Two weeks ago, the Central Bank of Nigeria (CBN) gave approvals in principle (AIP) to two of Nigeria's most prominent telecommunication companies—MTN and Airtel. With these AIPs, the subsidiaries of these telcos—MoMo and Smartcash—became Payment Service Banks (PSBs).

What's interesting is that PSBs are not new in Nigeria. At least three PSBs were operational until the first week of November 2021. Yet, the two latest CBN approvals have elicited some excitement—probably dread and uncertainty—within some financial institutions.


Some takeaways
  • With MTN's 630,000-army of agent bankers and a new PSB licence, retail banking is about to change for many Nigerians. For instance, in Ghana, MTN offered as much as a 7% interest rate on savings, higher than the average 4% offered by banks.

  • The Central Bank of Nigeria hopes the new PSB Licences will drive financial inclusion. It would but only at the access to payment or savings levels. Insurance, pension or credit might continue to lag, stifling the potential for economic growth. 

  • PSBs have existed in Nigeria before now. However, past telcos that owned these PSBs might struggle with good network coverage and low agent network that will aid seamless financial service transactions.


Let's look at two reasons driving the excitement behind the approvals. The first is that these new licenses are for subsidiaries of Nigeria's largest and most efficient telecommunication operators—MTN