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How is eTranzact faring one year after its 2018 fraud scandal? 

Many Nigerians were shocked by the news that the CBN had ordered the immediate removal of some key directors of eTranzact International.



How is eTranzact faring one year after its 2018 fraud scandal? 

Sometime in May 2018, many Nigerians were shocked by the news that the Central Bank of Nigeria (CBN) had ordered the immediate removal of some key directors of eTranzact International Plc, alongside the company’s then Chief Executive Officer, Valentine Obi. This was due to an alleged N11 billion fraud which occurred on one of the company’s platforms and involved three other principal players namely: Smartmicro Systems Limited, Delta State Government, and First Bank of Nigeria Limited.

As you can expect, a scandal of this magnitude had serious negative impact on the ICT Company’s public image, which invariably affected its business operations and financials. It has been over a year since the alleged fraud and the consequent investigations, board reshuffling, and damage control measures. So, on this week’s Nairametrics company profile, we examine how the company is faring now. And as is our tradition, we shall also be examining the company’s business model, its target market, ownership structure, competitors, and most especially, its overall financial performance.

How is eTranzact faring one year after its 2018 fraud scandal? 

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Corporate information about eTranzact International Plc

Initially incorporated as a Limited Liability Company in 2003, eTranzact International Plc is a Nigerian tech firm which provides payment solutions. It became a public company in 2019, the same year it was listed on the Nigerian Stock Exchange (NSE), specifically on August 7th eTranzact International Plc is one of Nigeria’s six listed ICT firms. With its market capitalisation of N9.9 billion, it is also the most capitalised.


The company’s business model and target audience

eTranzact International Plc is a dominant player in the Nigerian electronic payment ecosystem. Some of its services include payment processing, Point of Sale (POS), and training services. The company has tech solutions for players in various sectors of the economy including banking, education, the financial market, travel and transportation, telecommunications, and public administrations. Some of the company’s most notable products include:

  • BankIT
  • CorporatePay
  • ATM Cardlex Cash
  • eTranzact Strong Authentication
  • Pocketmoni
  • MobileTopUp
  • Payoutlet, etc

The company does not operate in Nigeria alone, it also has operations in Ghana, Kenya, Zimbabwe, Cote d’Ivoire, and even UK. Information available on its website says that it is, “currently expanding operations to more and more countries in the world.”

The company’s ownership structure

According to information contained in eTranzact International Plc’s full-year 2018 financial result, the company is majorly owned by eTranzact Global, with 50.33% shareholdings. The rest of the shareholdings are, “held by a diverse group of shareholders, including institutional investors.”

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A look at the competition

As earlier mentioned, there are six other IT companies that are listed on the Nigerian Stock Exchange, asides eTranzact International Plc. These companies are Courteville Business Solutions Plc, CHAMS Plc, CWG Plc, NCR Nigeria Plc, OMATEK Ventures Plc, and Tripple Gee and Company Plc. While each of these companies renders unique services they, their interests often conflict in terms of market audience. This creates competition.

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Besides the listed companies, there are a number of other emerging payment solutions companies that also pose competitive challenge to eTranzact International Plc. Two good examples of such companies readily come to mind: Paystack and Flutterwave.

While competition understandably remains a major challenge facing the company, it is not the only problem it has faced recently. For instance, the aforementioned 2018 fraud scandal combined with other factors led the company to record a loss after tax of N3.1 billion in full-year 2018. To understand how this happened, let us go back to the story for a moment.

[READ ALSO: Konga’s Sim Shagaya reignites e-commerce war as he reacts to Jumia’s scandal]

More on the 2018 fraud scandal

The whole scandal began on March 8th 2018 when First Bank of Nigeria Limited reported an N11.49 million fraud to the Central Bank of Nigeria. This fraud allegedly occurred on eTranzact’s Fundgate platform and involved Smart Micro Systems Limited, a merchant onboard the platform.

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How is eTranzact faring one year after its 2018 fraud scandal? 

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How it all began

Smart Micro Systems Limited approached eTranzact to help deploy a bulk purchase solution which would facilitate payments to Delta State employees. Additionally, the company allegedly configured an additional outbound fund transfer solution which required Smart Micro to maintain a pre-funded settlement account with a first-generation bank for settlement.

