Category: Money

Merchant payment in Africa stood at $66 billion in 2021, a 94 per cent rise from its2020 figures. The transaction rise is attributed to e-payment users change from cash to e-money in show of confidence in the payment system. The Central Bank of Nigeria and other financial sector regulators across Africa are focused on getting more people to embrace e-payment to deepen financial inclusion and make transactions seamless, writes Assistant Business Editor COLLINS NWEZE.

African economies are relying on e-payment to facilitate huge transactions. The payment mode is replacing use of cash, which for centuries dominated the continent’s transaction partner.

In Nigeria, the Central Bank, led by Godwin Emefiele, rolled out e-payment plan, that includes achieving 100 per cent cashless economy in the nearest future.

Already, many e-payment users are changing cash to electronic money (e-money) further raising the volume of e-payment transactions in the continent.

Electronic money (e-money) is broadly defined as an electronic store of monetary value on a technical device that may be widely used for making payments to entities other than the e-money issuer.

The device acts as a prepaid bearer instrument which does not necessarily involve bank accounts in transactions.

The CBN launched e-naira also meant to reduce cash use in the Nigeria payment system and promote access to finance across all segments of the economy.

In East Africa and Kenya, over 18 per cent of new merchants have self-boarded since MPESA began allowing companies to register on their platforms to deepen usage.

In 2021, mobile money’s value proposition expanded beyond P2P transfers and cash-in/cash-out transactions. It is now an essential part of many people’s and enterprise’s daily life, particularly in Nigeria and low- and middle-income nations.

Mobile money has fueled financial inclusion for the world’s most disadvantaged, mainly women in developing countries. These are using mobile money to gain more economic independence. According to MoneyTransfers.com’s analysis of Adoption Survey data, 44 percent of providers now provide credit, savings, or insurance products, allowing marginalised people to invest in their livelihoods and futures.

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Payment merchants have eased the acquisition of such credits besides insurance premiums. In Kenya, Nigeria, Ghana and Egypt, for instance, one would only need a mobile phone and a pay bill number to remit such a payment. The sector is likely to maintain its growth in 2022 due to its goodwill from users.

Mobile money accounts are processing around $1 trillion transactions annually on different fronts, of which merchant payments are one form.

Merchant payment stood at $66 billion in 2021, a 94 per cent rise from their 2020 figures, report from MoneyTranfers.com showed.

MoneyTransfers’ CEO Jonathan Merry attributes this growth to increased adoption of mobile money services.

Speaking on the development he said, “A definite trend is emerging towards a more digitised mobile money market.

‘’Many users are changing cash into e-money and either circulating it as such or using it virtually.”

Again, merchant payments have doubled in value, hitting $5.5 billion in monthly transactions. Providers say substantial incentives, such as remote on-boarding processes, entice enterprises to their platform.

Several reasons explain why the merchant payment option for mobile money is snowballing. First, the fundamentals of merchant processing are straightforward. You register with a merchant payment provider to accept mobile payments from your consumers (and receive payment yourself for all of those payments.

Second, the payment processor collects fees from your transactions and deposits the remainder into your business account. Selecting the appropriate choice enables your firm to spend less, get more helpful information, and find solutions specific to your business. You can enjoy all of that courtesy of constant interactions with the payment processor.

The COVID-19 outbreak has helped in deploying merchant payment systems. Most people used virtual, no-contact means to purchase items, pay bills, and raise money for various courses. The value of merchant payments reached $66 billion in 2021 due to this sustained rise. Besides, the providers charge reasonable transaction fees.

The Central Bank of Nigeria (CBN) has explained the essence of establishing the Credit Reporting Act and impact of its implementation to businesses and economy.

CBN Director, Corporate Communications Department, Osita Nwanisobi, said the Credit Reporting Act implementation was meant to institutionalise a business-friendly environment where businesses could thrive seamlessly, particularly the Micro, Small and Medium Enterprises (MSMEs), which is the engine of growth in any economy.

Speaking at the just concluded 2022 Lagos International Trade Fair held at the Tafawa Balewa Square, Lagos, he said the apex bank will continue to demonstrate unwavering commitment to supporting a productive economy and prudent management of the country’s vast resources as that is the only panacea to reaching Nigeria’s desired economic destination.

