Why I Oppose Telco Led Mobile Money

If you ask most of the proponents of ‘Telco led’ Mobile Money (Telcom operators having Mobile Money licenses) why they want the telecom operators in the Mobile Money game, their reason basically revolves around “it worked in 1Kenya”.

To be fair, that is a good argument. It is not a bad idea to try something that has worked before you start experimenting with something new.

However, what if there are anticipated 2downsides? Do you still move ahead?

Anyway, here are my simplistic reasons for opposing telco-led mobile money;

  1. They have not delivered on their primary responsibility of providing good voice and data services. Why give them more?
  2. They have refused to utilise what they have in the payment ecosystem. Telco billing.

There is no need to expand on point number one. They should swallow what is in their mouths first before looking for more to consume.

The second point is what is more interesting.

Money is entirely useless except it is spent. Quite a number of people transferring money do so because they, or someone else wants to buy something immediately.  Why don’t the telcos double down on the “I want to pay for something” segment of those that may use mobile money?

BlackBerry has already shown that telco billing is very possible at scale and can be rather seamless in using prepaid calling cards to pay for services. So why have prepaid third party services on telcos not grown beyond BIS, caller tunes and those spammy SMSs?


I am not sure about the Blackberry BIS revenue structure. However, telcos take between 45 -80% (yes 80%!) commission on stuff distributed and billed through them. Compare that to Apple’s albeit greedy 30% and Interswitch’s 1.5%.

As a result of greed induced friction, only an infinitely small range of products can commercially viably, be distributed via telcos. The math just can’t work when someone takes a commission of 80%!

Of course it is known that when you pay N100 for airtime, not all of it goes to the telco because of distribution costs and commission. However, about 90% does. Therefore, telcos can afford to give at 70 – 75% to the content/service providers vs. the 20%-55% they currently give.

Of course, a telco taking 30% off the top is still massive for a lot of businesses with lower profit margins, but there is a way out.

Postpaid subscribers.

Telcos in all probability take 100% of the money paid by postpaid subscribers as there is no distribution cost to the payment, so they can afford to give 90 -95% back to service/content providers for these category of subscribers.

Who knows? Ability to pay for services cheaply may even convert a lot of prepaid subscribers to postpaid.

So, anytime a pro telco-led Mobile Money person is around you, ask them “what they you done with what you have?”

For the record, I am in support of independent led mobile money implementation, ala Paga. Banks and Telcos should stay as unbiased infrastructure providers.



Some may ask, what about the free market? Let the market decide.

I am sorry to break it to you, free market economics does not exist in real life. Besides, the 4 telcos already have a monopoly position protected by the limited number of licenses available to provide telecom services.

How’s that for a free market?


1 Like I argued in my previous post, Kenya is a single data point with different circumstances so there’s no harm trying another way

2What downside is there to telco led mobile money? Telcos have an unfair monopoly advantage due to the fact they provide the infrastructure on which Mobile Money runs. Those who own the road/tollgate cannot be allowed to provide transportation services.


Thanks to Tija and Osahon for helping me spot a dozen typos and errors.

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Mobile Money Marketing: The Banked, Unbanked and Trickle-Down Economics.

This follows my previous post on Mobile Money

The concept of trickledown economics is propagated by politicians who want to give tax breaks to the rich. Their idea is thus; money exclusively trickles down for the rich to the poor. So if you want to stimulate the economy, you do so at the top and the effect would flow downwards1.

Whilst I agree money trickles down vertically, it does so in multiple value chains, not exclusively rich à poor.

How does that relate to Mobile Money?

You see, there is this idea that since Mobile Money is targeted at the unbanked, it should be marketed at the unbanked. I think this is the wrong approach.

With exception to the Nigerian political ecosystem value chain2, a new money cycle generally trickles down from the banked to other banked or the unbanked.

Let me use an illustration.

The government gets money from oil sales (banked) à pays a road contractor (banked) à who now pays his sub-contractors (mostly banked) à who now pay their labourers (mostly unbanked) à who then pay the mama put woman (unbanked) etc.

That is just one value chain flow but you get the general idea.

Hence, if you want the labourers (unbanked) to store their money in the Mobile Money format, who do you market it to, them directly who are the unbanked or the sub-contractors who are the source of the labourer’s monies?

