The Fight Over Who Regulates African Fintechs: Central Banks vs Telcos

The question of who gets to govern mobile money in Africa is not purely academic. It shapes how millions of people access financial services, which companies build dominant positions, and whether innovation or stability gets prioritized when the two come into conflict.

Across the continent, two powerful actors keep arriving at the same intersection: central banks, with their mandate to protect monetary systems and consumers; and telecommunications companies, which built the infrastructure on which most Africans conduct digital transactions. When their jurisdictions overlap, and they frequently do, the consequences ripple through boardrooms, regulatory offices, and the wallets of everyday users.

Two Regulators, One Payment

The clearest illustration of this tension plays out in Nigeria. When MTN Nigeria finally received its Payment Service Bank (PSB) licence from the Central Bank of Nigeria in 2022, it marked the end of a process that had taken the better part of five years. The CBN had required MTN to structure its mobile money service as a separate entity from its core telecommunications operations. This condition slowed the rollout considerably and kept the company navigating requirements from two different bodies.

Under Nigeria’s framework, the CBN grants licences to Mobile Money Operators and oversees all financial services rendered, while the Nigerian Communications Commission issues short codes and type approvals for the telecommunications equipment used. In theory, both regulators have defined lanes. In practice, any telco trying to offer mobile financial services must satisfy both, and the coordination between them is not always smooth.

This dual-regulator structure is partly deliberate. The CBN has historically been reluctant to allow telcos to function as lead initiators in mobile money, insisting instead that financial services remain under banking supervision even when delivered over telco infrastructure. That decision has had measurable market consequences.

Why Regulatory Architecture Determines Market Winners

The contrast between Nigeria and Kenya illustrates how regulatory posture can determine which players dominate an ecosystem.

In Kenya, the Central Bank allowed Safaricom to launch M-Pesa in 2007 with relatively light banking-sector restrictions. Without a nationwide real-time payment system at the time, Safaricom built its own, leveraging its network and subscriber base. Crucially, it operated for years without being required to interoperate with other platforms, entrenching a closed ecosystem. Today, M-Pesa processes over 61 million transactions daily and serves more than 50 million active users in Kenya alone, handling transaction activity equivalent to roughly 8 percent of the country’s GDP.

Nigeria went the other way. The CBN licensed 21 mobile money operators since 2011, promoted platform neutrality, and allowed fintechs to compete on equal footing. The result: telcos did not capture the market. Companies like Flutterwave, Interswitch, and PalmPay scaled faster than MTN’s mobile money arm, which despite having tens of millions of subscribers, has generated comparatively modest financial services revenue.

MTN’s stumble in Nigeria is less about consumer demand or product quality and more about regulation and market structure. Airtel reported only $5 million in mobile payments revenue from Nigeria in its most recent fiscal year, a figure that underscores how thoroughly bank-licensed fintechs have occupied the space telcos dominate elsewhere.

Francophone Africa and the BCEAO Model

West of Nigeria, the regulatory picture looks different again. The West African Economic and Monetary Union, governed by the Central Bank of West African States (BCEAO), took a bank-centred regulatory approach that slowed telco dominance, but also dampened the kind of fintech innovation seen in Lagos or Nairobi. Telcos like Orange hold significant positions in markets like Côte d’Ivoire and Senegal, but the regional framework keeps them more tightly supervised than their counterparts in East Africa.

The BCEAO model also recently moved to tighten its grip further. A regional central banking directive now requires fintech players operating across the union to obtain authorization from the central banks of each country in which they operate, raising the compliance burden for startups trying to scale regionally.

The Emerging Pressure on Both Sides

Neither central banks nor telcos are navigating this terrain comfortably.

In Nigeria, a proposed National Fintech Regulatory Commission Bill would create a specialised body overseeing licensing, regulatory sandboxes, and cross-border passporting. Critics argue it would add yet another layer to a regulatory web that already involves the CBN, the Securities and Exchange Commission, the NCC, and the Nigeria Data Protection Commission. The concern is not that more oversight is inherently bad; it is that overlapping mandates, without coordination, generate compliance costs that startups often cannot afford.

Meanwhile, MTN is actively pushing further into financial services. The company is seeking regulatory approval to expand into lending in Nigeria, with its fintech CEO stating it wants to move up the lending value chain and deploy its own balance sheet. That ambition keeps colliding with a licensing environment that still sees banking services as the CBN’s exclusive domain, regardless of who delivers them.

What Regulators Actually Want

Beneath the jurisdictional disputes, both central banks and communications regulators tend to articulate the same stated goals: financial inclusion, consumer protection, and system stability. Strong regulation protects customers through transparent terms and fair pricing, strengthens financial integrity by guarding against fraud and money laundering, and builds investor confidence by creating predictable environments, points that regulatory bodies across Kenya, Uganda, Ghana, Tanzania, and Zambia have all incorporated into their respective frameworks.

The disagreements arise over method and mandate. Telcos see mobile money as a natural extension of connectivity services and argue they should have more regulatory flexibility given the distribution advantages they bring. Central banks counter that once money is involved — deposits, payments, lending- the risks to consumers and the financial system require banking-sector oversight.

Ghana has offered one partial resolution, introducing interoperability through GhIPSS, the Ghana Interbank Payment and Settlement Systems, which allowed banks and fintechs to compete in a market where telcos had initially captured large shares. It is an approach that neither surrenders the central bank’s authority nor shuts telcos out, though it requires deliberate coordination between regulators that remains difficult to replicate across 54 countries with varying institutional capacity.

The Stakes for African Fintechs

For fintechs operating in or expanding across Africa, the central bank versus telco dynamic is more than a policy debate. It determines licensing timelines, compliance costs, and whether companies can access distribution at scale. It also shapes the investment case.

Regulatory unpredictability is among the market factors most consistently cited by investors reviewing African fintech deals, alongside harsh competition and changing socioeconomic conditions. When it is unclear which regulator holds authority over a product or when two regulators hold conflicting views, the uncertainty falls on founders trying to build and on investors trying to underwrite risk.

The continent is moving, however slowly, toward clearer frameworks. Regulators and central banks are pushing toward cross-border interoperability through initiatives like the Pan-African Payment and Settlement System, which would standardize some of the rules currently left to individual countries. But PAPSS is infrastructure, not a governance settlement. The question of who ultimately holds supervisory authority over mobile financial services when the pipes belong to a telco and the money belongs to a central bank is one that individual regulators are still working through on their own terms.

The outcome will vary by country, shaped by political economy, institutional strength, and how aggressively each player lobbies for its position. What is increasingly clear is that the fight is not simply about regulation. It is about who controls the financial infrastructure of a continent where hundreds of millions of people are, for the first time, gaining meaningful access to formal finance.