CBN finally gives “Approval In Principle” to Airtel and MTN to operate Payment Service Banks

The Central Bank of Nigeria has given an “Approval In Principle” to Airtel and MTN to operate Payment Service Banks (PSBs) in the country in its bid to increase the country’s drive for financial inclusion in Nigeria. This is coming about two years after the Apex bank issued Approval-In-Principle to three Payment Service Banks (PSBs) – Hope PSB, Money Master PSB and 9PSB in 2019. The three PSBs got their final approvals in August 2020 and they have already started operations.

Corroborating the story, MTN issued a statement, signed by the company secretary Uto Ukpanah, saying:

“MTN Nigeria Communications Plc (MTN Nigeria) as promoter, received an Approval in Principle (AIP) dated 4 November 2021 from the Central Bank of Nigeria (CBN) for a license application for the proposed MoMo Payment Service Bank Limited.

This is the first step in the process towards a finial approval, subject to the fulfilment of certain conditions as stipulated by the CBN. The decision to issue a final approval is firmly within the regulatory purview of the CBN and we respect their right and judgment in that regard.

MTN Nigeria affirms its commitment towards financial inclusion agenda of the CBN and the Federal Republic of Nigeria and continues to explore means whereby it can contribute to its fulfiment.

While we look forward to the eventual grant of a final PSB licence, we will continue to communicate material information in accordance with regulator obligations and guidelines.”

Airtel Africa’s Simon O’Hara also said that his company had also been notified of the “Approval In Principle” received for its own PSB – Smartcash. According to Segun Ogunsanya on the development, “| am very pleased that Smartcash has been granted an approval in principle to operate a service bank business in Nigeria. We will now work closely with the Central Bank to meet all its conditions to receive the operating licence and commence operations.”

“The final operating licence will enable us to expand our digital financial products and reach the millions of Nigerians that do not have access to traditional financial services. I am looking forward to working closely with the Government, the Central Bank and traditional financial institutions to expand financial inclusion and meet the evolving needs of our customers and the economy.”

Related story: Welcome, Telco-Backed Payment Service Banks…..Good Bye Nigerian Commercial Banks?

The PSB initiative was introduced by CBN in 2019 as a measure to increase financial inclusion in the country particularly in rural areas. According to the CBN, a major objective for the establishment of PSBs is to leverage mobile and digital platforms to enhance financial inclusion in rural areas, especially the underserved parts. This is expected to be achieved by increasing access to deposit products, payments and remittance services to small/micro businesses and low income households.

The Central Bank of Nigeria introduced the National Financial Inclusion Strategy (NFIS) in October 2012 to provide Payment Service Banks across Nigeria with the aim of breaking the traditional barrier preventing financial inclusion and promoting low cost, secure and convenient financial services across the country. The CBN’s vision was for 80 per cent of Nigerian adults to be financially included by the year 2020.

The EFInA Access to Financial Services in Nigeria 2020 Survey shows that only 64% of Nigerian adults were financially included by the end of 2020. This means that 36% of Nigerian adults, or 38 million adults, remain completely financially excluded.

It is not quite clear why these two telecom operators are getting their approvals two years later after the first 3 PSBs even though they have more experience in implementing similar schemes in other African countries. MTN has its MTN Mobile Money while Airtel has Airtel Money.

The 3 Approved PSBs do not seem to have done much in the space and it now behoves on the new PSBs to change the landscape when they get final approval.