Shares of Airtel Africa and MTN Nigeria have hit what are described as all-time highs after they were granted approval by Nigeria's central bank for banking licences – at least in principle.
These applications had been pending for more than two years and, as we reported two days ago, the Central Bank of Nigeria (CBN) has now granted its approval in principle (AIP) for the local units of Airtel Africa and MTN to receive Payment Service Bank (PSB) licences.
As Nigerian website Nairametrics points out, PSBs are banks that take deposits from people and small businesses, provide payment and remittance services within Nigeria, issue debit and prepaid cards, run electronic wallets, and engage in other CBN-approved operations. To lawfully engage in these operations, a PSB license from CBN is required, which both operators have now obtained.
Shares in MTN Nigeria and Airtel Africa rose for the second straight day after the news. Shares of MTN Nigeria, rose 3.90 percent and Airtel Africa gained 2.56 percent.
It’s another clear indication of the value of mobile finance not only to end users but to operators. The evolution of operators into PSBs is a more recent development, of course.
However, for now, the possibility that there may be greater competition between operators and traditional banks is not necessarily a real concern as PSBs aim to target small businesses, low-income households and other financially excluded entities.
In any case the approval in principle process is only the first step in becoming a PSB. The promoters of a proposed bank must apply to the CBN for a final license no later than six months after receiving the AIP.