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Business News

Airtel partners with Ecobank to offer loan and other services to Airtel users

Airtel Africa, will soon be able to request for loan from Ecobank after the network provider and the lender reached an agreement.

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Raghunath Mandava, Airtel Africa, Airtel to pay shareholders that hold shares on the NSE dividend at N386/$1

Customers of telecommunication company, Airtel Africa, will soon be able to request for loan from Ecobank after the network provider and the lender reached an agreement. Such partnership is not the first of its kind as Diamond Bank (now Access Bank) and MTN Nigeria also have a partnership.

The partnership between Airtel Africa and Ecobank Transnational Incorporation (ETI) is for the network provider’s Airtel Money service which the company is also planning to offer in Nigeria after the Central Bank of Nigeria (CBN) approved the operation of the telecoms firm as a mobile money operator. MTN Nigeria has already started its Mobile Money service in Nigeria, called MoMo.

According to a statement on the Nigerian Stock Exchange (NSE), which was seen by Nairametrics, the partnership is still subject to regulatory approval. This partnership opens both companies to a wider audience as Airtel Africa currently operates in 14 countries, while Ecobank operates in 33 countries across Africa as well.

Why this matter: The deal is expected to create more access to financial opportunities for those in need of capital, and also provides a payment platform for both companies’ customers. In Nigeria alone, Airtel has about 47.7 million users. Although, the customer size of Ecobank in Nigeria is not publicly stated, the lender is spread across a number of locations across Africa, while Airtel has aa large customer base across Africa as well.

[READ ALSO: Here’s why Glo users will no longer be able to call Airtel lines again]

Aside the access to funds, the partnership will enable the customers perform various mobile transaction between them, including product savings, international and domestic transfers. It was also stated that Ecobank account holders will be able to make bulk disbursements, such as payroll payments, directly into Airtel Money customer wallets. Also, Ecobank will issue both virtual and physical debit and pre-paid cards to Airtel Money customers.

Partnership douse fear of bank future: The partnership comes at a period banks are being tipped to lose their position and customers in banking to Fintech companies. The partnership between Airtel and Ecobank shows that two organisations cannot do without the other if the CBN is to deepen financial inclusion within the country.

Ade Ayeyemi

The future of banks have been wavering amidst the advancement of technology. Technology has expanded the service of banks beyond the grip of lenders, and other non-banking players have begun to spring up to cater to the underbanked or unbanked across Nigeria. But regardless of the job loss projected to happen in the next two to three years, banks and network providers – who are driving the next set of Fintech – need each other if they are to catch up or remain on the heels of technology advancement.

Speaking on the partnership, the Chief Executive Officer of Airtel Africa, Raghunath Mandava, said, “This partnership is a further demonstration of Airtel Africa’s commitment to provide affordable, simple and innovative solutions for our customers across Africa. We will continue to offer locally relevant M-Commerce solutions with partners like Ecobank in order to enhance the daily lives of our customers.”

Meanwhile, the CEO of Ecobank, Ade Ayeyemi, said, “We believe that financial inclusion can ultimately contribute to economic development, collaborating with major telecommunications providers in Africa is therefore a key strategic driver towards closing the gap between the banked and the unbanked.

“Hence, this partnership with Airtel Africa which makes Ecobank financial services available to any Airtel line registered on Airtel Money. In our markets where regulatory approvals are in place. This potential exensive reach will further provide convenience to customers, intra-country and particularly for cross-border transactions and remittances across Africa.” Ayeyemi concluded.

[READ ALSO: Airtel Nigeria tried to be funny, but it backfired fast]

Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: [email protected]

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Obituaries

BREAKING: Former minister and senator, Aisha Al-Hassan is dead

Ex-Women Affairs minister, Aisha Jummai Al-Hassan, popularly known as Mama Taraba is dead

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A former Minister for Women Affairs and ex-Governorship Candidate in Taraba State, Aisha Jummai Al-Hassan, popularly known as Mama Taraba is dead.

According to media reports she died in a hospital on Friday in Cairo, Egypt at the age of 61.

Al-Hassan, who was a former senator of the Federal Republic of Nigeria from Taraba North Senatorial District, was the All Progressive Congress (APC) Governorship Candidate for Taraba in the 2015 general elections.

