, seamlessly and instantly into mobile money accounts. The recipients are issued the mobile money prepaid ATM cards which allow them to access the value in their mobile money accounts through any bank's ATM, cash out at Stanbic IBTC Bank's agents or branches or simply spend it via the merchant POS terminal in a cashless manner.
Instructively, Standard Bank Group, to which Stanbic IBTC belongs, currently operates mobile money services in various markets in Africa, including Ghana, Uganda, Kenya and South Africa, and has indicated its interest to play a strong role in the Nigerian economy. Its strong continental footing and developmental focus have also given it access to an increasing number of cross-border transactions from various segments of the economy, effectively placing Nigeria on a solid pedestal. This is good news for Nigeria as the country will expectedly benefit from the group's experience and expertise. With an estimated population of 150 million people, over 20 million bank accounts and more than 120 million active phone lines, Nigeria, undoubtedly, retains the potential to become Africa's biggest mobile money market, once the right processes and infrastructure are put in place. This is where creativity and innovation become vital. And this is a task for stakeholders in the cashless and mobile money value chain. Technological innovations and customized products or services are known to have been effectively deployed to overcome hitherto difficult challenges, and that includes providing a leap in value for millions of people at a relatively low cost.