“The establishment of the Secured Transactions in Movable Assets Act (National Collateral Registry Act) and the Credit Reporting Act are part of the efforts of the bank to institutionalise a business-friendly environment where businesses could thrive seamlessly, particularly the Micro, Small and Medium Enterprises (MSMEs), which is the engine of growth in any economy.,” he said.

He said the  CBN Governor, Godwin Emefiele, and his team are resolute in steering the ship of Nigeria’s economy to prominence. The focus of the Bank is macroeconomic stability – which entails building a strong, stable, and resilient economy that is self-sustaining and able to weather unanticipated shocks.

“This, the bank will do, by applying appropriate monetary policy tools, striving to rein in inflation, and continuously encouraging a productive economy through its interventions. We have no other country than Nigeria, and it is our collective responsibility, as Nigerians, to make the country work!,” he stated.

Nwanisobi, who was represented by Sam Okogbue of the Corporate Communications Department of CBN, said  the CBN has initiated interventions that recorded significant successes in providing the needed structure for businesses to grow.

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“These include the Micro, Small and Medium Enterprises Development Fund (MSMEDF), which has supported entrepreneurship development with over N39.26 million; the Real Sector Support Facility (RSSF) through Differentiated

Cash Reserve Ratio (DCRR), where disbursements to 426 projects across the country stood at N10 trillion as at September 2022; and the 100 for 100 Policy on Production and Productivity (PPP) with cumulative disbursement of N93.39 billion to 62 projects within the aforementioned period,” he said.

Others include the Tertiary Institutions Entrepreneurship Scheme (TIES), which has total disbursement of N332.43 million; the Healthcare Sector Intervention Facility (HSIF) with cumulative disbursement of N130.54 billion for 131 projects, comprising 32 pharmaceuticals, 60 hospitals, and 39 other services.

Nwanisobi said the world is fast-moving to a digitized

economy and Nigeria cannot be found lagging. Hence, the introduction of the Central Bank Digital Currency, the eNaira, the first of its kind in Africa and ranked amongst the best in the world.

“The payment platform with the slogan ‘same Naira, more possibilities’ aims at enhancing financial inclusion; supporting Nigeria’s strong, stable, and resilient payment ecosystem; reducing the cost of processing cash; and enabling direct and transparent welfare intervention to citizens.

Other benefits derivable from the policy include, but not limited to, increasing revenue and tax collection; facilitating diaspora remittances and reducing the cost of transaction as well as improving the efficiency of payments,” he said.

“While the CBN will continue to refine, fine-tune and upgrade the platform with additional functionalities in the near term, the eNaira has recorded over 700,000 transactions worth about N8 billion within its first year (October 2022). Thirty-three banks have been fully integrated and live on

the platform. In addition to the foregoing, over 1.0 million customers have been onboarded while over 3,305 merchants have successfully registered on the eNaira platform across the country,” he added.

The CBN director said the  Central Bank of Nigeria, riding on international best practice and Section 2 (b) of the CBN Act 2007, which stipulated currency management as one of its key functions, has announced the redesign, production, release, and circulation of new series of three banknotes out of the existing eight banknotes, comprising N200, N500, and N1000 denominations, respectively, effective 15th December 2022; after its launch by President Muhammad Buhari.

“The new and existing currencies shall remain legal tender and circulate together until January 31, 2023, when the existing currencies shall cease to be legal tender in Nigeria. While Deposit Money Banks (MBs) have been directed to immediately start returning the existing currencies to the CBN, they have also been instructed to receive the existing banknotes beyond the threshold stipulated by the Cashless Policy without charge to customers. Consequently, you must return all the current N200, N500, and N1000 banknotes to your bank before the deadline. Let me also reiterate the need to handle the Naira with care,” he said.

To achieve a sustainable and stable fintech ecosystem, operators in the industry have been advised to put in place sound corporate governance principles and policies and also package their business proposals to attract potential investors. This was the opinion of speakers at the second edition of Ecobank Fintech Breakfast Series held at Ecobank Pan African Centre (EPAC) in Lagos.

The speakers who weighed in on the theme: “Strengthening the ecosystem” with emphasis on the role of good corporate governance in the fintech industry and what fintechs need to know about securing investments, emphasised that sound corporate governance strengthens organisations while good value proposition and structure determine and attract potential investors.