She later contested for the same seat on the platform of the United Democratic Party in the 2019 general elections after resigning from APC and as a minister in the administration of President Muhammadu Buhari on July 27, 2018.

The former senator was born on the 16th of September, 1959 in Jalingo, Taraba State, to Alhaji Abubakar Ibrahim, Sarkin Ayukan Muri.

Aisha Jummai Al-Hassan attended Muhammed Nya Primary School, Jalingo and LEA Primary School, Tudun Wada, Kaduna before proceeding to Saint Faith College (now GGSS) Kawo Kaduna where she studied between January 1973 and June 1977.

Details later…

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Financial Services

Ratings agency, Moody’s reveals it is reviewing First Bank’s ratings

Moody’s explained why it might downgrade First Bank’s ratings.

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Moody’s Ratings agency said on Thursday that it has put First Bank of Nigeria on review for a downgrade after the central bank sacked the board of directors and replaced them with new directors.

Moody’s made this statement in a report titled ‘Removal of Non-Executive Board Members Highlights Governance Shortcomings.’

In a quote, Moody’s said:

“Moody’s Investors Service, (“Moody’s”) has today placed all long-term ratings and assessments of First Bank of Nigeria Limited (First Bank) on review for downgrade. The review will focus primarily on an assessment of evolving governance considerations at First Bank, specifically corporate governance developments. The rating action follows the dissolution of First Bank’s board by the Central Bank of Nigeria (CBN), the bank’s primary regulator, on 29 April 2021. As a result of this action by the CBN, all the non-executive directors were removed while the executive management remained in place.”

The Governor of the Central Bank of Nigeria, Godwin Emefiele, had last week announced the sack of the entire board of directors of FBN Holdings Plc and its subsidiary, First Bank of Nigeria Ltd following the initial removal of its MD/CEO Dr Sola Adeduntan. Following his sacking of the board, he set up a new board for the bank holding company and its subsidiary and also reinstated Adeduntan as MD/CEO.

Moody’s mentioned that the regulatory actions demanded of First Bank by the CBN introduces a clould of uncertainty over the outlook of the bank. For example, the CBN had asked the bank to divest from its holdings in two listed companies while also recovering its loans from one of them.

“The review for possible downgrade reflects the rating agency’s view that the removal of all non-executive directors of the bank’s board by the regulator demonstrates corporate governance shortcomings and weaknesses in board oversight. The bank also needs to implement regulatory directives concerning the resolutions of loans to, and shareholding in non-banking related parties, which reportedly had not been executed in the recent past.

Moody’s notes that the outcomes of these developments are uncertain at this point, and the final and long-term governance, reputational and financial implications of the events for First Bank are also unclear.”

The central bank directive sacking the board of the bank also retained its executive management perhaps suggesting that the CBN had confidence in the ability of the MD and his team to manage the bank. Moody’s also noted this in its briefing.

“While the bank’s executive management team remained the same, the rating agency believes these developments could distract management’s focus on implementing the bank’s strategic plan and road to recovery. First Bank management’s immediate key target was to reduce nonperforming loans (NPLs) to levels comparable with domestic peers. The rating agency recognises that, in the context of asset risks, the bank took steps to reduce its stock of problem loans, with its reported NPL ratio falling to 7.7% at year-end 2020 from 25.9% in 2018.”

Will Moody’s downgrade First Bank?

The rating agency explained that the decision to downgrade will depend on how strong the bank’s corporate governance structure is and whether the CBN will impose additional sanctions. If any of these crystallizes, it could downgrade its ratings.

“The bank’s long-term deposit ratings can be downgraded if flaws in the bank’s governance systems exist, and if the CBN imposes additional sanctions on the bank, including, but not limited to, conditions to address any vulnerabilities that may be discovered. Financial output that is less than anticipated could also result in a rating downgrade.”

Moody’s, however, poured water on any optimism around a rating upgrade.

Given the review for downgrade and the pessimistic outlook on the government of Nigeria, there is a slim chance that First Bank’s ratings will be upgraded. Stronger solvency progress than currently reflected in the ratings, combined with a stabilization of the sovereign outlook, could result in the outlook being stabilized.

Why is rating important?

Corporate Organizations desire positive ratings because of the effect it has on their ability to raise capital as well as the cost of capital. A high credit rating typically attracts positive investor sentiments helping organizations tap the debt and equity markets, especially from institutional investors.

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