According to World Bank statistics cited in The National, “less than 6% of Nigerians use their handsets to transact using mobile money, compared with 73% of Kenyans.” Although Kenya is a leader in the region for mobile phone penetration at 95.1%, Nigeria is not far behind Kenya with a mobile phone penetration rate of 84%, meaning many Nigerians have mobile devices like Kenyans yet the mobile devices are just not being used for banking in Nigeria.
More than half of the global mobile money market is rooted in Sub-Saharan Africa, yet Nigeria lacks the financial infrastructure that could make mobile banking accessible to all Nigerians. Chief Operations and Information Officer of Fidelity Bank Plc commented, “When you open an account on your mobile, you can receive money but you cannot make payments. You need a Bank Verification Number to make transactions on that account you opened on mobile. Since the targets for financial inclusion are people that don’t have BVN already, some infrastructure needs to be deployed, like mobile BVN.”
In 2017, The International Monetary Fund reported that informal enterprises made up to 65% of Nigeria’s overall GDP. There are many reasons for the pervasiveness of undocumented business in Nigeria, yet issues with financial inclusion in the country likely contribute to the fact. A report from Lagos Business School stated that only 49% of Nigerian’s have bank accounts, which indicates the power held in cash currency throughout the nation.
In this report, we will build on what is already known about Nigeria’s banking infrastructure and examine intricacies of personal finance management in Nigeria.
Survey Methodology and Sample
GeoPoll set out in late 2018 to gather data on mobile money use in Nigeria. The data was collected from 500 unique respondents from GeoPoll’s mobile survey panel in Nigeria. There were half female and half male respondents, and all participants were required to be 18 years old or older. Respondents came from all SEC groups, with the highest portion of respondents falling in SEC groups B and C1. Respondents come from 29 of Nigeria’s 36 states, with 33% of respondents living in Lagos, 17% in Kano, and 10% in the Federal Capital Territory. The survey was conducted in English over SMS. The following report presents the data collected from Nigerians on their financial preferences.
Of the 500 Nigerians surveyed, 94% of respondents reported using a mobile money service of some sort in the past. Those who had previous experience using a mobile money service were asked to rate their experience with mobile money services, and 82% rated their experience as average or better than average. The prevalence of respondents who have used mobile money in this survey, compared to what we know about access to banking in the country, could be due to the survey sample, which is of literate, mobile-owning Nigerians. Also possible is that there is a misinterpretation of the term “mobile money” and respondents are not distinguishing between mobile money service and regular bank transactions on a mobile device. Additionally, these results show that the majority of respondents for this survey have access to a BVN or bank account, which is not the case for all Nigerian people. It is important to note that many Nigerians choose not to use mobile money regularly because the people they do business with do not use mobile money and prefer cash. This can explain why some Nigerians do have financial access to mobile money and choose not to use it.
Of the 6% of respondents who have not used mobile money services, 43% stated that they do not have the application on their devices. This finding could potentially tie into the power of financial inclusion in Nigeria, which could be a contributing reason that kept these respondents from participating in mobile money transactions.
Our final finding for this report regards preferred payment methods. All survey respondents were asked to report their preferred mode of payment for goods and shopping. Mobile money was preferred least at 19%, while debit cards, cash, and credit cards received 31%, 25%, and 24% of responses respectively.
It is interesting to note the prevalence of cash as consumers’ preferred payment method. 94% of respondents have used mobile money in the past, yet 25% of the respondents prefer to pay cash for goods and services. Most of the 25% of respondents who prefer cash theoretically would have access to banking yet still choose to use cash most, even prefer it. This again alludes to the culture surrounding payment methods in Nigeria being starkly different than many other countries in Sub-Saharan Africa, where mobile money is a popular form of payment.
Nigeria is a powerful player in Africa with the largest economy in the continent. Nigerians are well connected through mobile phones necessary for mobile banking, yet regulations are holding back this development. Mobile money is an important resource for the citizens of Nigeria because it provides a safe place to store and save funds over time. Due to the poor banking infrastructure in Nigeria, cash is still a prominent method of payment, even for Nigerians who may have a bank account. This will likely not change until mobile banking is accessible to all Nigerians who own mobile phones. If you would like to conduct your own study on mobile money, contact us today!