When you feel the urge to read too much into a certain number, remember that “not everything that can be counted counts and not everything that counts can be counted.” 

It may not be an original Albert Einstein quote. But it’s a good way to avoid the illusion that numbers tell the whole story about any subject (bookmark this Hannah Fry piece for more on what data cannot do). Some metrics, like what a business is worth in dollars, do not exactly predict how useful it will be to consumers in the future. 

The buzz around Africa’s mobile money businesses is the reason for this Sunday soberness, as we’ll see in a moment.

Money makers

Twenty years ago, an African telecoms company’s priority was to help people make calls and exchange short messages. 

But the rise of Mpesa became an eye-opener; why be confined to calls and SMS when you can build on the underlying infrastructure to develop a financial services distribution network? Internet penetration is low but USSD is available on every phone and doesn’t require 3G. 

And so a telco-driven mobile money industry was born in Africa.

In the decade-and-half since this revolution, MTN and Airtel (through its various evolutions) have stood out as the closest companions to Safaricom’s Mpesa. Both companies’ mobile money divisions are multi-billion-dollar enterprises with millions of users across tens of countries.

[ Read: Why Airtel is selling 11.25% of its $2.65 billion mobile money business ]

Airtel Money has received investment from Mastercard, while MTN Money (valued at up to $5bn) may be publicly listed soon. With these moves, both entities cement their front row status among Africa’s fintech elite. MTN Money is moving beyond peer-to-peer payments to typically difficult areas like insurance.

But how do we give these companies their due as innovators, without blowing their place in the grand fintech scheme out of proportion; without giving the impression that mobile money is the ‘end of history’ and Africa’s golden ticket to financial inclusion? 

Not yet uhuru

In a corner of LinkedIn last week, an interesting chat unfolded in which telco-owned mobile money businesses were compared to fintechs like Interswitch and Fawry. The suggestion was that, in becoming billion-dollar businesses, MTN Money et al have done just as well as the continent’s unicorn fintech startups.

Commenters responded in unison: No, telco-owned mobile money businesses are not startups. 

They enjoyed (and still enjoy) many privileges from their mother companies which startups built from the ground up have little access to.

It was also observed that, compared to other parts of the world, peer-to-peer money transfer via mobile money services in Africa is expensive.

While Governments urged providers to reduce and waive fees last year during the pandemic to encourage cashless payments, operators reinstated those fees after three months. Ideally, these p2p transaction fees should be as close to zero as possible.

And then there is the technology question. How much longer can Africa depend on USSD for financial inclusion? 

Among other things, the technology has accessibility problems that make it inconvenient for visually impaired people. Also, if USSD’s emergence as a key fintech solution was due to low internet penetration, what happens as the continent becomes better wired by fibre optic cables?  

These questions – of cost of access and technical usability – are more important for the future of mobile money and financial inclusion. 

Perhaps the telco-owned services will chart us towards discovering answers – they have achieved scale, tapping into the strength of stable profitable businesses. One hopes they are pressed more on those key questions, instead of the minor matter of what stock exchange they hope to list on.

Femi is one of the many entrepreneurs that was affected by the order from the Nigerian Communications Commission issued in December 2020.

The order asked telecoms operators in the country to stop selling or registering SIM cards. This was after an initial directive to the operators to suspend the mobile numbers of Nigerians who had not registered for the National Identification Number (NIN).  

The ban was supposed to last until the registration deadline which was initially set to 30th December 2020, 2 weeks from the announcement.

However, it was extended at least three times before the government finally lifted the ban. The first extension was by three weeks to 19th January 2021, then by eight weeks to April 6th, 2021 and recently by four weeks to May 6th, 2021. These extensions resulted in huge losses for telcos and young entrepreneurs.

Telcos suffered the highest losses. They lost 11.8 million subscribers between November 2020 and February 2021. This brought the total number of mobile subscribers in Nigeria to 195.7 million, dropping below 200 million for the first time since it reached this number in August 2020. 

By multiplying this number with the average revenue per user (ARPU) for the telecoms industry in 2020 (₦1,420/$3.66), this means that operators lost ₦16.8bn ($41m) in revenue. As the telecoms industry contributed an average of 10.3% per quarter to Nigeria’s GDP in 2019 (totalling $46bn), operators have lost 0.09% of this.

Consumers and young entrepreneurs have also borne the brunt of the ban. Over seven million Nigerians who make a living as SIM registration agents were out of work while the ban lasted. Business owners like Femi have also been unable to buy SIM cards for their operations making communication, an important pillar of running a business, difficult.

Although the government’s reasons for the ban were clear, it was difficult to justify them given the economic costs.

The telco industry is one of the major drivers of the Nigerian economy. It contributed 12.45% to the economy in the fourth quarter of 2020, lifting it out of recession. So the ban did not make sense especially in the light of Nigeria’s rising unemployment numbers.

While the government scores points for re-tracing its steps, the hope is that policymakers have taken the lessons from the consequences of the ban. Policy cannot exist in isolation, without assessing the potential consequences.

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Written by Boluwatife Sanwo