Interview: Daniel Monehin
What impact will national ID cards have on electronic funds transfers within Nigeria?
DANIEL MONEHIN: Our partnership with the National Identity Management Commission has been in the works for years, and anything of this complexity will take time to fully develop. Our role is limited completely to the payment side of things, as this is where our competency lies. The fact that we are on the National eID Card does not mean that we have access to the biometrics of Nigeria. Identity is managed exclusively by the federal government. Looking forward to the next five years, it is difficult to know how far this will go. It will certainly transform the way pensions are paid in the country. Now it is a cash-based manual process that is burdensome on the government, and even more so to the senior citizens who have spent their entire lives serving the government and the rest of their lives running after their money. They will now no longer have to travel sometimes hundreds of kilometres to city centres and wait in lines. Now the government knows exactly who you are paying, and a simple SMS tells the individual his or her account has been credited.
Another area is social benefits. The federal government has wanted to do this for quite some time, but again, it has not known exactly who people were and who they were paying, and so targeted benefit payments have not been developed. Along these lines, subsidies will also be transformed completely. People affected can receive these payments on their card. Person-to-person payments will also be facilitated, along with international remittances. Half-year remittances to Nigeria reached $10.4bn in 2014. This does not take into account informal payments, as people do not necessary trust the system. When everyone has access at the push of a button, it changes the whole scenario.
What are the primary reasons for the low adoption of point-of-sale (POS) systems thus far?
MONEHIN: Low adoption is linked to low penetration. The market has moved from about 20,000 POS devices in 2012 to over 107,000 in 2014. That sounds like a huge number, but we need multiples of this. MasterCard has a five-step process for the development of electronic payments, ranging from 100% cash to 100% electronic. We would like electronic payments to be used on day-to-day items in the next two years for Nigeria, but you have to remember it takes years to progress from one stage to another in economies around the world. Research released in May 2014 confirms that Nigerians are the highest users of ATMs in the world in terms of frequency. This falls in line with what they have used for many years, which is cash. Nigeria is clearly in the early stages of electronic payment adoption. A spike in the use of ATMs tells me that by the time we transition to the next stage, Nigeria will do well in the adoption of POS systems. The challenges are still there, particularly with low penetration, but the government is also working with partners to bring in other forms of acceptance devices, many of which are a fraction of the cost. This will only help spur things forward.
How can sectoral players encourage adoption of mobile financial services in Nigeria?
MONEHIN: In countries such as Zimbabwe, bank cards are increasingly being linked to mobile wallets, and this is a conversation that is beginning to take place across Africa. Many telecoms firms are interested in forging this link, which has probably most successfully been accomplished with M-Pesa in Kenya. Before the National eID Card, the prevailing idea was that mobile phones were the only way to get to the poor and the only way to achieve financial inclusion. But even with 134m subscriptions in Nigeria, not everyone has a device.
When the National eID Card is rolled out, everyone will have one and everyone will thereby have a payment card. In keeping with building ecosystems, the next step will be opening the system to mobile wallets and giving people an opportunity to connect the prepaid functionality of the card collectively to a mobile wallet, to a mobile phone, or to the actual bank card itself.
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