By Ifeoma Ben, LLM, MBA
In recent years, Nigeria’s telecommunications sector has steadily disrupted the financial services landscape by rapidly expanding mobile money platforms. Major telecom players such as MTN and Airtel have launched Payment Service Banks (PSBs): MTN MoMo and Airtel SmartCash, respectively, which are now playing a central role in advancing financial inclusion, especially among Nigeria’s unbanked and underbanked populations.
The Rise of Telecom PSBs in Nigeria
Airtel SmartCash, for instance, has recorded remarkable growth, boasting over 1.5 million active users and more than 205,000 agents across the country as of March 2024. This agent network has become essential for the last-mile delivery of financial services, particularly in rural and peri-urban regions where traditional banks struggle to operate. While MTN MoMo’s latest figures are not publicly available, its PSB operations are widely known to mirror Airtel’s scale and market penetration, leveraging MTN’s massive subscriber base.
Expanding the Financial Ecosystem Through Mobile Phones
These mobile money platforms offer a suite of basic financial services, including cash deposits and withdrawals, peer-to-peer transfers, airtime top-ups, utility payments, and cross-border remittances. Essentially, every mobile phone becomes a portable bank account, and every retail agent becomes a financial access point. By providing an inclusive ecosystem, telcos are dramatically shrinking Nigeria’s financial exclusion gap and strengthening the pillars of the digital economy.
Monetisation and Business Expansion
The business model for telecom-led mobile money extends far beyond transactional services. Telcos are building merchant payment ecosystems, launching virtual cards, and exploring micro-lending and insurance options. These innovations not only diversify their revenue base but also promote economic empowerment at the grassroots level. The mobile penetration rate, which exceeds 90%, gives telcos unmatched reach to integrate financial services into daily consumer life.
Legal and Regulatory Implications
The growth of telecom-based financial services presents new opportunities and challenges for Nigeria’s legal industry. Legal professionals are increasingly involved in:
• Licensing and regulatory compliance with the Central Bank of Nigeria (CBN)
• Drafting and reviewing agent and merchant contracts
• Advising on data protection under the Nigeria Data Protection Regulation (NDPR)
• Ensuring adherence to Anti-Money Laundering (AML) and Know Your Customer (KYC) frameworks
As telcos become financial operators, the demand for robust legal infrastructure to manage consumer rights, service-level agreements (SLAs), and transactional dispute resolution continues to grow.
*Market Competition and Legal Oversight*
The intersection between traditional banks and telecoms has created new tension points, especially in areas such as USSD access and pricing. Legal intervention has been key in resolving such issues, most notably, the flat-rate settlement of N6.98 per USSD transaction following prolonged disagreement between telecoms and banks.
The legal profession must also address competition law concerns, as telecoms wield considerable market influence that could potentially edge out smaller fintechs or limit consumer choice if not regulated properly.
Cross-Border Partnerships and Global Legal Considerations
Telcos like MTN and Airtel are engaging in international partnerships with remittance platforms like Thunes and SimbaPay, expanding their services to the diaspora. These ventures introduce complex cross-jurisdictional legal issues, including compliance with foreign exchange laws, cross-border data transfer regulations, and bilateral agreements. This presents a growing need for Nigerian lawyers with expertise in international financial law.
Conclusion
The convergence of telecommunications and financial services is redefining how Nigerians interact with money. Telcos like MTN and Airtel are not just connecting people through calls and data; they are also building bridges to economic inclusion. The rapid rise of mobile money in Nigeria is transforming everyday life, enabling commerce, and integrating millions into the formal economy.
For the legal industry, this evolution presents an opportunity to expand expertise in financial regulation, technology law, consumer protection, and cross-border finance. To ensure that these disruptive innovations are sustainable and equitable, legal frameworks must continue to evolve alongside technology. Ultimately, Nigeria’s future in financial services may be mobile, but its credibility, stability, and fairness will depend on sound legal foundations.
Ifeoma Ben is a Partner at The Law Suite and the Editor-in-Chief of Lawhauz Magazine and can be reached on 08033754299
