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Asset management Regulation

Nigeria softens rules shielding banks from wireless rivals

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Telecommunications firms, including South Africa’s MTN Group, are now interested in applying for licences that will allow them to create units that can collect deposits and maintain savings accounts.

Tuesday 08, January 2019

(Bloomberg) --Nigeria is preparing rules that will allow wireless carriers to transfer cash, softening a previous policy that protected the turf of banks in Africa’s most populous country.

The central bank may have realised it cannot rely on lenders alone to achieve its objective of extending services to the 50 million adults still without a bank account in the nation of about 200 million people.

The regulator late last year released guidelines on how Payment Service Banks will operate to reverse a drop-in access to affordable financial products. It had previously blocked network operators from getting licences to move money for customers without using a bank. But, with 162 million active lines between the nation’s four wireless carriers, the regulator is opening up the field in a bid to more than double its financial inclusion rate to 80 per cent by 2020.

“These guys are going to grab all the bottom-of-the-pyramid transactions,” said Bismarck Rewane, Chief Executive Officer of Financial Derivatives, a risk advisory group based in Lagos. “This is a disruptor to the traditional way of doing things.”

Banks still have some shelter from full-blown competition as the new policy will not enable licensees to lend, pay interest or accept foreign-currency deposits. It also requires that at least one quarter of access points be located in rural areas, which are currently under-served.

“I do not think everyone will say, ‘this is the perfect document,”’ said Usoro Anthony Usoro, the general manager of mobile-financial services for MTN Nigeria, the market leader with 67 million mobile subscribers. “It’s a first step towards bringing all players in. We expect that the CBN will keep listening to customers, to potential participants in that space and will keep improving the policy.”

The Central Bank of Nigeria did not respond to requests for comment about the new policy or when the licences will be granted.

Banks are confident they can withstand the competition with their own digital offerings. FBN Holdings’ First Bank of Nigeria is pushing ahead with its digital-banking roll-out, with more than 10,000 agents targeting the unbanked everywhere in the country, according to CEO Adesola Adeduntan, out of the 500,000 agents which the regulator has said are needed to cover Nigeria.

“As a bank, we can open accounts nationwide using digital financial services, invest the funds across a broad range of asset classes, and, most importantly, we can lend,” said Lagos-based Diamond Bank’s head of Corporate Communications, Ezechinyere Anyanwu.

TAGS : CBN, Mobile Money, MTN, Diamond Bank, First Bank of Nigeria

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