I’ve been in Nigeria for four weeks now. Despite having a job focused on electronic payments, I’ve operated with paper notes since arrival – constantly shifting thick wads of Naira (the local currency) between my luggage and wallet.
The whole process of getting cash in Nigeria has been a hassle. The government has refused to adjust the currency rate (pegged to the USD) since oil prices tanked. The result? A large parallel currency exchange market: At a bank, you’ll exchange 100 USD for 197 Naira. But if you pull over to a random parking lot with informal money changes, you’ll get 318 for the same 100 USD. (I’ll let you guess where I do my exchanges…) Combine this with the fact that the largest commonly accepted note is worth about 5 USD (1,000 Naira), and my days entail a lot of note shuffling.
This got me thinking about how most Nigerians manage their cash. I’m based in Abuja – the capital city created by planners in the 1970s. The city was plopped in the middle of the country, and built from farmland – to provide a neutral seat for the national government (favoring neither north nor south). This means that very few Abujans are actually from this part of the country. My colleagues are constantly jetting “home” – to Lagos in the south, or Kano in the north, for weddings or weekends with family.
So when my colleague, Bunmi, gave me a lift home after work one day, I was intrigued by the air freshener hanging from her rear-view window: “eaZy money, dial *966# now”. She waved her hand dismissively …. “Oh it’s just a mobile money advertisement, it doesn’t really work though.”
Zenith Bank owns and operates “eaZymoney” a mobile money app that promises to “make banking on the go even easier”. It claims to let you check your accounts anywhere, transfer funds, pay bills and make purchases (focusing on P2P and P2B payments). Indeed – the product website demonstrates an easy process that can be completed on smart or feature phones. But according to Bunmi, “It doesn’t really work, it’s really slow when you send payments; sometimes the recipient never even gets the funds…we don’t use it anymore.” Out of curiosity, I tried dialing *966#, but couldn’t get past the first menu.
EaZy money seems to be just one more mobile money start-up that couldn’t get off the ground in Nigeria – never moving beyond the acquisition phase to retain and stimulate customers. As Prateek Shrivastava writes, “Expectations of mobile money [in Nigeria] have not fully been met… Annual mobile money transactions in the country in 2014 exceeded N5 billion (US$25 million), while in Kenya and Tanzania total annual transactions in 2013 were US$22 billion and US$18 billion. In a notoriously entrepreneurial country, with severely under-banked, but connected population, and a central bank committed to financial inclusion – why has this nut been so tough to crack? I’ve been able to identify four key reasons:
Service quality and customer trust: In my informal survey of five middle-class Abujan colleagues, most had downloaded or used a mobile money app at some point in time – to transfer money or pay bills. But there was universal disappointment and skepticism – services were slow, unreliable, and most preferred to just use their traditional bank services. The value proposition to new consumers was not clear and negative first experiences turned off these new customers for good.
Over-reliance on banks: Nigeria’s mobile money guidelines prohibit MNOs from becoming fully licensed mobile money operators. So all mobile money deployments are managed by banks – making it difficult to leverage existing on-the-ground agent networks (such as airtime retailers) that are required to make mobile money useful and convenient.
Licensing process & competition: the Central Bank granted about 24 mobile money licenses in one fell swoop. It seems that striking that regulation balance between competition and efficiency may have gone awry here, as 24 options has likely overwhelmed consumers and complicated agent network development.
Consumer education and marketing: Other African countries I frequent – Rwanda, Congo, Senegal, Mali, are literally plastered with above the line mobile money advertising. Orange for Orange money, blue for Tigo cash, red for Airtel money… By regional comparison, advertising for mobile money in Nigeria is almost invisible. Several mobile money operators have publicly complained about the fact that the simultaneous issuance of licenses to so many operators made it difficult to raise capital, and ensure sufficient “patient capital” required to build up a mobile money system. Marketing budgets and campaigns were likely a casualty of this licensing decision.
Looking ahead: In response to some of these issues, the Central Bank of Nigeria recently changed regulations to allow mobile network operators to act as “super agents”. A number of new partnerships have sprung up between banks and MNOs. That hasn’t changed the minds of my colleagues in Abuja, but I’ll be curious to follow the story in coming years. And for now I’ll just hold on tight to that bundle of Naira.
By Sara Murray