Partner, Aluko & Oyebode, Tosin Iyayi, stated that to entrench sound corporate governance, an organisation must put in place a well constituted board of directors who will oversee and perform the roles of strategic planning and keeping oversight of the company’s affairs.

According to her, “The board will ensure an organisation that is well run in line with laid down ethics, rules and regulations. It should be able to add value to the organisation, review the operations at every given point and offer helpful advice on the growth of such organisation. Members should have sound  business acumen; they must have experience in running a successful business, and able to steer the direction of the company. There should gender diversity in constituting the board. Members should have good knowledge of environmental, social, and corporate governance (ESG) which refers to a set of standards for a company’s behaviour used by socially conscious investors to screen potential investments.”

On Fintech and Fundraisers: What fintechs need to know about securing investments, Chinedu Onuoha, Managing Director, Mzuri Solutions Limited, advised fintechs startup to have a clear insight on the need and purpose for raising fund, stressing that they should ensure such funds are deployed for the purpose.  In his words, “fintech startups should raise funds they actually need.

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Sometimes you don’t need fund but goodwill. Know when to raise funds and when not to, and where not to raise funds. You should have a clear insight on what you need the funds for and meet your payment schedule to avoid breach on corporate governance and your ethics. Don’t outrun yourself in order not to lose control thereby questioning your ability to drive the business.”

Also speaking,  Co-founder, Rising Tide Africa, Yemi Keri who spoke on how to secure fund, stated that investors look at the product, passion and structure of organisations. “Investors are looking for good deals. You can get investors from networking event such as this breakfast meeting. Visit platforms such as LinkedIn.

Check out profiles. There are genuine investors out there looking out for profitable business they can invest in” adding that “on our part, we look at your product, your passion, motivation. We also look at how you will leverage technology for ease of operation and meet the needs of the customers. We look at your team, scalability, value proposition and structure to ensure business continuity.”

Earlier, Osahon Akpata, Group Head, Consumer Payments, Ecobank stated that the Pan African bank pays high premium on the growth of Africa fintechs, stating that the fintech space is attractive. He said Ecobank was providing a platform for banks and fintechs to explore areas of mutual interests and opportunities with a view to building a stronger ecosystem. Other speakers at the event included Lexi Novitske, General Partner, Norrsken22 and Yele Oyekola, co-founder & CEO, Duplo amongst several others.

The Ecobank Fintech Breakfast Series which holds in partnership with Tech Cabal, a digital media and publishing firm based in Nigeria, is designed to hold quarterly and aims to gather fintech leaders across the continent to share business insights, as well as discuss pertinent topics in the fintech ecosystem such as regulatory guidelines, funding, and other topics of interest to support both established and fintech startups at different stages of their journey.

TAJBank, a national non-interest bank, has secured regulatory approval to list its N10 billion Sukuk on the Nigerian Exchange (NGX), deepening the pool of ethical securities at the stock market.

TAJBank had under the first tranche of its N100 billion Sukuk issuance programme, launched a N10 billion capital raising through its special purpose vehicle- Taj Sukuk Issuance Programme SPV Plc.

The company offered series 1 Mudarabah Sukuk at N1,000 per Sukuk certificate with a projected profit of 15 per cent per annum.

The net proceeds of the Sukuk will be used by TAJBank as additional Tier-1 Capital under the capital regulation and will be used by the bank to support its Tier-1 capital for the purpose of maintaining its capital adequacy and for its general corporate business activities.

With a stronger balance sheet, TAJBank plans to expand its operations across the nation by upgrading its operating licence to national banking licence.

Chairman, TAJBank Limited, Alhaji Tanko Gwamma, said the non-interest bank is focused on growing its business and attaining nationwide market.

According to him, TAJBank is committed to achieving required regulatory metrics, as well as pursuing strong growth in its balance sheet items, amongst other positive indices.

He noted  that TAJBank attracted and retained more customers, and recorded exponential growth in its risk asset base assuring shareholders that the future of the bank is bright and beautiful.

“We are confident to state that our exceptional service delivery, robust technological deployment, and responsive operational system yielded the excellent performance we have recorded so far,” Gwamma told shareholders at the annual general meeting in Abuja.

Managing Director, TAJBank Limited, Mr Hameed Joda, has also said the non-interest bank has shown impressive performance since its inception in 2020 and now needs to move to higher level.

