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The National Bureau of Statistics (NBS) reported last week that
inflation edged up marginally to 12.1 per cent year on year (y/y) in January,
from 11.8 per cent y/y in December, although it was still below the 12.8 per
cent and 13.4 per cent recorded in November and October.

The persistent rise in food prices, globally and locally
notwithstanding, the Bureau’s report states that food inflation dropped to 10.3
per cent y/y (a record low since February 2008), from 12.7 per cent, and 14.4
per cent in December and November. The ‘All items less farm produce” inflation
also increased to about 12.1 per cent from 10.9 per cent in December and 11.7
per cent in November.

Samir Gadio, Emerging Markets Strategist, Standard Bank,
however, noted that it is rather unusual to have a negative food inflation rate
at this month of the year.

“This implies that month-on-month (m/m) food inflation declined
to -0.9 per cent in January, from 0.9 per cent in December and 0.3 per cent in
November; interestingly, a negative m/m food inflation rate is somewhat unusual
in Nigeria this month of the year,” he said, adding that this happened in
January 2007 for the last time.

“In this regard, the negative imported food sub-inflation rate
appears to highlight that Nigeria has until now been somewhat immune to
exogenous pressures associated with rising oil and global food prices, but the
magnitude of the downturn in this category, to -5.6 per cent in January, from
13.7 per cent in December and 15.1 per cent in November, is somewhat intriguing
and will probably require further official clarification,” Mr. Gadio said.

According to him, most of the pressure still continue to
originate from the “Housing, water, electricity, gas and other fuel”
sub-component (16.7 per cent of the CPI basket) which registered a 13.2 per
cent increase, from 13.0 per cent in December and 12.6 per cent in November.

“As such, there was no sign of a tangible structural shift in
core inflation that would be fuelled by the demand side of the economy on the
back of the loose fiscal policy stance, which we think has been offset by a
weak money multiplier and sluggish private sector credit metrics over the past
couple of years,” he further said.

Unpredictable outlook

Mr. Gadio is, however, hopeful that inflation could drop in
February.

“According to our calculations, year on year inflation would drop
in February if month on month consumer prices are below 1.9 per cent. This
looks possible at this stage since such a m/m rate has been recorded only once
in the second month of the year since 2006 (in 2010) and the average of monthly
inflation rates in February between 2006 and 2011 is 1.06.

Mr. Gadio says if this scenario materialises, it would
positively support bond prices, especially as the liquidity ratio is also
increased from 25 per cent to 30 per cent on 1 March by the Central Bank.

“Nevertheless, the slight pickup in consumer prices in January
could still push the Central Bank to moderately hike the Monetary Policy Rate
during its March MPC meeting, as the policy focus has shifted from a recovery
in credit and growth to inflation in recent months,” he said.

Bismarck Rewane, the managing director, Financial Derivative
Company, is of the opinion that the nation’s inflationary threats are distinct
and prominent.

“World banks are shifting their focus away from the main
objective of controlling inflation. Until now, there were split between those
that adopted the explicit inflation targeting framework or implicit,” Mr.
Rewane said.

According to him, the average inflation for 2010 was 13.8 per
cent and the Central Bank’s single digit target was not achieved, though
inflation declined for the 6th consecutive month to 11.8 per cent (y/y) in
December.

“Robust liquidity growth, combined with recovery in bank lending
is expected to cause strong growth in money supply. Inflationary threats remain
real and pronounced,” he said, adding that the increase in minimum wage,
tighter fiscal policy and election spend, sale of the rescued banks, imported
food inflation, among others, are factors that fuel the pressure on the
nation’s inflation echelon.

The Central Bank of
Nigeria’s (CBN) insistence, last year, on banks’ compliance with
section 5.3.10 of its ‘Code of Corporate Governance for Banks in
Nigeria Post-Consolidation’ raised more questions than it answered.

