The Nation Newspaper

Tag: MARKET

  • Of dysfunctional labour market

    The Nigerian labour market is currently dysfunctional. A manifestation of this malaise is the level of unemployment in the market. This had always been the problem even when the economy was experiencing growth of an average of more than six percent. It was a period of economic growth without job creation. A disturbing aspect of this problem is the nature of the unemployment which is skewed in favour of young persons between the ages of 15 and 24 years. And, this situation has grave social implications because an observable characteristic of this group of unemployed persons is that a significant proportion of them are primary and secondary school graduates or dropouts. A good number of them are also products of monotechnics, polytechnics, universities and other specialized tertiary institutions such as Colleges of Education, Technical Colleges, Nursing Schools and so on. These idle young minds are normally restless and fertile breeding grounds for criminal and other unwholesome activities.

    This problem calls for some serious and hard thinking on the part of the managers of the economy at both the Federal and State levels of governance.

    Here are some suggestions that need serious consideration.

    The labour market needs to be more flexible and organized. A fundamental problem is that our labour market is too rigid to generate employment that can support the required GDP growth. There is no free flow of labour across markets due partly to too much adherence to “State of Origin” in public service recruitment at the state level. This explains why, for example, most northern states, despite the fact that there may be vacancies in their public service, do not engage southerners. In some cases, they even prefer Asians.

    We need to free our work schedules and salary payment systems. Work schedules and salary payment systems are too rigid in the public and in the formal private work environments. Workers of all categories are engaged in most cases on tenure bases and paid salaries on monthly basis even low-income earners like clerks, messengers, drivers, cleaners, gardeners, cooks, factory workers, etc. And, all these workers work, officially, from 8.am to 4pm, Monday to Friday. In other more organised climes, these set of low-level workers are engaged on hourly basis and paid weekly or bi-monthly and do not work on permanent basis. Employers draw from a pool and workers choice of working schedules are flexible. And, because of constant power supply, work space is 24 hours and workers are engaged in shifts allowing more persons to be engaged. This creates more avenues for employment which will further increase the potentials for higher GDP.

    We must liberalize the salary structure in our public service. Currently, our salary structure is too rigid. In the public service, a level 8 officer in Lagos earns the same salary as his counterpart in Zamfara or Edo and a professor in Ibadan, Lagos, ABU or OAU earned the same as his colleague in Akungba, Yola or Owerri. Also, it does not make economic sense for Lagos State governor to earn the same salary as the governor of Ekiti, Abia, Gombe, etc. And, the private sector takes its cue from the public sector. In the days of regional governments, public servants in Western Nigeria earn more than their colleagues at the federal level and other regions.

    The Nigerian educational system needs a complete overhaul to cater for more skills acquisition in the technical fields for the production of well-grounded craftsmen (artisans). The provision of educational opportunities in tertiary institutions like monotechnics, polytechnics and universities are necessary for young Nigerians but efforts should also be made to promote vocational education to make those not inclined to serious academic work acquire skills to fit into a modern economy. This means that in present Nigeria, artisans, for example, masons, carpenters, electricians, welders, mechanics, machinists, plumbers, and so on, should be trained in vocational technical schools rather than through the apprenticeship system.

    Nigeria should start to use some innovative programmes to promote economic activities and thereby create jobs as it is done in more matured economies. What readily comes to mind is the promotion of professional sports. This has worked very well in the United States of America (American football, lawn tennis, Basketball, Baseball, and Boxing), United Kingdom (Football, Cricket and Rugby) Brazil (Football), Cuba (Boxing), Australia (Cricket and Rugby), New Zealand (Rugby) and India (Cricket). These countries create millions of jobs for professional sportsmen and women, coaches, managers, technical and medical personnel, accountants and sport administrators; in addition, the building, maintenance and management of sports arena, create millions of jobs.

    Governments can deliberately initiate massive public works programmes to create jobs and serve as safety nets for unemployed jobless persons. These programmes can involve the building of public toilets, market outlets, urban renewal projects, urban gardening (horticulture), garbage collection, and so on. In addition, global warming induced problems can be mitigated by large scale afforestation and anti-desertification programmes creating millions of employment opportunities all over the country. These programmes can be designed to be executed in all 774 local government areas or even in all the 8,812 political wards in the country. This way there will be a deliberate policy action to stimulate economic development nationwide to ensure job creation and mitigation of rural-urban migration.

    Government can leverage on the now fledging entertainment industry, as epitomized by “Nollywood movies” to develop a huge labour-intensive industry that can create employment opportunities for educated young Nigerians. This has been accomplished successfully in India, Columbia, Brazil and Argentina, not to mention the highly developed entertainment industry in the United States of America and United Kingdom.

    The tourism industry, particularly, eco-tourism can create employment for local conservationists, tour guides, hotel and guest house workers, caterers and managers. This is in addition to jobs that can be created for managing tourist centres and game parks (reserves) as the case with South Africa, Kenya, Uganda, Zambia and other eastern and southern African countries. Apart from these rural-based ecotourism centres, activities that complement urban renewal projects can be designed to attract tourists to urban areas. In this regard, the greening of urban centres can be designed. These can serve the multiple purposes of checking urban decay, reduction in global warming, reduction in atmospheric carbon dioxide concentration and very importantly, create jobs for able-bodied educated youths. This could involve planting of trees, flowers as well as clearing of drainage ducts.

    Agriculture remains a key sector in the economy. Nigeria’s agriculture, which hitherto had been relying solely on natural rainfall, should be supported by irrigation to reduce the risks associated with seasonality of rainfalls and occasional drought spells. Construction of irrigation infrastructure (dams, channels, pipelines, etc.) require large dose of human labour thereby creating opportunities for large scale employment opportunities. And, the same goes with developing and organizing our agricultural storage and processing businesses.

