Regulations passed by the central bank of a nation are the most important factor when it comes to any kind of innovation. In a new development, it has emerged that the Central Bank of Nigeria is exploring the possibility of allowing Mobile Network Operators (MNOs) to set up banks meant for payment services. This will allow the MNOs to provide mobile money services to the citizens of Nigeria for the first time. Earlier, Nigeria had been one of the few nations in Africa which had barred MNOs from entering this particular field. However, it seems that the central bank has done an about-turn pretty quickly.
The services that an MNO can provide will be strictly restricted to that of a payment services bank. They would not be allowed to forward credit or sell insurance products to their users. However, these banks will be allowed to take deposits and provide payment services. On the other hand, the deposits could be used by the MNO to invest in government securities. In addition to MNOs, mobile money operators, retailers, and banking agents will also be allowed to apply for such a license. Any organization with $14 million or more to its credit can apply for the license.
Over the past few years, Nigeria and other nations in the African continent have emerged as hotbeds of innovation as far as Fintech is concerned. Hence, it is not a surprise that some of the larger organizations in Nigeria are now vying for a slice of the pie when it comes to the fast-growing payments sector. The fact that significant portions of the population are still unbanked in Nigeria makes this a good move on the part of the central bank.