Five months after the November 5, 2021, issuance of an approval-in-principle, telecommunications giant, MTN Nigeria Communications, says it has received final approval from the Central Bank of Nigeria (CBN) for its Momo Payment Service Bank Limited.
In a notification to the Nigerian Exchange Limited, on Monday, by Uto Ukpanah, its company secretary, MTN Nigeria said it received a letter dated April 8, 2022, from the CBN addressed to Momo PSB conveying final approval to commence operations.
The statement further assured that the commencement date for the service will be communicated to the CBN in accordance with its requirements, while MTNN used the opportunity to affirm “its commitment towards the financial inclusion agenda of the CBN and the Federal Republic of Nigeria and we are excited at this opportunity to support its fulfilment.”
Investdata News recalls that MTN Group Chief Executive, Rob Shuter, had in November 2018 announced plans to diversify its operations by seeking a licence to operate in Nigeria’s PSB space, thereby playing deeper in the country’s economy from the following year.
Reuters quoted him as saying at a telecommunications conference in Cape Town, South Africa that the company “will be applying for a payment service banking license in Nigeria in the next month or so, and if all goes according to plan, we will also be launching Mobile Money in Nigeria probably around Q2 of 2019.”
The CBN set a minimum capital base of N5bn for a PSB licence, which watchers of the economy feared may limit the playing field to telecommunications companies, especially given that such are supposed to operate in the rural communities.
However, the success of mobile money over in east Africa, pioneered by Kenya’s Safaricom, has convinced investors and the industry that financial services is the next growth area for telecoms to offset falling prices for basic services.
In September 2019, the CBN had announced that as part of its broader objective of enhancing financial inclusion and the development of the nation’s payment system, the issuance of AIP to three Payment Service Banks (PSBs), which it listed as Hope PSB, Money Master PSB, and 9PSB.
PSBs are also part of efforts to ensure a sound financial system while enhancing access to financial services for low-income earners and the unbanked in the society and expected to have a minimum paid-up capital and capital reserve of N5bn.
A statement by the then Director, Corporate Communications Department of the CBN, Isaac Okorafor, said the move will also increase access to deposit products and payments services through a secured technology-driven environment.
He explained that the AIP was part of the processes the institutions had to fulfill in order to be granted a license to operate as fully-fledged PSBs, such as submitting applications for the grant of a final license, not later than six months after the AIP.
Speaking further, he disclosed that the CBN code of corporate governance for banks would also be applicable to the PSBs.
As part of the financial requirements, the CBN also proposed a non-refundable application fee of N500,000 and non-refundable licensing fee of N2m, adding that “investment of the share capital deposit shall be subject to availability of investment instruments and upon the grant of license or otherwise.”
The deposit shall be refunded to the applicant, “together with the investment income, if any, after deducting administrative expenses and tax on the income.”
In October 2018, the CBN introduced regulations and guidelines for the licensing and operations of payment service banks (PSBs) in an effort to leverage technology to promote financial inclusion. PSBs are banks whose operations are limited to transactions involving deposits, withdrawals, and money transfers.