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Disrupting Nigerian banks

How does a bank like Zenith Bank accumulate more capital to be deployed than First Bank?



Q1 2020, Disrupting Nigerian banks, Evolution of Nigerian banks in 59-years , GTB, UBA, Zenith, Access Banks’ salary advance loans, Can a company operate without a website in 2019? , Banks refund N3.09 billion to customers over claims on excess charges, fraud, others  , Bank CEOs applaud NCC’s decision to suspend USSD charges, GTBank, Zenith, Access, FBN, 10 others spend over N8 billion on CSR, Banking: Evolving trends in the bankers’ market, GTBank, Access, FBNH, Standard Chartered wrestle over women entrepreneurs , GTBank, Access Bank, Zenith, FBN, 16 others disburse CBN’s N610.4 billion to farmers , Credit to government declines, as Credit to private sector hits N25.8 trillion, Banking sector NPLs down, loans up, Non-Performing Loans in Agriculture, construction, others rose to N143.76 billion, Asset seizure: Banks begins recovery of N6.125 trillion borrowed to the oil sector, Customer Experience: GTB, FCMB, Citibank, others emerge best banks in 2019, Nigeria’s top 5 banks spent more than N40 billion on adverts in 2019, Nigerian banks face risky future over low oil prices, coronavirus, Testing the financial strength of Nigerian banks

Whenever I see Nigerian bank ratings, the same question goes through my mind — “How did First Bank allow ‘upstarts’ like Zenith Bank and Access Bank get near her?”

First Bank started operations in 1894, Zenith Bank in 1990. If we consider that banks are in the business of deposit generation and deployment, how does a bank like Zenith Bank accumulate more capital to be deployed than First Bank? Was First Bank asleep? Was Zenith bank running? Looks like a bit of both.

Will the financial services landscape change again?

Will another “upstart” upstage Access Bank? Well for one, technology has equalized the game. With just N100,000 a FinTech startup can be created in Bayelsa with offices in Lagos, New York, London, South Africa and China. That startup can, via social media and mobile text, have access to the same markets any multinational has. Banking in Nigeria especially is due for disruption, and technology will enable that disruption. Nigerian banks are asleep on the lending wheel; they are not providing enough credit to the real SME sectors. Safe to say Nigerian banks are protected by banking licenses which create an artificial moat to competition. MTN Nigeria just got a financial services license but cannot accept deposits or offer loans (yet). If MTN and other Telcos could offer loans, then we may see Nigerian banks get creative in credit scoring and consumer finance.

CBN seeks standard practice from fintech operators

[READ MORE: Uproar as Banks, Telcos introduce charges on the use of USSD code]

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The Enhancing Financial Innovation and Access (EFINA) to Financial Services 2018 survey says only 39.7 % of Nigerians are formally banked, and only 1.3% have accessed a loan, (no typo), i.e. First Bank and Co in 58 years could only get 39 out of 100 Nigerians to open bank accounts. South Africa has an 80% financial inclusion rate, while Nigerian banks are also dropping the ball on financial inclusion. Digging further, the report says 9.4 million Nigerians (nearly 10% of the population) rely solely on informal channels to do financial intermediation. Of this group, 81.6% save a part of their incomes. So, there are Nigerians in rural areas, earning less than N20,000 a month, but they still save. Nigerian banks have no product for this class of Nigerians. Where do these Nigerians save — in a co-operative group, or at home?

However, EFINA also says that these informally banked Nigerians also access loans, from family friends and cooperative groups. What are they borrowing for? To start a business, buy food and fertilizer — these are the top three borrowing needs. Do these rural borrowers payback? Yes, 75% of them do. Finally, what’s the size of this informal market? EFINA estimates the potential market value of deposits as N42 billion with a credit value of N68.7 billion. Note that we are speaking of Nigerians who want to bank but have no access to formal banking. The market for the financially excluded is about N128 billion.

Take mobile technology, in a Harvard Kennedy School paper on the Mobile Banking Revolution in Kenya by Jay Resengard, he found that due to mobile banking, the share of Kenyans with access to a financial account jumped from 42% in 2011 to 75% in 2014. The percentage of Nigerians with mobile phones is put at 60.4%; that is huge. How many of these Nigerians are registered use mobile banking? 1.7% yes, (again no typo). Why do Nigerians not use mobile banking? Well, according to the EFINA report, 83% of the sample polled say they do not know what mobile banking is… How is that possible? Access Bank, in her 2018 Annual Report, said it wanted to aid financial inclusion through the provision of digital services to the underbanked and unbanked. Access Bank spent N4.8 billion on advertising, yet 83% does not know what mobile banking is? What is Access Bank communicating? Nigerian banks have again failed to capitalize on the number of mobile phone platforms used by Nigerians to expand financial inclusiveness.

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Why is mobile banking in Kenya booming and mobile banking in Nigeria stagnated?

The problem with mobile banking in Nigeria is the word “banking” attached to “mobile”. M-PESA is Kenya’s most popular mobile payment service; it was introduced by Safaricom, a mobile company, not a bank. Mobile payment systems in Nigeria are dominated by banks. In Kenya, a friend took me out in Nairobi and bought roasted fish from a buka, the fish seller had a piece of paper on her tent with numbers. My friend paid her by transferring cash from his MPESA wallet to that number which was her MPESA wallet. Magic! (if you have bought amala in any buka and paid via mobile banking, let me know.)

