BMI believes Nigeria's relatively under-developed mobile remittances market will receive a much-needed boost after UK-based Transferbee announced a money transfer service partnership agreement with Stanbic IBTC bank. The service, which is device and network-agnostic, is expected to appeal to the many millions of Nigerians who own mobile phones but lack traditional bank accounts. Mobile operators will benefit from increased usage of non-voice services on their networks, while Stanbic can expect to see a surge in low-cost, low-risk deposits, key to its strategy of diversifying profit growth.
Transferbee launched in the UK in November 2013 to capitalise on the needs of Nigerian immigrants living and working in the country to quickly and securely transfer money to their families in Nigeria without incurring high banking and transfer charges. Recipients can redeem their monies via thousands of cash-out points across the country, primarily located in areas where there are no formal banking facilities.
|UK Key To Nigerian Mobile Remittance Market|
|Breakdown Of Remittances To Nigeria By Country Of Origin, 2012|
Transferbee typically charges GBP4.50 to send money to a registered SIM in Nigeria and the remittances can be cashed in a matter of hours, far sooner than is possible through existing clearing systems employed by banks. Transferbee initially worked with Nigerian facilitators such as Teasy Mobile Money and Cellulant Wallet, but the partnership with Stanbic gives the service significantly broader exposure to consumers and businesses.
Stanbic claims that it has nearly 1mn registered mobile money customers, the vast majority of whom do not have a formal bank account. By partnering with Transferbee, it can reach many hundreds of thousands of new customers to whom it can potentially cross-sell more advanced financial services, such as loans or insurance. The cash being transferred through the Transferbee service can be used to leverage Stanbic's investments across multiple industry sectors and, indirectly boost the Nigerian economy.
The deal potentially brings a substantial volume of cash into the country, providing a direct boost to the Nigerian economy. The World Bank estimates that, in 2012, approximately USD20.6bn in international remittances flowed into Nigeria. The UK accounted for around 18.7% of that cash inflow and its contribution is likely to have increased in 2013 as more Nigerians settled in the UK and as money transfer services entered widespread use. The World Bank also believes that 70% of Nigeria's 160mn adults do not have a bank account, so Stanbic clearly hopes that mobile banking will prove a useful stepping stone to more advanced banking service usage in the future.
Transferbee is not the first mobile money service in Nigeria, but the market is still in the early stages of development as the first mobile banking licences were only issued in 2011, years after vibrant African mobile money markets such as Kenya, Tanzania and Uganda. In the meantime, the mobile sector has been transformed, first through the introduction of new network operators which, in time, led to lower tariffs and more affordable non-voice services, and second through the implementation of more rigorous SIM registration processes, which has improved security and user identification protocols, both of which are essential to developing robust mobile money services.
BMI forecasts the number of mobile subscriptions in Nigeria to rise from 127.3mn in 2013 to 160.0mn by 2018, with the penetration rate set to reach only 80.4% by 2018. At best, we estimate that mobile money penetration stood at around 15% of active subscriptions in 2013. New services such as that offered by Transferbee will ensure that penetration rises steadily over the next five years.