According to him, one of the major objectives now is to secure a national banking license in order to transform TAJBank into an industry leader.

“We will also be promoting financial inclusion by leveraging various channels and touch points, especially through the bank’s electronic platforms,” Joda said.

Joda said the non-interest bank is focused on attaining recognition as market leader in the non-interest industry in Nigeria.

“Another major strategy is to expand our branch network across state capitals and major commercial centers in Nigeria to offer non-interest banking product and services to the understand markets,” Joda said.

He attributed the performance of the bank over the past two years to innovativeness, customer-centric service delivery powered by world-class technologies and solutions, human resource capacity building and shareholders and customers’ growing confidence.

He also spoke on plans to grow the bank’s agency network to 100,000 agents by 2025, thereby reducing the financial exclusion rate.

“Our success in 2021 demonstrates that we not only kept our commitment to our stakeholders, but that we are growing in a sustainable manner. By so doing, we can continue to enhance value to society while also generating the revenue our shareholders will appreciate.

“We are constantly improving our operations so that we can respond to our clients’ ever-changing needs in their daily lives more efficiently and effectively. We are also pushing ourselves further beyond our comfort zones to provide a viable financial platform for all our stakeholders,” Joda said.

The Federal Government will today conduct its regular monthly bond auction with a target to raise N225 billion to further bridge its budget deficit.

The Debt Management Office (DMO), which oversees government’s bond issuances and general debt management, would be raising N225 billion through reopening of three previously issued mid-to-long term bonds.

The bonds being reopened include the 14.5500 per cent 10-year bond, which matures in April 2029. Also being reopened is the 12.5000 per cent 10-year bond, which matures in April 2032 and the long-term 16.2499 per cent 20-year bond with maturity date of January 2037. The previous stop rates for the three bonds were 14.50 per cent, 15.00 per cent and 16.00 per cent respectively.

Government plans to raise N75 billion each from the three bonds, totaling N225 billion. Nigeria depends on regular debt issuances to finance budget deficits as poor infrastructure and insecurity continue to threaten government’s revenue.

The DMO had last week offered two tranches of its monthly Federal Government of Nigeria Savings Bonds (FGNSBs). The November 2022 issuance was the 65th tranche of the savings bond, introduced in 2017.

The government had offered the two-year sovereign retail bond at a coupon of 12.492 per cent with maturity on November 16, 2024. It also simultaneously offered three-year FGNSBs at a coupon of 13.492 per cent with maturity on November 16, 2025. Minimum subscription to the pro-low savers bonds was N5,000 with maximum subscription per subscriber capped at N50 million.

The FGNSBs are designed to have most of the features of the existing sovereign bond but with  other benefits to the bondholder, including low amount of minimum subscription, listing on stock exchange and trading on the bonds. It will also be backed by the full faith of the Federal Government of Nigeria and is therefore deemed risk-free. The coupon is paid on a quarterly basis, providing investors with a regular stream of incomes.

The FGNSB was introduced in 2017 as a mass instrument for nationwide mobilization of savings and investments.

Investment Bank in Nigeria, DLM Capital and its subsidiary – Sofri (Sofri, powered by Links Microfinance bank) have reiterated the group commitment to developing an investment ecosystem of choice with the strategic intent to empower minds in Africa.

Managing Director, Links Microfinance Bank, Funsho Idowu, disclosed this following the recognition of DLM Capital Group and Sofri’s efforts at the just concluded BusinessDay Banks’ and Financial Institutions (BAFI) awards 2022.

DLM Capital Group emerged winner for “The principal Finance Firm of the Year 2022” while Sofri was awarded with “The Consumer Digital bank of the Year 2022”.

Sofri is a financial platform powered by Links MFB, a subsidiary of DLM Capital Group. The respective honors came despite some stiff competition from other formidable nominees.

He stated “Sofri has enjoyed several recognitions from Saudi Arabia, Kenya, Ghana among others and it is indeed an honor to receive this award from such a prestigious body as BusinessDay.

“This shows the strength of how impactful our works are felt far and wide. We are committed to delivering the best of services to our consumers and won’t relent’’ he added.

Access to credit is at the centre of banking services. It not only gives the lending institution opportunity to meet the needs of their customers, but also enables such customers to expand their business operations.