The CBN’s action
provided one answer: by requiring that “non-executive directors should
not remain on the board of a bank continuously for more than 3 terms of
4 years each, i.e. 12 years,” it attempted to address the task of
ensuring both continuity and the injection of fresh ideas into banks’
boards of directors.

The remaining
questions are a lot more, however, and more pressing. Arguably, the
most obvious problem is why it took the apex bank four years between
the effective date for the implementation of its corporate governance
code, and its insistence on the implementation of a key provision of
that code.

Is it the case that
the apex bank had dropped balls on its watch? Troubling though this
likelihood is, it speaks to the huge burden of combining the management
of monetary policy and banking supervision under one roof – a dilemma
that the directors of the IMF recently referred to as the “potentially
conflicting objectives of monetary policy”.

The world over, the
parameters of the arguments for and against this practice have been
altered by the recent global financial and economic crisis. However, a
decision either way in our case must consider two important facts.

First is that
monetary policy management is an inchoate practice here, a fact further
complicated by appalling levels of fiscal illiteracy at the executive
level. The second consideration derives from the venal nature of life
here. Because our default moral setting is a penchant for the easy way,
a regulator’s assignment was always going to be difficult.

However, this
difficulty is the more so when the regulator appears ignorant of its
own rules. This was always an outside explanation for the apex bank,
having dropped the ball on industry compliance with its own corporate
governance code. It, however, became a real possibility recently, when
the newspapers reported the deputy governor, financial system stability
of the CBN, as having hinted at a conference in Lagos, last Wednesday,
that appointments of sufficiently senior bank officials would now be
subject to the apex bank’s authorisation.

The apex bank may
indeed be reforming its operations in order that it can better take on
the task of strengthening the banking industry’s risk management
framework, but I know that banks in the country have regularly reported
promotions to senior levels to the CBN as a matter of course. And that
the CBN has had cause to object to the appointments by some banks into
certain offices of persons whose fitness and propriety for the new
responsibilities it had doubts over.

Is the CBN dropping
the ball because of a failure to read from its own scripts? Something
about how the CBN has proceeded with the authentication of banks’
customer account details nationwide is highly suggestive of a need to
hold the apex bank’s feet closer to the fire.

Why would it treat
work-in-progress the same way we treat voters’ registration here? I
was, therefore, minded to look again at the corporate governance code,
in search of provisions that the industry may currently be in breach
of, despite the fact that “compliance with the provisions of (the) code
is mandatory”.

What about
independent directors? In “civilised” jurisdictions, the position of
the independent director was conceived of in response to the “conflict
of interest” challenge. Increasingly, companies required persons on
their boards who – unburdened by interests in or previous or past
affiliations with the company or its subsidiaries – can discharge their
duties as directors for the exclusive benefit of these companies.

Responding to this need, the apex bank insists in its corporate
governance code that “at least two (2) non-executive board members” of
banks should be independent directors. Now, in the absence of reports
to the effect that the apex bank has sanctioned banks for breaching
this provision, we may safely assume that there are 48 independent
directors on the board of Nigerian banks.This is one of the many stats
on this economy that challenges one’s belief. Why not solve the problem
by requiring banks to list in their annual reports the number of
independent directors; and the nature of their independence?

Finance ministers of the world’s major economies reached a
fudged accord on Saturday on how to measure imbalances in the global economy
after China prevented the use of exchange rates and currency reserves as
indicators.

French Finance Minister, Christine Lagarde, who chaired the
Group of 20 talks, said the deal nevertheless represented a significant step
towards better coordination of economic policies worldwide to help prevent
another financial crisis.

“It wasn’t simple. There were obviously divergent interests but
we were able to reach a compromise on a text that seems to us to be both balanced
and demanding in its implementation,” she told a news conference.

Ministers and central bank governors agreed on a list of
indicators including public debt and fiscal deficits, private savings and
borrowing, the trade balance and other components of balance of payments such
as net investment flows.

But at Chinese insistence, there was no mention of the real
effective exchange rate or of foreign currency reserves.