    In the oil and gas sector, government will have to go beyond the implementation of the Local Content Act to encouraging and supporting more labour-intensive secondary industries that can spin off from crude oil and gas exploration including but not limited to those involved in the production of petrochemicals, fertilizers, pharmaceuticals, plastics, petroleum products from modular refineries and household products. In the solid mineral sector, another growth area for the economy are artisanal and small mining activities that rely on labour-intensive technologies. In the area of manufacturing including SMEs, labour-intensive industries such as textile milling and metal fabrication should be supported to absorb the large pool of workers that now perpetually remain idle in the labour market.

    Government should begin to adopt the posture that investing in infrastructure is the panacea to economic growth and employment generation in our economy. Workable infrastructure will not only engender the enabling environment for economic activities, thereby creating jobs, building infrastructural facilities themselves generate employment in large numbers. For instance, building roads, rail lines, irrigation facilities and housing estates will create employment opportunities for large numbers of semi-skilled and unskilled workers.

    Akinyosoye, a retired professor of Applied Economics and Data Management is immediate past Statistician-General of the Federation.

  • Airline operators seek level-playing field for single African market

    Airline operators have appealed to the Federal Government to create a level-playing field for carriers to enable them exploit the full benefits of the Single African Air Transport Market (SAATM).

    Executive Chairman, Airline Operators of Nigeria ( AON) Captain Nogie Meggison said Nigerian carriers could only take advantage of this new policy, if Nigerian government impressed it on the African Civil Aviation Commission ( AFCAC ) to see to the implementation of uniform navigation charges by countries that signed on for the air pact .

    Rather than initiate policies that will stimulate the growth of indigenous carriers, Meggison said Minister of Aviation Senator Hadi Sirika is throwing figures around about what airlines owed government agencies.

    He faulted the figures, urging transparency and accountability in the billing system by aviation agencies.

    He spoke against the background of comments by Sirika , who said indigenous carriers were too weak to compete with other continental carriers .

    Sirika accused Nigerian carriers of using the wrong operational model that will not make them compete favourably to take advantage of the African Open Skies pact.

    The minister said rather than get their acts right, Nigerian operators were busy complaining and accumulating debts running into N516 billion.

    He said such attitude against government  agencies would not be tolerated.

    He said: “For the new policy to work, Africa Civil Aviation Commission (AFCAC) should provide a level playing field because every member country should charge the same amount from one country to another. In Nigeria, an airline borrows money at 24 per cent interest rate, pay  five per cent to the Nigerian Civil Aviation Authority (NCAA), and also  five per cent value added tax but these are waived by government of other countries for their own airlines.”

    Former Vice-Chairman of Arik Air Senator Anietie Okon said Nigeria was not ripe for Single Air transport market because of some protectionist policies put in place by some African countries.

  • Properties destroyed as fire gut shops in Aba

    Properties destroyed as fire gut shops in Aba

    Traders and sympathizers at New Market in Aba, Abia State Line 49, Lagos zone could not hold back their tears as a mysterious fire gutted 14 shops and destroyed goods worth millions of cash in the inferno.

    Our correspondent who visited the scene of the inferno on Thursday reports that the traders claimed that they couldn’t save a pin from the inferno they said started when they had all gone home after their day’s business.

    While the affected traders were seen picking and packing out charred goods from their shops, others who could not hold back their emotions were seen being consoled by sympathizers at the scene.

    Some of the traders who spoke anonymously demanded that the security men on duty should be questioned. This is as some of them claimed that the inferno was sponsored.

    They wondered how the area that doesn’t have electricity supply over decades or have anyone that sells restaurant got burnt over a night. They also queried the inability of the security men on duty in the area to raise alarm when they spotted an unusual fire or smoke in a place that doesn’t even sell any inflammable material.

    One of the traders, Mr. Ifeanyi Ogbonna who was still struggling with his emotion but however, summoned courage to speak to our reporter at the scene said that he lost about N2.5m while a neighbour who sells provision lost goods worth about N8m.

    According to him, men of the Abia State Fire Service came to attend to the fire, but left when they ran out of water.

    He said that the fire was later quenched by sympathizers who used water from a nearby borehole operator to attack and stopped the fire from engulfing other shops in the zone.

    He appealed to the governor of the state, Dr. Okezie Ikpeazu and other well-meaning Nigerians to come to their aid as they cannot bear the pain and weight of the loss alone.

    Okezie Uche, Head Aba Fire Service said that the cause of the fire could not be ascertained at the time of filing the report, but however stated that it could have been unconnected to the change in temperature.

    Uche advised chairmen of various lines in the market and other markets in Aba and its environs to make sure that they have materials that would enable them to quench fire at the early stage before it goes out of hand.

  • NSCDC confiscates 1,500 litres of PMS from black market operators

    The Nigeria Security and Civil Defence Corps (NSCDC) in Plateau State has confiscated 1500 litres of Premium Motor Spirit (PMS) from black market operators and impounded four vehicles  with improvised tanks in Jos.

    The Commandant of the corps in the state, Mr Solomon Olasupo, disclosed this while carrying out a raid yesterday in Jos, describing the black market operators as”economic saboteurs”.

    According to Olasupo,  the Command has declared war against illegal sale of  PMS, adding that the perpetrators would be  treated as saboteurs.

    The commandant said the racketeers were  carrying out their illegal business opposite the NNPC mega fuel station in Jos, adding that they were diverting and hoarding the product to create artificial scarcity.