As it is now, it is the unbanked that are being marketed to mostly. I’d posit that it should be the sub-contractors that are the source of the unbanked’s money

It is not that simple though because for money to flow seamlessly (liquidity), both the giver and receiver have to be content with the transaction form.

Why should the unbanked labourer take money in a form that he cannot spend it in? He has no time to be talking Mobile Money when he needs to quickly condemn a plate of Eba and Egusi.  This is where the concept of TTL (Time To Liquidity) in my previous post comes to play.

However, if his Mobile Money wallet has a quick backup TTL (via a debit card tied to it or an ATM), it is much more viable to be considered. The labourer get paid his N2000 daily wage in Mobile Money, if the Mama put does not want to be paid in Mobile Money, he can quickly withdraw cash a form that is rather liquid.

In summary, for Mobile Money to kick-off in the above value chain, the most important persons are the sub-contractor and the labourer.  I believe rightly targeted marketing and a short TTL will do just that.


1Although money generally flows from top to bottom, the volume of traffic occurs at the bottom. So to stimulate the economy, the money should be fed to the bottom as quick as possible. Basically, whatever politicians tell you, do the opposite.

2From top to bottom in the Nigerian political value chain, it is cash. In Yobe State, local government allocation comes in cash.

Thanks to Tija and Osahon for helping me spot a million typos and grammatical errors.

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Thoughts on Mobile Money and its (non) Adoption in Nigeria

I have been thinking a lot about why Mobile Money is yet to catch up in Nigeria like it has in Kenya and maybe Uganda. Below are my thoughts.

I believe the primary issue stems from the fact that, although the circumstances that allow Mobile Money to thrive in Kenya are not available in Nigeria, we are still trying to push it as if it were.

So what are some of these circumstances?

  1. The novelty of Mobile money allowed for it to be created like a startup, the whole shindig of product-market fit. The technology was adapted to the particular environment without pressure as it was initially funded by Vodafone UK (No, mobile money was applied but not created in Kenya).
  2. As a result of its newness, the regulators did not see it coming and hence, did not have the opportunity to fuck things up. Paraphrasing @WhiteAfrican, regulation is the antidote of innovation.
  3. The newness of mobile money allowed the pioneering telco Safaricom, which happened to have an overwhelming massive market share move fast, thereby surmounting the network-effect limitation (I will explain what I mean shortly).
  4. When Mobile Money launched in Kenya, the absence/limitation of alternative ways to digitally move money quickly meant the necessity of adoption to try it out was much higher.

What I am basically trying to say is that, if MTN Nigeria with its almost 50% market share had a 3 year head start vs everyone else, CBN was not putting stumbling blocks all around, and internet payments were not readily available, Mobile Money adoption would have been much faster.

Anyway, that is not the case and there is an obvious need for a more inclusive payment system. How do we make it happen?

First of all, let me explain how I understand money, cash/liquidity and the bank.

  • Money is simply stored value.
  • Cash is a common agreed representation of that value backed by the government.
  • The bank is a third party place licensed by the government where we keep that stored value and acts as a ledger.
  • Liquidity is the ability to exchange one form of value to another. Cash is in most cases, the most liquid form of value as it is a commonly agreed representation of value.

At the risk of digressing further, let me use an example.

I have some yams. That is value for someone who needs yams and I want an iPad. If I can directly exchange that yam for an iPad, then the Yam is liquid. Most times it is not the case besides I might not need to get an iPad at the moment I have the yam.  And most times we do not know how many yams are worth an iPad. So I turn my Yam into a representation that is universally acceptable, Money/Cash. This does two things.

  1. There is a common ground for exchange.
  2. My money cannot spoil so I can keep it until I need an iPad or something else.
  3. The bank is where it is usually kept.

Phew! Let’s get back to Mobile Money.

At the very core, a Mobile Money account is a bank account with much lower KYC/regulatory requirements. Simple. If it is looked upon like this, then it makes things much easier.

One of the basic issues with the poor adoption of Mobile money it the perceived high TTL (Time To Liquidity).

Remember, cash is the most liquid form of money. Nigerians want to be as near as possible to their cash or an understood representation of their cash (the bank balance).