“Reserves have been dropped,” Mr Lagarde acknowledged, adding
that the deal included a mechanism to take account of exchange rates when
assessing the overall balance of payments.

The United States and other western countries accuse Beijing of
keeping the yuan artificially undervalued to boost its exports, hence
accumulating massive foreign currency reserves that they say distort the world
economy.

U.S. Treasury Secretary, Timothy Geithner repeated after the
talks that China’s currency “remains substantially undervalued” and its real
exchange rate had not moved much despite a slow appreciation since a reform
last June.

“There is broad consensus that the major economies, not just
Europe, Japan and the United States but also the large emerging economies, need
to allow their exchange rates to adjust in response to market forces,” he said.

The world’s number two economy, which overtook Japan this week,
has resisted Western pressure to substantially revalue its currency to help
rebalance global growth.

China’s trade surplus has shrunk of late, perhaps explaining why
it prefers that measure.

Western and Japanese officials said the indicators would in
practice cover balance of payments and foreign reserves, even if those terms
had been omitted to assuage Beijing. Chinese Finance Minister Xie Xuren left
without speaking to reporters.

“We needed to be inventive about wording in the communique in
consideration for a country that did not want to use the term ‘current account
balance’. The statement lists components of the current account balance,”
Japanese Finance Minister Yoshihiko Noda told reporters.

No specific goals

Mr Lagarde said the indicators were not binding targets but
would lead to the drafting of guidelines for coordinated economic policies to
reduce distortions, and then to a mutual assessment process.

Germany, Europe’s biggest exporter, which has resisted U.S.
effort to set numerical targets for current account surpluses, said no specific
goals would be set for certain indicators.

The G20 ministers acknowledged that economic recovery was
diverging between developed and developing economies, but they differed in
their assessment of global inflation risks.

The communique noted that while growth was subdued in most
developed economies, with unemployment high, major emerging markets were
roaring ahead, “some with signs of overheating.”

European Central Bank President, Jean-Claude Trichet said
inflationary pressures coming from energy and commodities prices must be taken
seriously, and the ECB was determined to avoid second-round effects on wages.

But Mr Geithner said inflation risks in the United States were
moderate.

French President, Nicolas Sarkozy, who holds the G20 presidency
this year, urged ministers on Friday not to get bogged down by the indicators
dispute and welcomed the fact that China had agreed to host a seminar on
reforming the international monetary system in Shenzhen in late March.

France has also ran into opposition with its two other G20
priorities — greater transparency and regulation of commodities prices and
reform of the international monetary system.

The G20 communique said ministers agreed to work on
strengthening the international monetary system to help avoid disruptive
fluctuations in capital flows and disorderly movements in exchange rates.

China and Brazil complain that “hot money” inflows risk
destabilising the economies of emerging countries, pointing the finger at the
U.S. Federal Reserve’s money printing via a $600 billion bond purchase
programme.

With world shares at 30-month highs, investors seem content for
the G20 to take its time, whereas at the height of the crisis two years ago,
markets were baying for policy action.

The Central Bank of
Nigeria’s (CBN) insistence, last year, on banks’ compliance with
section 5.3.10 of its ‘Code of Corporate Governance for Banks in
Nigeria Post-Consolidation’ raised more questions than it answered.

The CBN’s action
provided one answer: by requiring that “non-executive directors should
not remain on the board of a bank continuously for more than 3 terms of
4 years each, i.e. 12 years,” it attempted to address the task of
ensuring both continuity and the injection of fresh ideas into banks’
boards of directors.

The remaining
questions are a lot more, however, and more pressing. Arguably, the
most obvious problem is why it took the apex bank four years between
the effective date for the implementation of its corporate governance
code, and its insistence on the implementation of a key provision of
that code.

Is it the case that
the apex bank had dropped balls on its watch? Troubling though this
likelihood is, it speaks to the huge burden of combining the management
of monetary policy and banking supervision under one roof – a dilemma
that the directors of the IMF recently referred to as the “potentially
conflicting objectives of monetary policy”.