    He impounded  two vehicles and  two tricycles that had improvised tanks awaiting their turns to get fuel at the NNPC Mega Station on  Yakubu Gowon way.

    He warned managers of the filling stations to desist from conniving with owners of  vehicles and tricycles with improvised tanks and siphoning the products at night.

  • ‘Mortgage market records 82 per cent growth’

    The mortgage finance  market recorded 82 per cent growth between 2010 and 2016, the Mortgage Banking Association of Nigeria (MBAN) President, Mr. Akinniyi Akinlusi, has said.

    He made this known  during a chat with The Nation. Akinlusi said while the size of the mortgage market in 2010 was N284.1billion, it grew to N348.1 billion in 2012, and by 2016, hit N518.76 billion, about 82 percent growth.

    The MBAN chief noted that mortgage transactions,  though low, were gradually picking up. He based this on the fact that in  39 years,  from 1960 and 2009, mortgage transactions were less than 100,000, compared to the 181,519 deals recorded six years – between 2010-2016.

    “We had less than 100, 000 mortgage transactions for 39 years; and in just six years, we had 181, 519 mortgage transactions. This is a significant growth that tells you that this industry is moving now and it is upbeat,” Akinlusi said.

    He explained that from microeconomics, mortgage debt to gross domestic product (GDP) is less than one per cent, adding that less than five per cent of the 13.7million housing units  were financed with mortgages.

    He blamed this low figure on the challenges in the industry, such as titling. The dearth of titled properties, he further explained, is an albatross for mortgages.

    “Mortgages are not created in vacuum. So there must be titles. If there are no titles for the land there cannot be title for the house on it. So, it affects both the supply and demand sides of the housing market,” Akinlusi said.

    He listed the problem of foreclosure as a challenge for the industry, adding that where there is a default in mortgage payment, recovery of same becomes difficult because of the cumbersome court process.

    Akinlusi also blamed the tenor period for mortgages as a hinderance for its steady growth.

    “Mortgage business is a marathon and not a 100- meter dash. There are mortgages with duration of 20 years whereas the funds available in the market are short-term funds. So, we cannot be using funds of 30 or 90 days for mortgages. This will be a recipe for disaster,” he explained.

    The MPR rate, which he said, is 14 percent makes the  market interest rate to hover around 20 and 24 percent, meaning that apart from the Federal Mortgage Bank of Nigeria, whose interest is at six percent, others are double digits and this affects mortgage affordability.

  • Re: Troubling Market

    SIR: Your editorial of January 2, titled Troubling Market is an unacceptable commentary from a respected publication like The Nation. The piece came at beginning of a new year when the Nigeria Stock Exchange closed the 2017 with a stellar performance and global media firms like CNN, Bloomberg etc. wrote informed and positive pieces about the change in fortunes of the exchange. It is therefore saddening to see The Nation dwelling on negative reportage unjustly on the first day of trading in 2018. What is the motive?

    Firstly, the headline – “Troubling Market” is sensational and unfounded. What is the trouble with a market that rebounded with more than 40% growth after two years of negative performance? As if the headline was not troubling enough, then followed the rider – The stock market continues to bleed; NSE must do more. The bleeding of two years ended in 2017 and The Nation can at least pat the exchange and the government for policies that resulted in reversing the trend. It will be interesting to see The Nation enumerate the nature of bleeding in our market that inspired the rider.

    Moreover, the opening sentence – “It is indeed not the best of times for the Nigerian Stock Exchange (NSE)” is mischievous and a clear misrepresentation of the true reflections of the market in 2017. It was written on the morning of the first trading day in 2018 for a market that closed with 40% growth in performance. What could have been best? Even while the paragraph goes on to talk about the challenging environment for quoted companies, the question that comes to mind is – which companies then made the 40% growth possible? It is indeed disappointing that the narrative remained negative in tone.

    The Nation also wrote – “There are companies tagged in this report that are in the BLS category, which means that they are not fit to be listed on the exchange any longer and, therefore, investors must desist from transacting in their stocks”. This statement clearly demonstrates the lack of understanding of what Below Listing Standards means. For the companies mentioned, they have free float deficiencies – which means that the number of shares that should be in public domain is below the limit set by the exchange. So in the case of Union Bank, it applied to NSE in accordance with our rules and received our approval to cure this BLS.  Please note that you have misinformed the public by saying that investors should not buy from these companies. As a well read newspaper, you should be careful not to disseminate erroneous information that can create a panic amongst investors.

    On your reference to “some companies that have technically, and indeed practically, ceased to operate” still listed on the NSE, this again shows the inadequate understanding of happenings in our market.  Thomas Wyatt and Golden Guinea are currently undergoing a restructuring process. Last year, we started “Facts Behind the Restructuring” – where we bring these companies to meet with journalists, analysts and brokers to explain how they are restructuring the company and plan to return to good performance and full compliance with the rules of the exchange. This initiative demonstrates NSE’s resolve to assist struggling institutions to return to positive performance as against delisting, which is a measure taken only as a last resort and after careful consideration of all the circumstances. One would expect that you will fairly report this effort and not the unjust vilification of our institution.

    We take with open mind any criticism of our market actions as we believe that through such feedback, we can improve. We hold The Nation newspaper in high esteem and believe that it is one of the gold standards in the Nigerian media. This piece and its numerous misrepresentations are therefore surprising and highly unacceptable. We do hope that with the clarity provided, you will be able to correct the unfounded assumptions and misinformation.