To ensure more credits flow to businesses,  Interswitch has inaugurated Verve on Credit to give commercial banks, micro-finance banks, fintechs and other financial services institutions the chance to lend more to their customers.

With quick and easy on-boarding process, the scheme which can be assessed through mobile, web e-commerce and purchase platforms has come to represent a good channel for easy credit access.

On the  scheme, Managing Director, Interswitch Purepay, Akeem Lawal, said Verve on Credit is a “buy now, pay later” solution designed to improve the payment experience of consumers on e-commerce platforms by providing credit as an alternative source of payment for goods and services.

He said the rising inflation and the limited purchasing power resulting from this, has created an opportunity for businesses to help consumers meet urgent needs.

“Interswitch has developed the Verve on Credit solution to serve as a technology-driven lending solution across e-commerce platforms and other digital platforms where exchange of value is taking place, through an easy application programming interface integration. This will help financial institutions be at the heart of commerce by offering loans in-market and also help merchants make more sales,” he said.

Lawal added that consumers could leverage the buy now, pay later opportunity of Verve on Credit across different purchasing points, purchase airtime, pay  for data subscription, Cable TV subscription, hotel reservation,  school fees, travel tickets and online purchases.

“Companies that have adopted Verve on Credit have seen benefits like easy on-boarding from end to end. The company configures the API credentials for for them, so they can call the API to the time they go live with the solution. Verve on Credit also increases the participating company’s lending opportunity as a financial institution,” he said.

“Your lending abilities will cover a wide array of e-commerce and sales platforms where you can offer lending services in-market to customers who need. It also gives financial institutions and merchants the chance to satisfy their customers and give them uninhibited ability to purchase,” he added.

Equally, through the Verve ob Credit, merchants grow their business as they get more purchases from customers who have been given the ability to buy now and pay later through the product.

He stated that Interswitch was helping to shape the payments ecosystem across the growing e-commerce sector in Africa. It processes and facilitates value exchange on behalf of financial services, with a peculiar focus alleviating the challenges and simplifying access to the technology infrastructure financial institutions need to thrive.

Interswitch has a successful implementation pedigree with an understanding of various markets across Africa with over 99 per cent direct connections to financial institutions in Nigeria and a growing connection across Africa.

“Our transactions are powered by a secure intelligent e-business transaction-processing engine designed for high speed, high volume, and round-the-clock availability. Interswitch’s infrastructure is Europay, MasterCard, and Visa enabled, it aligns with Global Security Standards  such as The Payment Card Industry Data Security Standard compliance. The relevant payment industry certifications further lend credence to our promise of transaction security,” the company said.

World Bank announced a new multi-partner fund that will pool funding from the global community — including donor countries, the private sector and foundations — for scalable pathways to greenhouse gas emission reduction.

The  Scaling Climate Action by Lowering Emissions (SCALE) partnership will provide grants for verifiable emissions reductions and expand the funding sources for global public goods.

President of the World Bank Group, David Malpass, said:“Climate finance needs major new mechanisms that pool funding from the global community to accomplish actual reductions in greenhouse gas emissions across the developing world. SCALE offers a key non-fragmented avenue for the global community to take action on climate change”. 

“The verifiable emission reductions created by SCALE and similar mechanisms will also be an important step toward building effective carbon credit markets.”

SCALE will deploy Results-Based Climate Finance where countries receive grant payments for achieving pre-agreed, verifiable results, drawing on twenty years of World Bank Group experience in this area.

SCALE will support countries to build a track record of generating emission reductions from impactful programs and policies that they can apply toward their national emission reduction targets. SCALE will also yield excess credits that can be offered in carbon markets with the potential to unlock additional private sector funding.

SCALE will pool public and private resources to (i) channel additional funding to middle and low-income countries’ emission reduction programs; (ii) help bridge the gap between the supply of and demand for high-quality emission reduction credits by supporting large-scale climate investments; and (iii) help countries develop high integrity credits and enhance their access to international carbon markets.

Social inclusion is embedded in the design of all SCALE programs. An associated fund within the SCALE umbrella – Enabling Access to Benefits while Lowering Emissions  (ENABLE)  – enhances the inclusion of marginalized communities and indigenous peoples in programs under the partnership through specially designed benefit sharing arrangements.