The world over, the
parameters of the arguments for and against this practice have been
altered by the recent global financial and economic crisis. However, a
decision either way in our case must consider two important facts.

First is that
monetary policy management is an inchoate practice here, a fact further
complicated by appalling levels of fiscal illiteracy at the executive
level. The second consideration derives from the venal nature of life
here. Because our default moral setting is a penchant for the easy way,
a regulator’s assignment was always going to be difficult.

However, this
difficulty is the more so when the regulator appears ignorant of its
own rules. This was always an outside explanation for the apex bank,
having dropped the ball on industry compliance with its own corporate
governance code. It, however, became a real possibility recently, when
the newspapers reported the deputy governor, financial system stability
of the CBN, as having hinted at a conference in Lagos, last Wednesday,
that appointments of sufficiently senior bank officials would now be
subject to the apex bank’s authorisation.

The apex bank may
indeed be reforming its operations in order that it can better take on
the task of strengthening the banking industry’s risk management
framework, but I know that banks in the country have regularly reported
promotions to senior levels to the CBN as a matter of course. And that
the CBN has had cause to object to the appointments by some banks into
certain offices of persons whose fitness and propriety for the new
responsibilities it had doubts over.

Is the CBN dropping
the ball because of a failure to read from its own scripts? Something
about how the CBN has proceeded with the authentication of banks’
customer account details nationwide is highly suggestive of a need to
hold the apex bank’s feet closer to the fire.

Why would it treat
work-in-progress the same way we treat voters’ registration here? I
was, therefore, minded to look again at the corporate governance code,
in search of provisions that the industry may currently be in breach
of, despite the fact that “compliance with the provisions of (the) code
is mandatory”.

What about
independent directors? In “civilised” jurisdictions, the position of
the independent director was conceived of in response to the “conflict
of interest” challenge. Increasingly, companies required persons on
their boards who – unburdened by interests in or previous or past
affiliations with the company or its subsidiaries – can discharge their
duties as directors for the exclusive benefit of these companies.

Responding to this need, the apex bank insists in its corporate
governance code that “at least two (2) non-executive board members” of
banks should be independent directors. Now, in the absence of reports
to the effect that the apex bank has sanctioned banks for breaching
this provision, we may safely assume that there are 48 independent
directors on the board of Nigerian banks.This is one of the many stats
on this economy that challenges one’s belief. Why not solve the problem
by requiring banks to list in their annual reports the number of
independent directors; and the nature of their independence?

The Nigeria Labour Congress (NLC) has advised Union Bank to
fulfil its part of the terms of agreement which both parties reached on Friday,
after days of picketing the bank.

Denja Yakub, the Assistant Secretary General of the Nigeria
Labour Congress said at the weekend that the union has decided to suspend the
strike but that it will not hesitate to unsheathe its sword if the bank fails
to keep its part of the agreement. “Yes, we have suspended the strike. We had a
meeting with the bank and the Minister of Labour and Productivity and we were
able to reach an agreement.

The meeting lasted up till 2.30am on Friday. We hope that Funke
Osibodu, the MD of the bank will implement the agreement because if she
doesn’t, we will roll back our terms,” he said. Mr. Yakub said the bank has
decided to meet all the demands of the Union. “They met all our demands. The
union is now being recognised by the bank and they have agreed to call back
those that were sacked, we will give her sometime and watch her implement these
terms” he said.

Business activities have been disrupted at the headquarters of
Union Bank in Marina, Lagos and at branches across the country for days. The
NLC, led by its president, Abdulwaheed Omar, picketed the organisation over its
decision to sack workers and ban union activities. Even the intervention of
Yakubu Alkali, the commissioner of Lagos State Police Command, could not broker
peace between both parties, leading to the decision to go on strike, from an
ongoing picketing.

Back to work

Francis Barde, the spokesperson of the bank confirmed that the
NLC has called off the picketing of the bank and directed its members
nationwide to vacate the premises of the Bank nationwide for smooth operations.

