How Paga is replicating the Kenyan success


Paga, one of Nigeria’s leading mobile money operators in Nigeria marked 10 years of its existence and announced that it had processed c.US$4.6m transactions since it began operations. The firm currently has over 12.1m active users, over 20,000 agents and has processed over 17m transactions.

The Paga mobile payment service was launched in 2009 and obtained a full operating licence from the Central Bank of Nigeria (CBN) to operate a mobile money service in December 2010. The company’s subscriber base of 12.1m indicates a subscriber base penetration of 6.2% (subscribers as a proportion of the estimated total population).

To put the service subscription numbers in perspective, the firm’s current subscribers as a percentage of total active mobile subscribers (which stood at 174.0m based on data provided by the Nigerian Communications Commission as at January 2019) is 7.0%.

We compare these achievements to those of M-Pesa, a similar mobile-phone based money transfer and micro-financing service first launched in Kenya by Safaricom.

Safaricom, in which Vodafone Kenya owns 40%, currently has over 162,000 agents. The service, launched in 2007, has enjoyed high subscription growth with Safaricom reporting that the number of M-Pesa customers increased to 29 million subscribers in 2018 driving the growth in M-Pesa revenues. M-Pesa has 54.5% mobile payment penetration.

Coming back home, similar mobile payment systems have not been able to replicate the same success as M-Pesa. While mobile telecommunication subscribers have increased rapidly in recent years, mobile payment penetration remains low. Many have blamed thisphenomenon on the bank led model adopted in Nigeria compared to the telco led model adopted in Kenya. To aid faster penetration, the CBN had recently given the telecommunication giants an option to apply for a licence to act as payment service banks (PSB).

The National Communications Commission and the Central Bank of Nigeria signed a memorandum of understanding in 2017 and the guidelines for the licencing and regulation of PSBs were approved in October 2018. While the model is yet to be implemented, there are reports that many Nigerian telcos are interested in applying for the PSB licence.

Interestingly, the likes of MTN Nigeria and Airtel Nigeria have already signalled interest in acquiring the PSB license.

Under the existing guidelines, a total of 21mobile money operators’ licenses have been issued by the CBN made up of 15 non-bank operators and 6 bank operators. Considering the large subscriber base of the telco operators, we believe this may be the trigger required to deepen the penetration of mobile service payments particularly in the underserved and
unbanked population.

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