In March 2018, First Bank of Nigeria Limited informed eTranzact that the settlement account was in debit to the tune of N11.49 billion. That same March, the Managing Director of Smart Micro Systems Limited, Michael Obasuyi, wrote a petition to the Economic and Financial Crimes Commission (EFCC) against eTranzact. In a twist of events, eTranzact also wrote a counter-petition against Smartmicro Systems Limited. All these led to an investigation by the EFCC, which implicated Michael Obasuyi. He was then arrested for alleged cybercrime and money laundering.

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Nigeria’s apex bank also ordered the removal of the company’s CEO, two directors and others. This, the company later explained in its financial report, was not because these individuals were a party to the alleged crimes. Instead, they had to go because the alleged crime happened under their watch.

How the scandal affected the company’s financials

eTranzact International Plc recorded a loss after tax of N3.1 billion for the 2018 financial year, as against N208 million profit after tax made in 2017. This was largely due to a spike in operating and administrative expenses. For instance, administrative cost for the period stood at N2.3 billion, as against N1.6 billion in 2017.

The company also had to make provision for the N11.49 billion fraud case it found itself immersed in. Below is how the company summarised how much it expended in this regard, according to information it provided on page 20 of its 2018 financial results.

“…This relates to provision for Fraud Assets in relation to a portion of the N11.49 billion fraud reported by First Bank of Nigeria Limited (FBN) on March 8th, 2018, involving Smart Micro Systems Limited (SM), a merchant on-board to the eTranzact Fungate platform as an aggregator for Micro Finance Banks. As directed by the Central Bank of Nigeria (CBN) in a letter issued on Match 13 2019 the net liability was shared equally between eTranzact International Plc and First Bank of Nigeria Ltd at N5.75 billion each. Also, the sum of N5.95 billion recovered from Smart Micro System Limited was shared equally and used to reduce the impact of the liability.”

[READ FURTHER: FAAN in recruitment scandal as politicians hijack process]

How has the company performed so far in 2019?

For its H1 2019 financial results, eTranzact International Plc reported a profit after tax of N96 million, against a loss after tax of N231.8 million during the comparable period in 2018. Revenue also jumped to N6.4 billion in H1 2019, compared to N4.2 billion in H1 2018. Administrative expenses reduced to N470.9 million, compared to N600.3 million in H1 2018. All these are indicative of the possibility that the company may record positive performance at the end of full-year 2019, compared to 2018.

However, eTranzact International Plc needs to do more to clean up its image, especially as it pertains to corporate governance lapses on its part. Its shares are currently below listing standard (BLS) with just 10.06% free float. Note that the Nigerian Stock Exchange requires companies on its main board to have a free float of 20%, while those on ASEM are required to have a 15% free float.



Emmanuel is a professional writer and business journalist, with interests covering Banking & Finance, Mergers and Acquisitions, Corporate Profiles, Brand Communication, Fintech, and MSMEs.He initially joined Nairametrics as an all-round Business Analyst, but later began focusing on and covering the financial services sector. He has also held various leadership roles, including Senior Editor, QAQC Lead, and Deputy Managing Editor.Emmanuel holds an M.Sc in International Relations from the University of Ibadan, graduating with Distinction. He also graduated with a Second Class Honours (Upper Division) from the Department of Philosophy & Logic, University of Ibadan.If you have a scoop for him, you may contact him via his email- [email protected] You may also contact him through various social media platforms, preferably LinkedIn and Twitter.

1 Comment

1 Comment

  1. Jagaban

    November 2, 2019 at 1:12 pm

    So you mean the Central Bank of Nigeria, Delta State, First Bank, eTranzact, Smart Micro Systems Limited, Pricewaterhouse Coopers, Ernest and Young, and the EFCC cannot categorically explain/unravel the fraud after an entire year? How and who stole what and when??

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Downstream players suffer revenue declines due to Covid-19, forex, fuel subsidy

2020 has no doubt been one of the most challenging years for players in the oil and gas downstream sector, having to deal with several issues.



Nigeria’s downstream oil and gas players are in the midst of one of the lowest revenue declines in their history of operations. In an industry used to the highs and lows of economic and commodity price cycles, 2020 poses one of the greatest challenges to oil and gas companies.

Total Plc, 11 Plc, MRS, Ardova and Conoil are some of the major downstream players (all quoted) that have suffered revenue declines and margin drops in one of the worst years in modern history.