    • Olumide Orojimi,

    Head, Corporate Communications,

    Nigerian Stock Exchange

  • Canon: Nigeria still largely untapped market

    Canon: Nigeria still largely untapped market

    For tech entrepreneurs, Nigeria remains destination of choice for equipment vendors because of her vibrant youthful population and huge market. The Regional Sales Director at Canon Middle East, Somesh Adukia, says in spite of the presence of so many original equipment manufacturers (OEMs) in the country, it is market still waiting to be explored. He spoke with LUCAS AJANAKU on the sideline of the launch of the firm’s range of printers in Lagos.

    Why is Canon deepening its presence in Nigeria?

    Nigeria is one of the largest African markets in terms of potential and GDP, and we feel it is an untapped territory in terms of its potential and growth. It is also an important market due to largest population allowing it to be a key market for Canon.

    But the country continues to grapple with several challenges, including infrastructure deficit. What is the attraction?

    Yes, every country has its challenges. And in spite of all these challenges you spoke about, Nigeria is an important hub in industrial and production printing segment, and has a thriving film industry – all of which Canon can support through our value added services. Our goal is to extend our services to the largest number of customers possible by being closer to them.

    Why has Canon decided to introduce these printers to the Nigerian market?

    The demand for cost effective office printers has significantly increased in Nigeria for offices where high yield printing is the norm. There has also been a boom in demand for home users who enjoy printing all their best photographs. With the Canon Pixma Series, our customers in Nigeria get to enjoy, efficient cost effective printing.

    What are the features of the Pixma G series printer, and how do they work?

    The G1400 is a single function printer, while the PIXMA G2400 and PIXMA G3400 & G4400 are all-in-one printers offering print, scan and copy functionalities. We are in an age where internet connectivity drives our day-to-day personal and professional lives.  The G series range are Wi-Fi enabled and offer printing without wires from a PC as well as smartphones or tablets, with full compatibility with Canon’s new print app. This Cloud printing let you send documents and photos to print from anywhere in the world, and remotely print from popular services including Instagram, Google Drive, Facebook, Dropbox and Flickr. For truly creative photo printing, the G series range are also compatible with Canon’s Easy-PhotoPrint+ and are accessible from tablets or a web browser, the software accesses your photos and lets you edit them before printing creative projects such as greeting cards or calendars.

    In the case of a malfunction or issue, what service is available to your customers in Nigeria?

    Earlier this year Canon Central and North Africa partnered with three service centers in Nigeria namely Ensure Services, Kontakt and Technology Distribution (TD). These service stations offer total after-sales product repair services in eight locations across Lagos, Abuja and Port Harcourt. The service centres will also support all B2C products including DSC, DSLR, professional video, OPP inkjet- and laser-printers, projectors and calculators.

     Nigerians tend to print high volume documents in fast succession. What is the printing speed and capacity of the Pixma G series printers?

    The printers have been designed to cater for customer’s needs, this is why each printer incorporates a durable FINE print head system for high quality prints at fast speeds, as well as technology that stops air penetrating the ink feeding tubes, ensuring reliability and stability when printing in high volumes. For prints with high levels of detail the 2pl, 4800x1200dpi print engine offers smooth gradations and fine detail, perfect for intricate documents or high-quality photographs. Each model in the range also prints borderless 4 x 6” photos in as little as 60 seconds.

    What innovation differentiates them from their competitors?

    The new printers all come with Canon’s My Image Garden software, which includes a range of applications including Creative Park. An exclusive software created by Canon that helps you print a variety personalised creations including cards, crafts and even high-detail paper arts, ranging from amateur to artisan professional crafters. Also the new compact refillable ink tank models combine an aesthetic design and ease of use. The four high-yield, front facing ink tanks are immediately visible, making it simple and fast to check ink levels, while the uniquely designed ink bottles make topping up a quick and mess-free task.

    The printers will be available at all Canon authorised dealers including, prominent e-commerce sites such as Jumia, Konga and Yudala.

  • SEC, IST partner to curb market infractions

    SEC, IST partner to curb market infractions

    Securities and Exchange Commission (SEC) has expressed readiness to partner with relevant bodies in its quest to ensure zero tolerance on infractions in Nigeria’s capital market and to ensure that perpetrators of fraudulent acts are brought to book.

    Acting Director General of SEC, Dr. Abdul Zubair stated this when the chairman and members of Investments and Securities Tribunal, IST, visited him in his office in Abuja.

    Zubair said the present management of SEC has zero tolerance on infractions adding that anyone that flouts the rules will be made to face the consequences of such actions.

    He told the IST team that the SEC has been embarking on a number of initiatives to protect the investors in the market and ensure that they reap the benefits of their investments.

    “ SEC has rolled out a number of initiatives and campaigns which have been yielding results. These initiatives are to ensure that investors are aware of what to do to protect their investments”,

    “ The e-dividend is one of such campaigns and we enjoin investors to key-in so that they can reap the benefits of their investments” he added.

    Speaking earlier, the Chairman of the Investment & Securities Tribunal (IST), Isaiah Idoko-Akor Congratulated the Acting DG on his assumption of office and expressed the confidence of the Tribunal in his ability to move the market forward.

    He commended the SEC for all it has been doing to support the Tribunal in the discharge of its duties and craved for more support to avoid hitches in the Tribunal carrying out its assignments.

    “IST is serving the market, it is very important to the market and  that is why we commend SEC for its support to the IST

    “ However, IST needs to be strengthened to be able to carry out its functions effectively.

  • FinTechs, banks in desperate battle for market control

    FinTechs, banks in desperate battle for market control

    Technology is rapidly reshaping financial services operations. Banks and Financial Technology (FinTech) companies have identified a shift in consumer behaviour towards digital channels. Rising acceptance of FinTech start-ups’ services by bank customers threatens lenders’ control of over N30 trillion assets and revenues in the banking sector. That dominance is changing as FinTechs begin to offer products and services previously exclusive to the banks. Many lenders are fighting to reclaim lost businesses by investing in technology. COLLINS NWEZE captures the ongoing digital disruption in the banking sector and what it means for operators and customers.

