MoMo Agent Service: Energizing the Cashless Initiative

Dr. Joe Abah|Sometimes, we implement certain economic policies that we think will help the poor but end up disadvantaging them. One such policy is how we decided to handle the issue of Mobile Money and the Cashless Banking initiative.

We decided that it should be led by banks. The thinking was that it will encourage more people to open bank accounts and use debit cards and point of sale machines. The problem is that in many remote villages, there are no banks and no POS machines. When the only bank in a village was robbed, economic activities were stalled.

The result is that, only 6% of Nigerians use Mobile Money. Compare this to 73% in Kenya where, with Mpensa you can get dollars from abroad in 5 minutes using PayPal. Kenyans use Mpensa to pay for virtually everything, including haircut at the barber-shop.

Kenya drove their Mobile Money initiative through Telcos, not banks. Thankfully, the Central Bank of Nigeria’s Digital Financial Policy of 2018 reversed this policy to put Telcos in the driving seat. This should encourage wider financial inclusion for the poor.

Therefore, Nigerians are pleased to learn that MTN has launched it’s mobile money service called ‘MoMo Agent’. The MoMo Agent Service allows Cash to Cash transfers between customers. The eventual plan is to minimise the use of cash as more people use the service to pay for things. You don’t need to register to use the service. All you need is a mobile phone.

The MoMo Agent Service involves the following procedures:
✓ Send a text for free and get a response giving you the list of agents near you.
✓ Give the sending agent some cash and she sends the money to the recipient.
✓ Collect a code to give the recipient.
✓ The recipient collects the cash from the paying agent, elsewhere.

You don’t need a smartphone. The sender will pay ₦100, though. ₦50 will go to the sending agent and the paying agent will also get ₦50. The minimum amount you can transfer to someone is N100 and the maximum is either ₦50,000 or ₦100,000 depending on the agent.

The recipient must claim the money within 30 days or the voucher will expire. Will the sender get their money back, when the voucher expires?

While it is good that both sending and receiving agents get ₦50 each, the ₦100 to be paid by the sender is higher than the ₦52.50 it costs to send money through mobile banking. I hope that MTN will look into this.

The MoMo Agent Service will have the dual effect of creating thousands of jobs and also make it easier for the unbanked and rural dwellers to be financially included. While only 40% of Nigerians have bank accounts, there are 146 million active GSM lines in Nigeria, many of them on smartphones.

Well done, MTN. We look forward to tryout the ‘Momo Agent Service’ soon. The service  will also enable a number of young, unemployed people to get jobs. The task of job creation is not only for government or through the formal sector like banks. The new CBN policy is progressive.

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