READ: Aviation: Nigerian ground handling firms count revenue losses due to pandemic-induced plunge

  • Conoil Plc, one of the major downstream players reported its 2020 9 months results revealing revenue declined 21.84% YoY t0 N88.1 billion.
  • 11Plc, another major player in the sector, also saw its topline revenues plummet from N141.5 billion in the first 9 months of 2019 to N114.7 billion in the corresponding period in 2020.
  • Total Nigeria Plc, one of the largest players in the downstream sector also recorded declining revenues. In 2019 it reported total sales of N181.6 billion compared to N117.3 billion in 2019. The 35% drop was the largest of the lot.
  • The only outlier of the lot was Ardova Petroleum which somehow managed to record revenue growth with 2020 9 months revenue rising to N116 billion compared to N110.7 billion same period the year before.

READ: Nigeria’s 5,000 BPD refinery will produce 271 million liters of petrol every year

In general, revenues for the major oil and gas downstream players in the country fell by a whopping 21% from N646.8 billion in 2019 (9M) to N514.2 billion in the corresponding period in 2020. What is to blame for these declines? Covid-19!


The Covid-19 pandemic triggered a nationwide lockdown for most of 2020 that has negatively impacted demand for petroleum products across the country. The lockdown has grossly affected volumes for downstream oil and gas companies hitting their margins and profitability.

READ: Why listing of oil companies will stimulate industry growth – NCDMB

Businesses across the country such as manufacturers, airlines, restaurants, schools, the transportation sector and motor vehicle owners have all reduced their demand for fossil fuel.

The downstream sector has also struggled to take advantage of the drop in oil prices as they still need to deal with the multiple devaluation of the naira and being able to gain access to foreign exchange. Their inability to access the forex market leaves them with little choice but to continue to rely on NNPC, the sole importer of petroleum products for their inventories.

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READ: Jitters as Nigerian banks brace up for more loan provisioning

In a recent comment, the Chairman of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Mrs. Winifred Akpani, lamented that “the inability to source FOREX from the official CBN FOREX window by independent marketers is continually hindering the effectiveness of the principles of DEMAND and SUPPLY market forces to correct the current inefficiencies in the pricing mechanisms adopted in the deregulation process.”

Mrs. Akpani also explained that inability of marketers to source FOREX creates a situation which can be described as “pseudo subsidy” in the market, suggesting that being forced to sell petroleum products at fixed prices means they cannot recover their importation cost, most of which is paid for in US dollars.

READ: FG gives reason oil marketers are not yet importing petrol, stops monthly price fixing

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This is further exacerbated by the fact that the federal government regulates pricing irrespective of the unique operating costs of these private oil companies. Also, being the sole importer of petroleum products means the NNPC will likely pass on inefficiencies in managing cost to petroleum marketers, eliminating any chances of efficient pricing that can be obtained from increased competition. The effects of these are low profit margins and ‘never-shifting’ revenue positions, except for exceptional cases.

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READ: Has petroleum product deregulation finally come to roost?

Last December, the Federal Government revealed it was ending its subsidy programme, increasing fuel to reflect its market cost. However, it balked after pressure from the labour unions, reducing prices without recourse to sector players.

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Despite these challenges, the sector will likely eke out some profits largely due to cost cutting initiatives and income from ancillary businesses. However, dividend payment might be a challenge as it will be advisable for these companies to set aside cash for what could be a pivotal year.

READ: Nigeria to import petroleum products from Niger Republic, sign MoU on transportation, storage

The Petroleum Industry Bill (PIB) will likely be signed into law this year and will produce new investment opportunities for the downstream sector if things go as planned. The government will likely relinquish its hold on the sector and fully deregulate the downstream before the end of the year.

When it does, those with a strong balance sheet will be winners.

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Notore Chemicals is swimming in debts – company to access equity market in Q2 2021

Notore is swimming in debts and this will stifle any chances of profitability at least in the short to medium term.



The story of Nigeria’s 24-year privatisation journey cannot be complete without mentioning the National Fertilizer Company of Nigeria (NAFCON), established in 1981 to produce and sell fertilizer.

