Nigerian mobile payments landscape during 2011-2012

I received a lot of positive feedback on my previous blogs on the Nigerian mobile banking landscape. The e-mails and comments were very informative for me and I must thank readers for this. It was clear that a lot of attention is focused on this exciting market. I thought that I would try my hand at predicting what will happen in the next two years.

The following realities should be taken into consideration when thinking about the future of the mobile money market as it relates to Nigeria:

• This is a huge country with many people. Very few (if any) deployments can claim to reach such a vast country with so many potential subscribers. (Many of the deployments in India are still regionally focused and have not yet been made available through a country-wide agent network).
• The Nigerian people are very industrious and entrepreneurial. Viable business propositions are usually embraced and developed to grow spectacularly. Propositions that do not work (on the other hand) are quickly discarded.
• Doing business in Nigeria is expensive. Infrastructure, transportation, electricity and many more basic ingredients to run a business are often in short supply and very expensive.
• The use of physical cash is ingrained into the fibre of society. Niara notes are not just used as tender, but play a role in a number of ceremonies (for instance weddings). Getting rid of or reducing the dependency on cash will be difficult. The value proposition of mobile money will have to be huge in order to reduce the dependency on cash.

Keeping the above in mind, the winners will have to be able to scale fast with a clear (or preferably more than one) value proposition. Winners will be companies that provide a proposition that hits the spot immediately, and they will have to be well capitalised. Success in Nigeria will be very beneficial, but will cost a lot of money.