Mobile money operators miss deadline on N2bn capitalization

Some mobile money operators in the country have missed Central Bank of Nigeria (CBN) deadline on N2billion capitalization requirements, Nigeria CommunicationsWeek has learnt.

The apex bank had issued a directive to all mobile money operators in the country to capitalize to the tune of N2billion from N20million by June 2016, which expired on May 31, 2016.

Nigeria CommunicationsWeek investigations revealed that only mobile money operated by money deposit banks and few successful operators have meant the CBN deadline while others are struggling to meet the directive on capitalization.

An operator who does not want his name in print told Nigeria CommunicationsWeek that, Central Bank of Nigeria is aiming to increase the capitalization of the licensed mobile money operators in Nigeria by 100 percent from ₦20 million to ₦2 billion by June 2016.

“This is to further increase their stability, reduce systemic and settlement risks. I believe settlement risk is a major reason for the new capitalization. However we are yet to witness a single breach (maybe unannounced). It is also difficult to require an industry that is still battling with low volume transactions to meet N2B capitalization when some of them do not even transact up to half that figure in a given financial year. They could be many other clever options to consider reducing the settlement risk due to the fragile nature of the industry or maybe the regulator is seeking to transform the lightweight players into middle or heavy weights by the new requirements.”

However, there is anxiety among fringe operators that are yet to meet the deadline as to whether CBN will be firm on the deadline or will extend it.

Emmanuel Okoegwale, principal associate, Mobilemoneyafrica, said that: “what was the basis for the new capitalization? Which data was applied in reaching the new requirement which is 100 times more? Maybe the new requirement was based on submissions of the operators themselves to the regulators showing robust operations, large and active agency network among others, and hence the regulator moved to further consolidate the industry”.

“In reality, the N2B capitalization in the current economic climate and state of the mobile money industry in Nigeria will be unjustified and also impracticable for most of the non-bank operators as only a handful had ever done close to or more than N2 Billion transactions in a given Year.

“What are the basis for reaching the N2 billion capitalization requirement – Is it based on current trading volumes or expected future growth? In more mature mobile money markets around Africa the minimum capital requirements for e-money issuers shows that Kenya has USD $225,000, Namibia -USD 216,000 or two percent of outstanding electronic money liabilities while West African Economic and Monetary Union is USD $571,000 and to have ongoing funds of three percent of the greater of the prior day’s or average outstanding e-money liabilities, but Nigeria is asking for a whopping $11m in a struggling market even European union is less than half a million dollars capitalization requirements for e-money issuers,” he noted.