The company began fertilizer production 6 years after it was incorporated, followed by years of mismanagement and corruption which forced the company to shut down 11 years later in 1999. The company resurrected again in 2005 following its privatisation, resulting in a sale of $152 million to new owners and then rebranding itself to Notore Chemicals.

READ: Agriculture: AfDB to invest $25 billion in Nigeria, Senegal, 3 others

Today, the company manufactures, treats, processes, produces, supplies, and deals in nitrogenous fertilizer and all substances suited to improving the fertility of soil and water. The Company has a 500,000 metric tonne Urea Plant in Onne, Rivers State, Nigeria, generating circa N18.7 billion (2019: N21.4 billion) in revenues as reported in its 2020 audited accounts for the period ended September 30, 2020.

In 2020, the company embarked on a massive Turn Around Maintenance (TAM) programme for its plants, which it targets will help boost its production levels to 500,000MT nameplate design capacity. The company further claims that 70% of the revenue earned from the operation of the plant post TAM filter into its bottom line, hence boosting profitability.


READ: FG announce registration of 5 million farmers for fertilizer subsidy

The importance of its TAM cannot be overemphasized. Notore earns 97% of its revenues from fertilizer sale of Urea and other chemicals. About 17% of the revenues are generated from export, thus the potential is there to improve sales and perhaps bottom line locally and within Africa.

But to achieve its TAM plans, Notore has doubled down on its debt binge. Total borrowing for the year spiked from N79.9 billion in 2019 to N108.3 billion in 2020. Whilst most of the loans came from new loans, the rest was due to a devaluation. Notore is swimming in debts and this will stifle any chances of profitability at least in the short to medium term.

READ: Dangote’s world biggest fertilizer plant starts production in February next year

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Out of its N108 billion loan, it owes Afrexim $38 million (N14.75b); $5.1 million is due within a year as it reported in its audited financial statements. The dollar facility came at a steep 12.7% interest rate and is repayable over 84 months (7 years). There is also another $72.86 million (N29.08b) facility, out of which $5.85 million is due this year – also at an interest rate of 12.7%.

Thus, the company will have to find at least a whopping $10.9 million (excluding interest rates) to fund all its external loan obligations that fall due in one year. How it intends to achieve it this year is anyone’s guess.

READ: Egbin Power Plant generated the highest total energy output in Q1 2020, 14.82%

Another N16.79 billion are BOI-CBN loans obtained at concessionary rates of about 7%, add commercial bank loans of N44.46 billion at an interest rate of 23%, you start to understand how much debt the company is swimming in. These are unsustainable figures and is weighing down negatively on its balance sheets and profitability.

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Interest on loans is now the company’s highest cost driver coming at N23.4 billion last year alone, topping cost of sales and operating expenses of N21.6 billion and N5.9 billion, respectively. In fact, finance cost was higher than revenue in 2020.

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READ: Taraba to get free economic zone – NEPZA

Notore recognizes this challenge and restructured some of its loans in 2020. There are also plans to raise capital in 2021 through a rights issue or public offer. Whilst that seems like a plausible route to go this year, the size of equity it will require will depend on its share price and how far it wishes to go in terms of being diluted.

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At the current price of N62.5 per share, it will have to sell equity worth half its market capitalization of N100b to pay down just 50% of the debt. This will be a significantly expensive offer for potential investors considering that it has negative retained earnings of N29.1 billion and is unlikely to return to profitability anytime soon.

READ: Food and agriculture market in Africa to rise above $1 trillion by 2030 – AfDB President

The company can, however, take solace in the fact that its outlook for its mainstay, Fertilizer, is brighter than its capital structure woes. Nigeria needs fertilizer if its to expand its Agriculture revolution plans. As the company stated “the consumption of fertilizer per hectare of arable land in Nigeria is still far below the 200kg per hectare recommended by the Food and Agriculture Organization,” buttressing the potential to grow topline. Export opportunities also exist especially with the start of the African Continental Free Trade Agreement.

Notore only needs to find a better way of financing its TAM programme and it cannot be sustained with the current capital structure.

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Nestle Nigeria must achieve consistency in its principal market segment

Nestle Nigeria Plc is well aware of the areas they need to scale up efforts and must immediately devise strategies to do that.



