Barriers to Mobile Money Adoption in Nigeria

July 10, 2014

By: Aibek Iliasov

Since the launch of Nigeria’s first mobile money service (Paga by Pagatech) in 2011, more than a dozen new mobile money providers have entered the Nigerian market. Mobile money services are now offered by independent vendors, major banks and mobile network operators. In addition to a wide range of mobile money providers, Nigeria has high mobile phone and SIM card ownership. Ninety percent of adults report having their own mobile phone and 91 percent say they have their own SIM card, according to InterMedia’s Financial Inclusion Insights (FII) Tracker Survey of 6,002 adult Nigerians.

Despite these favorable factors, mobile money uptake has been very modest in Nigeria. Only 0.1 percent, or 879,000 adults, are “active” mobile money users, defined as having a registered mobile money account and having used it at least once in the past 90 days. So why has mobile money adoption been so slow?

The FII Tracker Survey and related FII qualitative studies in Nigeria suggest three main barriers:

Barrier 1: Few are aware of mobile money providers

Only 12 percent of Nigerians have ever heard of mobile money providers, according to the FII Tracker Survey. Crucially, mobile money awareness is largely limited to bank users, with awareness among nonusers of banks four times lower than among active bank account holders (5 percent among nonusers of banks; 21 percent among active bank account holders).

The problem of low awareness may partly be attributed to the fact that radio and TV advertising is not reaching potential customers. Our survey indicates, with the exception of MTN mobile money, for which TV and radio advertising is the main source of brand awareness, mobile money providers’ brand awareness primarily comes from their agents rather than TV and radio advertising. This suggests that advertising does not seem to be reaching the intended audience. For example, if we take U-mobile (one of the mobile money providers in Nigeria), only 3 percent of adults were aware of U-mobile and 66 percent of those who heard about U-mobile found out about it from their agents. This is similar across other providers, as the chart below shows.


In addition to the survey, we conducted 24 consumer focus groups with both users and nonusers of mobile money and a balanced mix of participants in terms of gender, poverty level and area (both urban and rural locations in Lagos, Abuja, Kaduna and Enugu).

Our focus group results showed that some visual advertising was perceived by nonusers as targeted to a wealthy urban audience, and excluded rural consumers. In addition, certain advertisements shown to the participants contained indirect messages, and required basic literacy and prior understanding of mobile money services to decipher the message. Therefore, mobile money advertising aimed at rural residents, who are less likely to have basic literacy, should rely more on conveying messages through unambiguous visuals rather than text.

Barrier 2: Limited knowledge about mobile money services, even among those familiar with mobile money providers

Even if someone is aware of mobile money brands, he or she may not necessarily understand what mobile money actually does. In contrast to traditional banks, which are well established and known in Nigeria, Nigerian consumers lack clear understanding of mobile money services.

For example, based on spontaneous responses, the survey data shows that less than half of adults who have heard about mobile money knew they can send (48 percent) or receive money (39 percent) from other people, and only a third knew they can buy airtime top-ups (33 percent). In addition, three of the top four reasons why Nigerians who are aware of mobile money do not actually use it can be attributed to a lack of knowledge: I do not know how to open an account, I do not know what it is and I do not have a smartphone (it is not necessary to have a smartphone to use mobile money).

Our focus group results indicated that people lack reliable knowledge about how mobile money works, making them unwilling to use the service. Mobile money nonusers were unclear about what specific mobile money services are offered in Nigeria, the cost of mobile money transactions, or whether they need a specific type of phone to use the service.

Therefore, there is a compelling need for mobile money providers to both raise brand awareness through additional advertising, and conduct educational campaigns to inform users about the transaction process, product availability, key features and service reliability.

Barrier 3: Low level of trust in mobile money services

A low level of trust in mobile money services presents another serious barrier to adoption of mobile money. When asked to rate financial institutions by the level of their trustworthiness, only one in five respondents said they trust mobile money services (21 percent). In contrast, the majority of Nigerian adults said they trust state-owned banks or private banks the most (57 percent and 53 percent, respectively). Trust in mobile money is low even among existing bank users – only a quarter of active bank account holders said they trust mobile money (25 percent).

Focus group results showed that trust in traditional banking services is underpinned by people’s perceptions of banks as institutions with proven financial records, established brands and a physical presence that provides reassurance. Mobile money services, on the other hand, are deemed vulnerable to mobile network fraud and poor network quality. Many focus group participants reported being victims of fraud, including being overcharged for calls, airtime credits “disappearing” from their total balance, being charged for undelivered SMS or for unwanted ringtones. All of these create suspicion about services delivered through mobile phones, including mobile money.

Therefore, consumer educational campaigns conducted by mobile money providers need to emphasize the security features associated with mobile money services, including the mechanisms in place that provide safe and restricted access to user accounts and transactions.