Africa’s Biggest Mobile Operator MTN Wants To Compete With Nigeria’s Banks

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Written by Peter Pedroncelli
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MTN’s mobile money product already has 22.2 million users in 15 African countries. Photo – AP – Sunday Alamba

South African mobile operator MTN is expected to begin offering financial services in Nigeria after it received a license from the Nigerian central bank in July.

Yello Digital Financial Services Limited, a fintech subsidiary of MTN, is expected to offer services that will help MTN compete with Nigeria’s banks, according to VenturesAfrica.

Nigeria has an unbanked population of around 60 million people, which represents 31.4 percent of the total population. The government needs them to become “banked” to achieve its goals of financial inclusion by 2020.

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In 2018, the Nigerian central bank announced that it would allow telecom companies to provide banking services that are aimed at giving Nigerians without bank accounts access to mobile money services and including them in the financial system, Africabusinesscommunities reported.

MTN runs Nigeria’s biggest mobile phone network, serving around 61.5 million people in Africa’s largest economy.

South African mobile operator MTN is in a position to provide financial services as it is already directly connected to almost a third of the population through its subscriber base.

MTN customers without bank accounts can access mobile money services.

With the government’s backing, the mobile operator is expected to recruit its existing airtime agents and other small businesses to distribute financial services in Nigeria, according to Techfinancials.

Banks in Nigeria have been particularly resilient to fintech disruption because of advantages built up through their branch networks, expertise in providing credit, and the fact that the central bank has been in their favor.

Fintech has not yet challenged the income stream commanded by the banks in Nigeria but this could change now that MTN has the central bank’s blessing.

MTN is applying for a payment service bank license, which will allow it to “offer a broader and deeper range of financial services” that would compete directly with banks, Quartz reports.

Mobile operator wanting to be Africa’s biggest bank

In 2018, MTN CEO Rob Shuter said that his company was aiming to be Africa’s biggest bank in the near future.

MTN’s mobile money app has 22.2 million users in 15 African countries. That could double if a third of Nigeria’s mobile subscribers begin using MTN’s mobile financial services.

Nigeria is one of MTN’s three biggest markets. Its total revenue was $8.8 billion in 2018.

The Nigerian market accounts for 29 percent of MTN Group’s service revenue, 34 percent of voice revenue and 30 percent of digital revenue.

In May, MTN Nigeria listed on the Nigerian Stock Exchange, becoming the first mobile network operator to do so.