“The order followed the agreement reached last night under the
intervention of the Minister of Labour and Productivity, Emeka Wogu with the
Union Bank and NLC which suspended the industrial action against the bank and
sought to cooperate with each other in ensuring permanent industrial peace” he
said.

Mr. Barde also said in a statement signed and issued on Friday
that the move was the outcome of constructive and fruitful deliberations.
“Following constructive and fruitful deliberations, we are pleased to announce
that all issues in dispute that led to the current action between the Nigeria
Labour Congress (NLC) and the management of Union Bank of Nigeria PLC have been
addressed to the mutual satisfaction of all parties”, he added.

The workers have accused the bank’s management of mismanagement,
undermining workers solidarity, and indiscriminate staff layoff. The dispute
reached its climax last month when the management sacked 13 staff and withdrew
the recognition of the chapter of the Association of Senior Staff of Banks,
Insurance and Financial Institutions (ASSBIFI).

Normal banking activities are expected to resume today.

The National Bureau of Statistics (NBS) reported last week that
inflation edged up marginally to 12.1 per cent year on year (y/y) in January,
from 11.8 per cent y/y in December, although it was still below the 12.8 per
cent and 13.4 per cent recorded in November and October.

The persistent rise in food prices, globally and locally
notwithstanding, the Bureau’s report states that food inflation dropped to 10.3
per cent y/y (a record low since February 2008), from 12.7 per cent, and 14.4
per cent in December and November. The ‘All items less farm produce” inflation
also increased to about 12.1 per cent from 10.9 per cent in December and 11.7
per cent in November.

Samir Gadio, Emerging Markets Strategist, Standard Bank,
however, noted that it is rather unusual to have a negative food inflation rate
at this month of the year.

“This implies that month-on-month (m/m) food inflation declined
to -0.9 per cent in January, from 0.9 per cent in December and 0.3 per cent in
November; interestingly, a negative m/m food inflation rate is somewhat unusual
in Nigeria this month of the year,” he said, adding that this happened in
January 2007 for the last time.

“In this regard, the negative imported food sub-inflation rate
appears to highlight that Nigeria has until now been somewhat immune to
exogenous pressures associated with rising oil and global food prices, but the
magnitude of the downturn in this category, to -5.6 per cent in January, from
13.7 per cent in December and 15.1 per cent in November, is somewhat intriguing
and will probably require further official clarification,” Mr. Gadio said.

According to him, most of the pressure still continue to
originate from the “Housing, water, electricity, gas and other fuel”
sub-component (16.7 per cent of the CPI basket) which registered a 13.2 per
cent increase, from 13.0 per cent in December and 12.6 per cent in November.

“As such, there was no sign of a tangible structural shift in
core inflation that would be fuelled by the demand side of the economy on the
back of the loose fiscal policy stance, which we think has been offset by a
weak money multiplier and sluggish private sector credit metrics over the past
couple of years,” he further said.

Unpredictable outlook

Mr. Gadio is, however, hopeful that inflation could drop in
February.

“According to our calculations, year on year inflation would drop
in February if month on month consumer prices are below 1.9 per cent. This
looks possible at this stage since such a m/m rate has been recorded only once
in the second month of the year since 2006 (in 2010) and the average of monthly
inflation rates in February between 2006 and 2011 is 1.06.

Mr. Gadio says if this scenario materialises, it would
positively support bond prices, especially as the liquidity ratio is also
increased from 25 per cent to 30 per cent on 1 March by the Central Bank.

“Nevertheless, the slight pickup in consumer prices in January
could still push the Central Bank to moderately hike the Monetary Policy Rate
during its March MPC meeting, as the policy focus has shifted from a recovery
in credit and growth to inflation in recent months,” he said.

Bismarck Rewane, the managing director, Financial Derivative
Company, is of the opinion that the nation’s inflationary threats are distinct
and prominent.

