Digital Financial Inclusion: Efficiency Analysis of Mobile Money Penetration by Nigerian Telecommunication Companies

A more significant number of adult Nigerians still face financial exclusion. This study, therefore, makes an unprecedented effort to apply Data Envelopment Analysis (DEA) to analyse the efficiency of mobile network operators (MNOs) in providing mobile money services, using 12 sampled firms from the Nigerian telecommunications sector. An output-based DEA analysis of cross-sectional data from 206 MNO managers reveals that MTN and Airtel have efficiency scores (Thetas) of 100%. Consequently, they are efficient companies in the provision of mobile money in Nigeria, serving as benchmarks or peers for other inefficient MNOs in the sector. Further, both CRS-TE and VRS-TE DEA results illustrate that other sampled MNOs such as Spectranet, MainOne, L.M. Ericsson, Smile Nigeria, Globacom, Swift Network, Internet Solutions Nigeria Limited, Broad-based Communications Limited, NTEL and 9 Mobile are inefficient and could increase mobile money penetration (output) to become efficient by 6.5%; 9%; 11%; 16.4%; 17.8%; 30.4%; 31.7%; 33.9%; 50.4% and 51.5% respectively whilst holding their current input factors constant. Therefore, the study asserts that only MTN Nigeria and Airtel are the most efficient telecom firms in mobile money penetration in Nigeria; however, other inefficient telecom firms can improve their future performance. The study recommends that other telecom firms in Nigeria should adopt best practices for mobile money services similar to those implemented by MTN Nigeria and Airtel Nigeria.