Page 108 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

State of the market Prior to having a functional regulatory approach for DFS provision, the CBL followed a bank-
before authority’s led model. As a result, mobile money was offered by two banks in cooperation with one
involvement mobile network operator (MNO). The unsatisfactory uptake of mobile money led to an
amendment of the new regulatory framework of 2014. The new regulatory framework fol-
lows a functional approach and no longer requires companies licensed by the Central Bank
of Liberia for the provision of mobile money services to do this in cooperation with banks. So
far, two subsidiaries from the MNOs have been licensed as mobile money providers: Lonestar
Cell MTN Mobile Money Inc. which is currently market leader; and Cellcom Technologies Inc.,
which recently received its license.
Relevance assigned Interoperability has been considered important, as proven by the explicit requirement in the
to interoperability mobile money regulation.

Reason to address Customers show a keen interest to transact across providers so interoperability is important.
interoperability So far, however, the major challenge has been the deployment of the national switch at the
CBL, to enable interoperability on infrastructure level.

Outcome The two licensed mobile money providers still need to establish interoperability, as required
by the mobile money regulation.

Country: Nigeria

Respondent: Nigeria Inter-Bank Settlement System 10

Mandate The Central Bank of Nigeria has the legal mandate for DFS in Nigeria, including enforcement
of interoperability, through the Central Bank Act of 2007.
The role of telecommunication operators is the provision of telecommunication services,
enabling the delivery of DFS over USSD, STK, mobile app, and the web via various GSM data
plans.

State of the market The authority’s focus on DFS prior to 2007 was limited. Financial institutions were the sole
before authority’s’ DFS providers before the legal mandate was enacted. Interoperability was mandated in 2008
involvement among the two card payment processors (one with about 90 per cent and the other 10 per
cent market share). Both were previously interested in interoperation, but they could not
agree on business and commercial terms prior to 2008.

Relevance assigned Interoperability has been considered important.
to interoperability

Authority’s approach Since moral suasion did not lead to the desired interoperability outcome, it was enforced by
the Central Bank. The Central Bank initiated the development of the Nigeria Central Switch
and mandated the existing (private) switches to interconnect to it for interoperability pur-
poses. Inducing interoperability and establishing a central switch might have facilitated the
growth of DFS in Nigeria, as DFS providers were able to interoperate with all banks right from
the commencement of operations.

Outcome (aimed) More efficient resource utilization (there were silo implementations which were expensive to
operate and none were able to achieve critical mass) and lowering the barrier to entry were
the major aimed outcomes.

10 Nigeria Inter-Bank Settlement System was represented by Mr. Niyi Ajao.

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