“World banks are shifting their focus away from the main
objective of controlling inflation. Until now, there were split between those
that adopted the explicit inflation targeting framework or implicit,” Mr.
Rewane said.

According to him, the average inflation for 2010 was 13.8 per
cent and the Central Bank’s single digit target was not achieved, though
inflation declined for the 6th consecutive month to 11.8 per cent (y/y) in
December.

“Robust liquidity growth, combined with recovery in bank lending
is expected to cause strong growth in money supply. Inflationary threats remain
real and pronounced,” he said, adding that the increase in minimum wage,
tighter fiscal policy and election spend, sale of the rescued banks, imported
food inflation, among others, are factors that fuel the pressure on the
nation’s inflation echelon.

South Africa’s loss
may just be Nigeria’s gain. Many mine operators in South Africa are
currently faced with the possibility of losing their mining titles, as
the government is planning to nationalise the mines and withdraw
existing operational rights.

This is part of the government’s plan to distribute the country’s wealth more among the majority black population.

Though the South
Africa’s minister of mineral resources, Susan Shabangu, assured
participants at the recent Indaba Mining conference in Cape Town that
the idea of mining nationalisation was “not an option”, as it would
result in huge losses in jobs, president of the Youth League of the
ruling African National Congress (ANC), Julius Malema, is reportedly
insisting on the policy as the “only solution” to the economic problems
faced by ordinary South Africans.

Already, Nigeria is reaching out to mine investors whose South African investment may be under threat.

Minister of Mines
and Steel Development, Musa Sada, who also participated in the
conference, said he discussed with several investors on the investment
opportunities available in Nigeria as a viable option should they
desire to look elsewhere. He also said some of the coal miners his team
discussed with included those interested in investing in coal
development as a source fuel for the country’s power sector.

Coal-to-power projects

“We had discussions
with about 13 different groups that are interested in investing in
coal-to-power development projects, apparently because of the interest
of the federal government in the development of the power sector. Some
of them are multinational companies that are currently making
significant contributions to the South African economy,” Mr. Sada said.

He said Nigeria is
prepared to accept such investors into the country. “The groups are
willing to come into the country to invest in the coal development on
agreed partnership terms for the local market, which means they would
be supplying fuel for other investors interested in running the power
plants,” he said.

Other groups the
minister said he and representatives of the departments of steel and
metallurgy geological survey held discussions with included investors
interested in understanding issues on community development agreements,
to avoid the experience in the oil producing communities of the Niger
Delta.

Attracting investors

Though he said
discussions are to continue when they visit the country, Mr. Sada
assured them that government is already taking steps to create a stable
operational environment that would attract investors to the country.

“Government is
determined to grow the mining sector as another source of revenue for
the country and to provide job opportunities for the teeming youth as
well as ensure that the sector regains the role it once played prior to
the country’s independence,” he said.

Identifying the
ongoing reforms in the sector as one of the steps government is taking,
the minister said the adoption of a national policy would give a clear
direction for the sustainable growth of the industry, while the
establishment of the Mining Cadastre office as an independent legal
business entity responsible for the administration of mineral titles
would be a confidence booster, as it would operate without any
political interference and ensure security of titles tenure.

“Government is
working towards establishing the solid minerals development fund with
the support of some international agencies, while it is putting in
place the regulatory framework to assure investors of the security of
their investment. Government is also interested in creating a solid
mineral sector that would contribute effectively to the development of
the country’s economy,” he said.

Getting cash into the hands of a teeming populace can be a Herculean task in a country as vast as ours. In spite of Nigeria’s relatively sophisticated banking sector, the over 6,000 branches that the commercial and microfinance banks have introduced are not nearly sufficient for a potential market of over 140 million people. Because of low bank penetration, a large part of the population is financially excluded from the formal banking system.

From informal to formal channels

The primary objective of financial inclusion strategies being implemented across the developing world is to connect the “unbanked” population with the formal banking system.