    Michael Phillips, 35, was leaving home for work when his smartphone beeped with a familiar Facebook message alert. It was another reminder for him to renew that month’s subscription for his DStv – pay-to-view cable service.

    His four-year-old daughter, Nancy, had reminded him the previous night that the subscription would be expiring that Monday morning. Two payment options came to his mind. The first was to renew the subscription through internet banking platform. The other option was to use the Paga network.

    Few minutes later, he opted for the Paga option, one of the Financial Technology (FinTech) firms and money transfer service provider. FinTech is the new technology and innovation that competes with traditional banking methods in the delivery of financial services.

    As little as the N100 transaction fee seems, it represents one of the millions of revenue leakages facing commercial banks daily. Paga now has over 7.5 million customers in just eight years of its operation.

    A few years ago, Phillips could not have imagined paying his bills online without going to the banking hall.

    Another bank customer, Lucy Osademe, chatted endlessly on her two mobile smart phones as she waited in a long queue within Ikeja to withdraw N10,000 at an Automated Teller Machine (ATM). Then the machine stopped dispensing cash; the long queue disappeared.

    Osademe decided to go into the banking hall where he met a longer queue. One hour later, a customer service officer announced a system downtime.

    “Please, the system is very slow. Kindly give us more time to process your transactions,” the officer pleaded. It took one hour before Osademe was paid.

    Yet, for the likes of Phillips, willing to leverage on the FinTech opportunities to settle their financial obligations, many, like Osademe, are frustrated by the poor quality of service they get from their banks. There are equally a larger number of customers who have lost confidence in the banks’ internet or mobile banking platforms.

    “Mobile payment is where the world is heading and Nigeria cannot afford to be left behind. We do not compete with the banks since our funds are saved with them. But, there are places where we clearly compete, and there are more places where we collaborate to do what we are doing,” Paga’s Co-Founder, Jay Alabraba, who has been in a rush since taking up the top job eight years ago, said during a chat at his Lagos office.

    The Paga chief insisted that change was needed because brick-and-mortar approach to banking is expensive and not accessible.

    He said: “Nigerian consumers are changing. They are getting busier with no time to waste. They want to get their services nearer to where they work or live. Shopping is becoming entertainment and recreation while the phone is becoming their most intimate relationship. That explains why we are stepping in.”

    As the banks and FinTech firms battle for the control of the more than N30 trillion banking assets and revenues in the financial sector as highlighted in the Central Bank of Nigeria’s (CBN’s) economic report for June, their customers are taking strategic decisions on which platforms to embrace.

    But, it is not just Paga that is making banks rethink their continued existence, since technology firms crept into some businesses traditionally meant for the lenders. Social media platforms, e-commerce providers, and mobile money services, technology payment firms have brought new twists to how banking is done.

    Managing Director, Cellulant Ghana, Albert Ngumba, said his firm facilitated payment for agricultural value-chain, helping Nigeria farmers to buy fertilisers, paying through Cellulant platform instead of banks. Famers can also perform financial transactions, including savings, transfers, loans, micro insurance using its platforms.

    “We sit between the banks, mobile operators and merchants. We power payment and make transactions easier for the people,” he said when contacted on telephone.

    “Our wallet account holders can now enjoy the convenience of ATM cards to take out money from a machine and buy products or services. They don’t have to carry cash because they can get it from almost any ATM machine and pay bills easily and quickly,” he added.

    Also, before the coming of Treasury Single Account (TSA), Nigeria’s notoriety in the public finance management brought the country to the state of near-economic-collapse.

    But today, Remita, an e-payment solution developed by SystemSpecs and adopted by the CBN for the payment and collections of funds for the Federal Government has turned the backbone of TSA implementation.

    The TSA consolidates all inflows from government agencies, using the Consolidated Revenue Account (CRA) at the CBN.

    Prior to the advent of Remita, commercial banks were responsible for the collection, processing and management of government revenues. The deployment of Remita has reduced government’s debt servicing costs, lowered liquidity reserve needs and boosted effective use of surplus cash.

    “Remita processes over $30 billion transactions every year, and that’s just within Nigeria,” SystemSpec’s Chief Executive Officer, John Obaro, said.

    Besides lowering the level of corruption, he said the TSA greatly exposes the emerging potential of FinTech industry in the country.

    Other platforms that have taken chunks of banks’ businesses and profitability are: Facebook, Twitter, LinkedIn, My Space, Tumblr, Instagram, Alibaba, Jumia, Konga, Supermart, Amazon, Square, Cellulant, Apple, Google, Visa and MasterCard.

    Companies, such as Uber, Taxify and Airbnb have equally developed radical business models that continue to surprise many institutions.

    Secure online payments systems, such as PayPal and mobile payments and transfer solutions, are changing the ways in which payments for goods and services are made. These firms are helping consumers to make payments, secure credits, and do things that banks consider impossible. They satisfy customers’ thirst for speed and variety, leaving banks struggling for customer loyalty.

    An Executive of the Research and Policy Department, Nigeria Deposit Insurance Corporation (NDIC), Kabir Katata, said digitisation has changed financial services landscape.

    To him, FinTech firms are latching on clear evidence that consumer behaviour and expectations of service and experience are changing.

    He said the take-off of e-commerce and emergence of fast-rising online outlets, such as Jumia, Konga and Supermart, are opening up new avenues for e-payments and data collection that were previously left for banks.