Why Nestle Nigeria’s return remains strong - EFG Hermes, Nestle Nigeria Plc appoints new Director, Nestle Plc: FY 2019 Revenue beats estimate; but profit underperforms, GTB, Zenith Bank, & Nestle emerge as Renaissance Capital’s top stock picks, Nestlé’s parent company acquires additional shares worth ₦300 million

The consequence of the pandemic on a company like Nestle Nigeria plc is that despite huge efforts to improve revenues, a higher rate of increase in key costs will erode earnings.

Nestle is a worldwide brand with a distinct reputation and has been a strong pillar of growth for over 6 decades, producing a range of high-quality iconic brands including Milo, Maggi, Golden Morn, and Nescafé, amongst others.

The consumer goods giant has a presence in over 22 African countries and has operated with a customized strategy tailored to the locality they inhabit, depending on its peculiarities.

It uses local ingredients and other technologies that resonate with the local environment and gives autonomy to its local branches based in different countries to make pricing and distribution decisions.

This focused strategy has hitherto harvested results and steady improvements until 2020, at least not so much anyway.


Revenue grew by 3.3% y/y in Q3’20, thanks to improvements in the sales of Beverages – one of Nestle Nigeria’s operating segment, the other being Foods.

Beverage segment as at Q3’2020 improved 12.3% y/y from external revenues, whilst Food segment suffered a 6.4% decline within the same period.

Ironically, the Food segment (particularly Maggi) is dubbed Nestlé Nigeria’s frontier product and biggest market. However, this is where Nestle has faced its toughest competition in recent times from Unilever, Cadbury and many others.

Indeed, the consumer goods industry is one of Nigeria’s finest and competitive, where companies go toe-for-toe for market share and product. Unilever recorded a 25.1% Q-o-Q surge in turnover from its Food segment at the end of Q3’2020. Nestle Nigeria on the other hand, suffered 16.1% decline.

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This data automatically confirms the conclusion that Unilever Nigeria Plc directly wrestled this market share primarily from Nestle and a little more from others.

Whilst this may be concerning, it doesn’t suggest any immediate doom for Nestle Nigeria. This is because in the last few years, Nestle Nigeria, to its own fault, has failed to nail down any sort of consistency in its Food segment.

Lose some percentage of market share today, gain some more next quarter and lose some again and just like that. Following this pattern, it is expected that by the release of Q4 results, Nestle may have recovered its 16%. It all depends on how successful the management strategy pans out and if their topsy-turvy progress pattern plays out again, we’ll just have to wait and see.

Nestle is an international brand, a Swiss multinational food and beverage company with over 447 factories across 194 countries and employs around 333,000 people. The company’s strategy has been to enter emerging markets early and strongly before its competitors, investing in people and structures to build a substantial customer base by selling products that suit the local population.

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Nestle Nigeria plc in line with this vision, made increased investments in its personnel. This is observed in the 11.8% increase in salary and wages and other welfare and personnel expenses.

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In terms of making further investments in structures, in this decade alone, Nestle established its Milo RTD (Ready to Drink) factory and made significant improvements to its ultra-modern distribution centre in Agbara, Ogun state – the Agbara Manufacturing Complex is one of Nestlé’s biggest factories in Africa.

The profit before tax for Nestle Nigeria plc in Q3 2020 was 4.5% less than its feat last year, even though it still closed the quarter with a strong profit position. The extra expenditure incurred on salary, wages and personnel haven’t done much to help its cause just yet.

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However, this wasn’t what was solely responsible for their failure to translate improved revenue position to bottom-line growth. The increase in the cost of sales is a culprit.

Nestle allowed an 8.5% increase in its cost of sales position. Analysts have implied this increase resulted from Nigeria’s weakened currency and inflationary pressures. Whatever the case, what is not in doubt is that Nestle Nigeria Plc is well aware of the areas they need to scale up efforts and must immediately devise strategies to do that.

Bottom line

Maggi sales have, hitherto, been their oil-well. The consumer goods giants must ensure to reclaim market share in this segment and maintain consistency and dominance over time.

Furthermore, in Chile, the Philippines, Mexico and various countries where Nestle hold significant share of the market; there is this practise where, as the income level rises in each niche market, Nestlé introduces an upscale version of the same brand to increase its profit level.

This strategy could be borrowed by Nestle Nigeria if the Beverage segment continues its present super-impressive form. Finally, it goes without saying that costs must now be carefully monitored, especially in generating sales.

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