In the absence of access to the formal banking system for most Nigerians, transactions tend to be cash based, leaving no audit trail for regulators to monitor. Mobile money will introduce more transparency and create greater visibility in transactions and money flows as remittances move from informal to formal channels.

The challenges of financial inclusion include illiteracy and a lack of awareness, a cumbersome documentation process, and difficulty in proving identity or proof of address, long distances and often awkward physical access to bank branches, particularly in rural and isolated locations, low income, and high transaction costs.

For an emerging market country severely constrained by an inadequate infrastructure and where relatively few people have access to bank accounts, the introduction of mobile money into the domestic economy should help to extend basic financial services to the millions of unbanked people who will enjoy the convenience of transferring money without having to open bank accounts which they often do not qualify for.

With over 60 million mobile phone users and less than 25 million bank account holders, the mobile phone penetration far outnumbers the bank account penetration.

What is Mobile Money and how does it work?

Simply put, Mobile Money is a service that enables money to be transferred through a mobile phone. Once the account holder has registered and the account has been set up, subscribers can carry out a number of operations; they can deposit money, pay bills, transfer and withdraw funds, and buy goods and services via text messaging and in a cost effective way.

To open a mobile money account, you will be required to take some form of identification to a mobile money outlet, which will include telecom shops, large and small retailers, for registration. You can then deposit money, which can be transferred to a mobile phone even where the recipient uses a different service provider. The recipient receives a notification on their mobile phone via text message with which they can visit a local agent to receive the money.

A medium of storage

Mobile money provides unbanked mobile phone users with a secure platform, which introduces easy to use menus on their phone to send messages through an audited system; it can authenticate both sender and recipient and record the transaction in a secure way. In addition to its ability to increase transactions, mobile money is an ideal medium of storage of money for both the banked as well as unbanked subscribers.

Inspite of the fact that interest is not earned on balances, money that may have been kept “under the mattress” at home that failed to enter the traditional banking system, may now find its way into the formal system and those without bank accounts can retain their savings on this platform.

More secure than carrying cash

Many Nigerians have to travel far away from home to find work and need to send money back to their dependent extended family in rural areas to meet their daily expenses and assist with their bills. The cost of remitting money can be very high and this forces people to depend on more informal channels such as friends or relatives to remit or physically deliver money.

Mobile technology lowers the cost of remittances as it removes the need for physical points of presence. The ability to pay for goods and services, without having to carry cash, has universal appeal. With mobile money, travelling long distances just to deliver cash, which comes with significant risk of loss or theft, should no longer be an issue and the money will be delivered as fast as it takes a text message to arrive.

Opportunities for small retailers

Retailers will be able to register their outlets as agents offering the service and in return get a commission for registering new subscribers. Naturally, the retailers would also benefit from an increased number of customers visiting their stores, as they are likely to make other purchases from the store.

Throughout Nigeria, with its vibrant entrepreneurial populace, there are retailers that are well placed to register their outlets so that subscribers can easily withdraw their cash.

A veritable tool for economic development

Financial inclusion and in particular, the advent of mobile money, will have a huge impact on the lives of the ordinary Nigerian. As soon as people gain access to financial services, their cash management and personal financial planning will improve and this will lead to a greater ability to save.

Indeed, the extraordinary success of mobile money in Kenya has demonstrated that there is a strong and compelling need for a platform that can empower people to make cashless transactions without having to visit a bank for every transaction.

The youth segment is likely to adopt this payment mode faster than the older members of the population as they imbibe technology as ducks to water and constitute a large segment in Nigerian mobile subscription; yet they remain relatively under-banked or unbanked.

Nigeria is poised to take huge strides in this direction following the release of the mobile payment regulatory framework issued by the Central Bank of Nigeria (CBN). Its objective is to provide an enabling environment for mobile payments services in reducing cash dominance in the Nigerian economy.

The mobile phone has been a driving force for change and with an enhanced ability to move money efficiently from one point to another, economic activity is bound to be enhanced, further endorsing the mobile phone as a veritable tool for economic growth and development.