Published on 08 Dec 2021

Mobile telecoms operators entering banking sector in Nigeria

The anticipated entry of Airtel Africa and MTN in the banking sector could be a shot in the arm for financial inclusion

By Johan Burger

The Central Bank of Nigeria (CBN) has provided an approval in principle for Airtel Africa and MTN to operate a payment service bank (PSB) in Nigeria. The move comes three years after CBN decided to allow non-financial companies to apply for mobile banking licenses in Nigeria.

According to DataReportal, less than 40% of Nigerians over the age of 15 are considered financially included while less than 6% have a mobile money account. Only 50m Nigerians have a bank account. That leaves some 55m adults unbanked. The entry of the two big mobile operators in the banking sector could be a game changer.

According to the CEO of Airtel Africa, Segun Ogunsanya, Smartcash will work closely with the CBN to meet all the conditions to receive the operating licence and commence operations. Upon receiving the final operating licence, Airtel Africa will expand its digital financial products to target the millions of Nigerians currently without access to the traditional financial services sector. This will expand the level of financial inclusion in Nigeria.

The company secretary of MTN Nigeria announced it too had received principle approval for its proposed MoMo Payment Service Bank. The final approval, however, was still dependent on meeting certain conditions stipulated by the CBN.

Airtel and MTN will not offer a full suite of financial services typically associated with banks but can provide users with an entry into the financial system. PSBs accept deposits from individuals and small businesses, carry out payment and remittance services, issue debit and prepaid cards, operate electronic purses, and provide other financial services as prescribed by the CBN. MTN and Airtel will be joining existing mobile money players such as OPay and Paga. As the telecoms players have an extensive footprint in Nigeria, especially in rural areas, they have significant potential to fast-track the CBN’s goal of financial inclusion.

Banks have stopped opening branches in new locations and are even closing operations in some areas due to the high infrastructural cost of setting up branches and security. According to the IMF, Nigerian banks closed 234 branches and 649 ATMs in 2020, reducing the number of banks in Nigeria from 5,392 in 2019 to 5,158 in 2020.

Looking at the active mobile subscribers of these two mobile telecoms players makes it clear that there is a huge potential for them to grow the level of financial inclusion. Airtel Nigeria has 40.4m active mobile customers and MTN Nigeria has 67.5m. This adds up to more than half the total Nigerian population. Even accounting for multiple SIM cards, the figures are significantly higher than those of the top three Nigerian banks by customer base.

Nigerians are turning out to be enthusiastic users of fintech services. MTN Nigeria says its fintech revenue grew by 54.7% for the first nine months of 2021. The growth has promoted the telecom operator to expand its MoMo agent network, which is already 630,000 strong.

Obtaining a PSB license will help both MTN and Airtel to offer a wider range of mobile financial services beyond the classic person-to-person mobile money transactions that have become popular all over Africa.

Airtel and MTN were not the first organisations to receive PSB licences. In September 2019, three PSB licences were issued to Globacom’s Money Master, 9Mobile’s 9PSB, and Unified Payment’s Hope PSB. According to anecdotal reports, these organisations have under-performed.

The entry of Airtel and MTN has the potential to breathe new life into the industry and increase the level of competition, to the benefit of Nigerians. The two telecom operators have a significant advantage over their competitors. They can build upon their existing infrastructure and dealer network. They also have the advantage of having provided similar services in other markets.


Additional readings:

Aihe, O. 2021. With MTN and Airtel joining the PSB fray, let the games begin. Vanguard. 10 November 2021. Available at  Accessed 19 October 2021.

Gilbert, P. 2021. MTN & Airtel inch closer to banking licenses in Nigeria. Connecting Africa. 8 November 2021. Available at  Accessed 19 November 2021.

Nwokoma, C. 2021. What MTN, Airtel PSB licence approval could mean for financial inclusion in Nigeria. Techpoint Africa. 8 November 2021. Available at  Accessed 19 November 2021.

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