Nigeria has the potential to become a leading player in the mobile money market, which could boost its economic growth and financial inclusion, according to a new analysis by Morgan Stanley.
The global investment firm highlighted that Nigeria’s telecommunication sector and consumer segments offer a unique opportunity for investors, especially if the reforms of the Tinubu government result in a rise in income.
The analysis, titled “Nigeria: A New Dawn?”, suggested that new policies, such as the removal of fuel subsidies and the unification of the naira’s exchange rate, could fuel economic growth and increase the purchasing power of Nigerians.
This could create more demand for mobile banking, data usage, and consumer goods, which are still underdeveloped in the country.
The telecom sector was identified as a key area of opportunity, due to low mobile data penetration and usage levels.
“By one estimate, Nigerian internet usage is one-tenth of South Africa. Additionally, last year’s regulatory changes that allowed telecommunications operators to receive banking licenses have enabled a growing mobile money market. This presents an opportunity for providers of telecommunications-led mobile-money services, which are still in the early stages of growth,” said Steven Quattry, executive director of the firm with over 19 years of industry experience.
According to the experts, the mobile money market in Nigeria could benefit from the high mobile phone ownership, estimated at over 85 per cent, and the low bank account penetration, estimated at less than 50 per cent.
“Should mobile money penetration levels in Nigeria climb to the 75 per cent to 95 per cent levels seen in Senegal, Ghana, and Kenya, it would drastically increase financial inclusion and present an attractive investment opportunity, particularly in telecom operators,” notes Quattry.
The consumer goods market was also cited as another potential area of growth, as Nigerians could spend more on discretionary purchases as their incomes rise.
The consumer goods market in Nigeria could grow 150 per cent from an estimated $240 billion in 2023 to about $603 billion in 2030, creating opportunities in sectors such as packaged food and beverages, household and personal care products, education, healthcare, and durable goods like appliances and transportation.
The analysis also pointed out the export potential of Nigeria, especially in the service sector, where the large pool of English speakers could give the country an edge.
The Nigerian music and film industries, known as Afrobeats and Nollywood, were mentioned as examples of successful service exports that have gained global recognition and attracted investments from major media companies.
By 2030, Africa’s film and music industries, which are dominated by Nigerian productions, could be worth $20 billion and create 20 million jobs.
However, the analysis also acknowledged the challenges that Nigeria faces, such as high inflation, currency depreciation, security issues, and infrastructure gaps, which could hamper its economic prospects.
The government was urged to implement more reforms and policies that would improve the business environment, enhance governance, and foster social stability.
More collaboration and cooperation among regional and international partners of Nigeria, such as the African Union, the Economic Community of West African States, the World Bank, and the International Monetary Fund, were called for to support the country’s development agenda.
The analysis concluded that Nigeria has the potential to become a more prosperous and inclusive nation if it can overcome its challenges and leverage its opportunities.
“Should Nigeria succeed, it would not only benefit its own people but also serve as a role model and a catalyst for the rest of Africa,” the analysis said.
Source: Business Day