    Speaking at a media conference in Kano State, Katata described FinTech as a technologically-enabled innovation in financial services that could result in new business models, applications, processes or products with an associated material effect on the provision of financial services.

    He said: “Multiple technologies poised to drive the next wave of financial services are converging in maturity. FinTech threatens to disrupt financial markets with the banks taking the threats like the loss of control, the emergence of a non-regulated environment, market fragmentation, and loss of revenue—very seriously.”

    Katata disclosed that while many banks have been able to retain their customers through traditional channels and digital service offerings, recent shifts are threatening the customer base of those yet to key into it. Even long term banking relationships at traditional banks, he added, is susceptible to disruption.

    Managing Director, Nigeria Interbank Settlement System (NIBSS), Adebisi Shonubi, noted that transaction at banks’ branch transactions have dropped by 25 per cent in the last one year, as more customers embrace electronic payment.

    “Banking transactions are moving towards zero human interactions, saving cost and time for customers,” he said.

    A Senior Manager, Management Consulting, KPMG Nigeria, Bode Abifarin, disclosed that one-third of Nigeria’s population is below 24 years. The implication is that with a growing middle-class population, internet penetration and usage, which are the backbone of FinTech firms, the sector is set to grow significantly.

    Abifarin said: “KPMG survey shows that 77 per cent of Nigeria’s banking customers now use social media for personal purposes. The problem is that Nigeria’s banks have largely failed to translate this passion for the internet and social media into increased adoption of internet and mobile banking solutions and that is what FinTech firms are leveraging on.”

    Echoing him, Partner, Technology Advisory, KPMG in Nigeria, Boye Ademola, said that digital platform businesses are also leading a quiet revolution in Nigeria and indeed, Africa. Over the last 18 months, Jumia, an e-commerce platform and another Nigeria’s leading FinTech firm, attracted investments of $425 million and $250 million respectively. He said these firms are valued at over $1 billion each. “They both have footprints across Africa and are looking to become formidable platform businesses,” he stated.

    Even global financial institutions have seen the rising influence of FinTech firms.

    Speaking at the 2017 Annual Meetings of the International Monetary Fund/World Bank, IMF Managing Director, Ms. Christine Largade, acknowledged the rising excitement about FinTech.

    She said: “We cannot be sure, but we know that digital currencies, new models of financial intermediation, and artificial intelligence will change the way we do our job. Our key message is that it would be wise for central bankers and regulators to prepare for the potential benefits and challenges of FinTech,” she advised.

    Ms. Largade said that FinTech might provide solutions that respond to consumer needs for trust, security, privacy, and better services, change the competitive landscape, and affect regulation.

    She admitted that boundaries among service providers are blurring, barriers to entry changing and improvements in cross-border payments likely.

    SystemSpecs Executive Director, Deremi Atanda, said the rising influence of FinTech in banking is not a threat, but would improve banking penetration in key segments of the economy.

    He said that technology is key in realising the CBN’s financial inclusion plans.

    “If financial inclusion is about bringing people into the formal economy, then FinTech is making that happen and that can only boost economy. So, FinTech is accelerating the rate of economic growth by bringing more people into the financial system,” he said.

    Atanda, who spoke on the theme: “Regulatory concerns on risks: Challenges and the resulting impacts on FinTech adoption” at a financial inclusion conference in Lagos, said the introduction of FinTech cannot in anyway threaten banking services. Rather, it will compliment them.

    He said: “Well, I do not think the banks are jittery about FinTech roles in providing financial services. It is not an immediate threat in this immediate environment. At the end of the day, payment is cultural. And it must also be within context. And so, technology will always follow the ways and manners of people, even though it can be disruptive in nature.”

    The SystemSpecs’ director said lenders will have to leverage on infrastructure such as internet penetration, data, identity, which FinTech firms are trying to ramp up.  Atanda said: “It is not that FinTech is going to disrupt banking per say, the mix of it accelerates the growth, exchange of value, and boosts the economy in general.

    “The role we (FinTech) play is just as enablers and facilitators within a collaborative ecosystem, because one party cannot do it all alone. We are going to be working with regulators, banks and other financial service providers and generally everyone focused on seeing transactions thrive.”

    According to him, 70 per cent of FinTech transactions are centred around remittances and lending as they do not take deposits like commercial banks.

    Pointing out that it was not unusual to see regulators clash with FinTech innovators, Atanda said regulators must ensure that technology being adopted does not have unintended consequences that challenge what they saw in creating those things.

    The CBN Director in charge of Banking and Payments System Department, ‘Dipo Fatokun, said the demand for the services of FinTechs will continue to rise, even as they need commercial banks’ for them to operate effectively.

    He noted that the increasing roles of FinTech companies in the payment system will allow banks to focus more on their traditional role of financial intermediation.

    Fatokun predicted the rise in the need for collaboration between the FinTechs and banks, as none can displace the other.

    The CBN director explained that banks in developed world focus on their core functions and leaving other roles to service providers.

    Fatokun said: “FinTechs have always been in existence. It’s just that more prominence is being given to their roles. In some jurisdictions FinTechs are being allowed, or plans are under way to allow them connect to the central bank which, previously, was the exclusive preserve of the commercial banks.

    “The fear has always been there that FinTechs will take over the roles of the banks and that a time will come when there will be no bank. FinTechs are not licenced as financial institutions, they cannot take deposits. They can only facilitate payments or make it easier but the banks will still continue to play a very big role.