My recommendations to help the adoption of Mobile Money in Nigeria

  1. Reduce Time To Liquidity: Presently, you are able to withdraw money from your mobile money account (abi na wallet?) from quite a number of ATMs. So time to liquidity is not technically an issue but it is because it is not really known.  It is why I said perceived. If every Mobile Money wallet had a debit card, it would help this perception a lot. At first, people will be withdrawing their cash immediately it hits their mobile money account but over time, they will be willing to leave it.
  2. Interconnectivity of Wallets/Accounts: I hope Mobile Money operators understand they are not competing with each other but with adoption. It is a no brainer that since no one has the necessary network effect that Tigi had when they launched in Kenya, inter connectivity between wallets is necessary. Banking would not be viable if I needed to have an account with all 22 banks because I could not move money from GTBank to Diamond Bank.
  3. Open up APIs: APIs allow for the extendibility of services. Banks via Debit/Credit cards have allowed for the extendibility of payment online, POSs etc. If ‘mobile money’ accounts are connected to the card system, that would be a shortcut. But in the absence of them, there is a chance for innovation and adoption if the APIs are opened up and more efficient methods of moving money are created.
  4. Improve Communication: The communication of Mobile Money is frankly, confusing. I personally would do away with the term mobile money and call them what they are, accounts; if not Bank accounts. While running the idea of this post with Mark Essien, is suggested the name Mini Bank accounts. Perceived competitors should come together and unify communication. Imagine if Diamond bank called the cheque book something different from GTBank?

As things are, the banked (Mobile Money) market is for the Banks to lose. From outside, Stanbic looks the best positioned so far. Paga has done a great job and I am rooting strongly from them. I foresee Paga morphing into a branchless bank such as ING direct.


I’ll end here for now. I think I have 2 more payment blogposts in my head.

Thanks to Mark Essien for listening to my ramble and feedback which enabled this post to finally come out almost one year after I was due to write it in response to Mbwana’s question


Will The Real Nigerian Mobile Money Companies Please Stand Up?


I am just waking up after a very short sleep and I have a few minutes before preparing to attend  The Future Awards Symposium. So this has to be brief and i hope it is as articulate I want it to be.

Here is the issue, I do not get Mobile Money as it is being attempted in Nigeria. The companies I have heard of seem to be more interested in in painting BRT buses and large billboards rather than being Mobile Money companies.

However, this post is not about my disappointment with the “Mobile Money” companies but rather an opportunity for them. Any real/serious Mobile Money company in Nigeria will salivate at this

Crowd funding and A grand opportunity.

Crowd funding is is one of the few killer applications that makes a business case for Mobile Money and there is a grand opportunity waiting to be taken.

There is a young man called Oke who needs some money to save his legs and his life. (If you get mind, here is the link to his story) The fact of the matter is the money he needs (N5million) can be raised in a single day if there was an easy way to send money to him. At the moment, Twitter is virtually saying “shut up and take my money”. But the true problem for the young man is HOW? The sad truth of the matter is this, 95% of the people absolutely willing to give 1000 or more will not because going to deposit money in a bank account is a really long thing. That is the absolute reality.

If only there was a way we could send money without the hassle of going to a bank, queuing, etc etc… Wait!! that is what the entire premise of Mobile Money is all about. This is the perfect opportunity to prove and show how this thing works! It is one thing to go back slapping yourselves at Mobile Money conferences around the world and claiming to be the next M-Pesa and another to actually do stuff.

What Serious Mobile Money companies should do NOW!

It is a no brainier for a Mobile Money company to provide matching funding for money raised for Oke through their platform. You will be committing bird genocide with a single stone (showing how/that your stuff really work, doing good, awesome PR, acquiring real users, jump starting the industry, having a very relevant case study, etcetc gbogbotigbo).

So MTN, Paga, VCash, PoketMoni, GLO, VTN, Airtel, what are you guys really waiting for. Are you guys real? Can you already grab this opportunity with both hands?

When CCHUB tried to raise money for a roofing project at the police barracks in Yaba, you guys failed, but the implication was a few wet mattresses. However, this time is someones life. Do the right thing for Oke and yourselves.