    “Banks provide hundreds of services outside of payments. They open Letters of Credit (LC), give out loans and you can only give loans if you take deposits. The banks provide guarantee, either an advance payment guarantee or a performance bond for contractors. For you to do that, you need to be a licenced financial institution.”

    According to him, FinTechs have played a complementary role for the baking industry and that have made it possible for banks to provide services at cheaper rates and expand their services to the grassroots.

    Konga said it has opportunity to create an operating system for e-commerce not only in Nigeria, but across Africa. It admitted that one needs heavy lifting and deep pockets to succeed in this business insisting that the entrepreneurial energy of Nigeria is greater than what Konga alone can do.

    Jumia is taking the local market very seriously, just as it has taken precautions to guide against fraud.

    It said the online retailer introduced cash-on delivery policy to ensure that customers match request with product quality.

    But, Board Chairman, Parkway Projects, owners of ReadyCash Mobile Money, Richard Obire, explained that three parties are involved when mobile money transaction takes place.

    The banks, telecom operators and the mobile money operator are all involved, sharing the fee that come with the transaction.

    Obire, who was former Executive Director, Keystone Bank, said the cash involved in the transaction sits in the bank, although represented by electronic wallet.

    He said the coming of mobile money is not totally taking away business from the banks, but is helping the lenders to tap into the unbanked market.

    “The entire banking system is an ecosystem where the players are given roles to play. Such roles including banking the unbanked through mobile money will deepen the financial system,” he said.

     

    Banks fight back with innovation, collaboration

    As banks’ revenues fall, the lenders are looking at areas to bridge the gaps. There is the zeal to raise cheap funds, finance power sector projects, mortgage, agricultural and educational businesses.

    Some banks have also gone into Facebook banking, social lending and partnership with global payment and technology firms.

    Wema Bank’s Deputy Managing Director Ademola Adebiose said his bank is playing big in the digital space, where lies the future of banking. He said the mid-tier lender introduced Alat, a fully digital platform, to enable it capture the grassroots customers and the youths. Adebise said: “Digital banking is becoming more attractive to banks and their customers. It is catching the attention of everyone thinking of speed, efficiency and cost saving in banking.”

    He explained that the lender had reviewed its marketing strategy, and made huge investments in the digital space. The Alat platform, he said, has over 100,000 customers, mostly the youths.

    According to him, WemaBank is collaborating, not competing, with FinTech firms.

    Adebise said: “I think we should see it as how do we build an eco-system. Yes, I have my customers. The FinTechs have their products. They will need to access my customers and we need to collaborate.

    “It is not an issue of whether they are taking over or not. And mind you, the business of banking is regulated. The CBN is charged with the responsibility of regulation. But we cannot rule out the threat presented by FinTech and any forward looking organisation or bank must identify the areas of collaboration to build the ecosystem. You cannot be competent on everything.”

    Besides, FirstBank, Fidelity and Union banks have partnered with PayPal to enhance online payment for shoppers. The partnership enables the lenders’ customers to register for a PayPal account from their internet-banking accounts.

    By linking their-issued debit, prepaid or credit cards to their new PayPal account, customers can then shop and pay on millions of websites around the world from their personal computers, tablets or smartphones, without having to share financial information with the seller.

    Fidelity Bank Chief Executive Officer, Nnamdi Okonkwo, described the introduction of PayPal as a deliberate attempt by the bank to make financial services easy and accessible to its customers.

    Specifically, he said that the development is in line with the bank’s commitment to consistently deploy innovative strategies to make life easier for its customers.

    Aside partnership with payment firms, some banks have also developed products that are technology-driven. The GTBank Instant, First Instant and Sterling Social Lender accounts were built by GTBank, FirstBank and Sterling Bank respectively to enhance social banking.

    Here, customers can open accounts online, and that creates convenience for them.

    For instance, Sterling Bank’s Social Lender Account allows it to grant loans to customers on Facebook. It provides a platform for online fans, followers who are customers of the bank to obtain micro-credit loans via social media starting with Facebook and Twitter.

    The bank said approval of the loan happens within 10 minutes, and that borrowers can make the request online and get their accounts credited with the fund.

    It explained that although it started with N3, 000 for borrowers, the amount will gradually rise, and is targeted at customers with urgent cash need.

    Adaku Obi, a customer who benefitted from the loan narrated her experience: “While going to Yaba some days ago, I had no cash in my wallet. I needed cash badly. My cheque book was not even with me. I couldn’t find my bank branch around because I wasn’t familiar with the area.

    “So, I tweeted at the handle of my bank. The response was swift. In 10 minutes, my account was credited with N3, 000 short term credit. That is how interesting banking has become.”

    Access Bank Plc, Visa and shoptomydoor.com, an online shipping company are collaborating to give Visa cardholders opportunity to shop online at retailers in the United States (U.S.), United Kingdom (UK) and China. Such customers, the bank’s Executive Director, Personal Banking, Victor Etuokwu, said, will also enjoy exclusive shipping discounts and shop from the world’s major international retailers with more flexibility and convenience.

     

    Stakeholders speak

    Financial pundits believe that banks do not fear other lenders but the start-up in a bedroom. Managing Director, CRC Credit Bureau Limited, Tunde Popoola, said deepening the financial landscape creates room for new players to emerge.

    Popoola said: “When the financial system is deepened, the banking industry will be the ultimate gainers. The good thing is that people now have more choices to make. It is only banks that key into the new opportunities that will benefit.

    “But, if they are able to innovate, and device ways of seeing their customers not necessarily coming to the banking halls, but getting the services they need wherever they are, then, they will be the gainer at the end of the day. Lenders that are unable to get to their customers through some of these forms and processes will lose the market.

    “Organisations such as Paga, Cellulant, are all part of what we are expecting. More of them will come. We have those who are in the telephone territory. There are those in the credit card territory and they are not formal banks. These are the things that will become the formal feature of our economy.”

     

    Connecting past with future

    White Sapphire’s Chief Executive Officer Biyi Fashoyin said it is not just the banks that need to innovate, the world itself is now a global village, and the social media is a community by itself.

    Fashoyin said: “Any corporate entity that ignores the social media and technology is just on its own peril. Everybody now is now on social media, including the kids. Any wise bank will know that’s where the market is. It is a ready market.

    “The industrial revolution came at a time. Europe, America and some other countries took part. Some other countries especially in Africa stayed back. Eventually those that participated became the global powers. Those that abstained were labeled third or fourth world countries.

    “That is exactly what is going to happen to the business world. Any bank that is stepping back now, running away from the current realities which reside in the social media space, or the virtual world, will soon be out of business.

    “My advice is that every bank should come in and plug into it. That’s where your market is. That’s where your future is. Your future is actually in the social media,” he said. Fashoyin, who is a social media adviser, admitted that the platform has become a place for the good, the bad and ugly.

     

    Global trends

    At the international level, FinTech firms are among global business leaders. Alibaba Group Holding Limited, a retail and technology conglomerate provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals and electronic payment services.

    As of last month, Alibaba’s market capitalisation stood at $486.27 billion. It is one of the top 10 most valuable and biggest firms in the world.

    PayPal’s services allow people to make financial transactions online by transferring funds electronically between individuals and businesses. Through PayPal, users can send or receive payments for online auctions on websites like eBay, purchase or sell goods and services, or donate money or receive donations.

    Amazon, has 230 million accounts, and dominates online shopping.  The tech giant is the largest Internet retailer in the world measured by revenue and market capitalisation, and second largest after Alibaba Group in terms of total sales.

    The PricewaterhouseCoopers (PwC) 2017 digital banking survey found that 46 per cent of customers skipped bank branches altogether, relying instead on smartphones, tablets, and other online applications.

    U.S. Financial Services, Industry Leader, Neil Dhar, writing in this month’s edition of the PwC Financial Services report titled: Digital Transformation in Financial Services, said both wholesale and retail users now expect a digital experience from their financial institutions.

    Dhar said: “It is about differentiated customer experience, providing what customers want, when they want it, and how they want it, whether you are a bank, insurer, or asset manager.

    “This is not just a matter of cosmetics. Banks need to change their back-end operations to support it. And they will need to think differently about how to solve problems because technology is not a silver bullet.”

     

    Stakeholders proffer solutions

    Wema Bank Executive Director of Retail & North Directorate, Moruf Oseni, advised banks to take steps that would enable them meet customers’ needs better.  He said that customers should be given a priority in designing banking products and services.

    Oseni advised: “Banks must become customer-centric because the disruption in the banking industry is real. There are two ways to react to it. Its either we sit down and wait to be protected by the regulators or work with the ecosystem to build the future of banking.”

    On competition in the industry, he said: “Competition in the e-payment space is stiff. Bank to bank competition is not even as deadly as FinTech startups-bank competition. Any bank that is not innovative in the times we live in will die a natural death.”

    Ms. Largade advised regulatory authorities to balance carefully, efficiency and stability trade-offs in the face of rapid changes, and ensure that trust is maintained in an evolving financial system.

    She urged the authorities to calibrate regulation in a manner that appropriately addresses the risks presented by FinTech firms without stifling innovation.

    In the days and years ahead, the big question will not be whether FinTechs have come to disrupt or complement banking operations, but which of the sectors controls the over N30 trillion assets and revenues that define Nigeria’s financial sector as a leader in the sub-regional banking businesses. The market will always favour operators that meet customers’ demand for speed, efficiency and security, in the delivery of financial services.

    In a report by Ernst & Young (EY) entitled: “Unleashing the potential of FinTech in banking”, the multinational professional services firm, advised banks to determine how best to engage with FinTechs, given the contrasting sizes and cultures of their respective organisations. FinTechs also need to know how best to approach and navigate their way through banks.

    EY said the most successful banks will be those that improve speed and reduce costs by collaborating with a range of different partners in building the strongest network.

    To achieve the future state, the banks must unleash the FinTech potential in their own organisations – and both must forge ahead to get better to successfully drive innovation. There is no alternative to this collaboration to stay in business.

     

  • Lagos to fix Ladipo market link roads

    The Lagos State Government has said it would fix the link roads in Ladipo market to ensure free flow of traffic in the area.

    Deputy Director, Ministry of Works and Infrastructure, Mr. Sina Thorpe in a statement yesterday, said the government had decided to rehabilitate and upgrade the roads to a dual carriage way.

    He said the government realised the economic value of the area, which is a 2.87km road, connecting Agege motor road to Apapa Oshodi Expressway service lane at Toyota Bus stop.

    Thorpe, in his response to a report in a paper about traders lamenting the state of roads in the area, said the government was also rehabilitating and upgrading Alhaja Akinwunmi Street, which connects Ladipo Street to Apapa Oshodi Expressway at Five Star Bus stop; Obagun road, which links Badejo Kalejaiye street with Fatai Atere Way and also connects Ladipo Street with Agege Motor Road.

    He added: “To ensure the interconnectivity to the network of roads and ease traffic in the corridors, part of the ongoing expansion and upgrading of the Oshodi International Airport Road would see the provision of a U-Turn ramped bridge to serve the motorists in the area.”

    He urged road users and commuters along the corridors to cooperate with the contractor in order to speedily deliver the road projects as scheduled, while mindful of their present albeit temporary discomfort.