Looking back at the EFINA data on Nigerian financial inclusiveness, 71% use mobile money to send money, 45% use it to receive money, and 26% buy airtime with it. Telco companies should be given the license to accept deposits and make loans, also offer payment services to Nigerians through their phones or debit cards that can be scanned by smartphones. The Telcos have deeper market penetration than banks, they are more suited for cashless transactions and can handle smaller transactions than banks. Companies should offer employees the option to receive their salaries via Direct Deposit into either bank accounts or GSM cash wallets. Let both platforms compete, the consumer will be the winner.

[READ ALSO: Banks’ online transactions rise by N12.8 trillion]

As business services move online, Nigerian banks must evolve. In the coming years, it’s possible that plots of land will be purchased with airtime and cryptocurrencies alone, bypassing the need for cash and banks. Nigeria now has online an only bank that is reducing fees as traditional banks are increasing fees — that is the future of banking, not large air-conditioned banking halls where cash is counted and stored.

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Just as today we wonder how Zenith Bank surpassed a bank that was gathering assets nearly 100 years before it was formed, will we witness an upstart internet bank wipe out all the banking giants we see today?

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Fortune, they say, favours the prepared.

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Why I am now buying Bitcoin

Gold was the go-to asset class to hold cash in times of uncertainty but cryptocurrencies are now seeing big utility enhancements.



Investor moves $133 million worth of Bitcoins, suspected from Coinbase, World's biggest sovereign wealth fund now owns cryptos, Investors cashing in big time, as 95% BTC wallets are currently in profit, blockchain technology, Bitcoin giving better returns than the Nigerian stock market, What it will take Bitcoin to hit $100,000?, Buying signal; Bitcoin whales with 1000 BTC or more continue to rise

On November 26th by 4.30 am, according to trading records from Coinbase, an online market for Cryptocurrencies, Bitcoin (BTC) was trading at $17,331. By 9.30 am BTC prices had fallen to a low of $16,299, on December 1st when I wrote this article, Bitcoin was now trading at a high of $19,915.

If an investor has bought 1 unit of Bitcoin by 9 am on Thursday 26th, and sold at 3 am December 1st, his gain would be $3,616 or a 22.18% return. According to a report by the NASDAQ, BTC return this year has been like a Space X rocket, this year alone bitcoin is up 166%, gold is up 24%, US Bonds 7%, US Stocks 5.5%.

Cryptocurrencies have been up cumulatively 5,000% (yes Five thousand) but I have not personally considered them an investment. The reality is even as BTC surged to $19,000 in 2017, there was still essentially a bet on someone else buying them from you, what in finance is called the “greater fool theory” (it’s a real theory, google it). Bitcoin for instance has a fixed supply, so as long as demand increases, the price will go up.

Cryptocurrencies have no inherent value, if you had left 100 units of Bitcoin bought for $200 units in a vault in 2015 and returned in 2017, the value would still be $200 but the price you would sell it for would be $19,000. Why no inherent value you ask? well because Bitcoin has limited use except for speculating. A Bloomberg article in May 2019 based on data from blockchain researcher Chain analysis found, “only 1.3% of economic transactions came from merchants in the first four months of 2019, with little change from prior 2 years”.  This was why I never considered investing in BTC, it was a game of chicken to see how high it could rise.

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However, in November, I changed my strategy. I have now added cryptocurrencies as a viable investment in my portfolio.

Three reasons why I have now decided to buy cryptocurrencies:

  1. The world is awash with cash and low output, inflation cometh. Even before the COVID-19 hit, most of Europe and Japan were already offering negative rates and using monetary quantitative, then Biden won. Biden also nominated Janet Yellen as his Treasury Secretary. Yellen is a proponent of deficit spending, i.e. a Keynesian. All this translates to the fact that a lot of cash is going to pour into the Western economies soon and remain there to keep rates low, and the dollar low. Thus, any cash holding in US currency will see yields fall
  2. Global fixed-income rates are going to remain low, and Covid-19 has taken property funds off the table. Fixed income investing across the spectrum will see flat rates. This will mean all short to long-duration fixed income funds plus fixed income funds tied to income from rentals will see a fall in yields.
  3. There is now much greater acceptance and regulation of cryptocurrencies especially in the key market of the US. Facebook Libra ran into headwinds with his plan for a global cryptocurrency, but today the regulatory landscape has improved. US banks now can provide custody services for cryptocurrencies and the US Department of Justice policy enforcement for digital coins as well.

The summary of those three points highlighted above is this, investors seeking outlets to park cash that will at least hold value until there is clarity on inflation fears will buy cryptocurrencies. Gold was the go-to asset class to hold cash in times of uncertainty but cryptocurrencies are now seeing big utility enhancements. Paypal for instance will issue cards based on bitcoin to allow everyday buying and selling based on a bitcoin account. I am yet to see a gold-backed debit card. These enhancements mean bitcoin and other cryptocurrencies now can come out of the speculative space and into retail, again boosting demand.

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That is a game-changer.

What is the risk to this? That Cryptocurrencies become so widely accepted that the US Treasury introduces her own Fed Coin. This move will draw away many who are buying Bitcoin and other cryptocurrencies and reduce demand for bitcoin, bringing down the price.


Follow me @finplankaluaja1

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OPEC+ agree to raise oil production

For Nigeria, a combination of both higher oil prices and lower production cuts is needed to fund the country’s 2021 budget.



OPEC+ 2, Oil production drops, as Nigeria complies with OPEC+ output cuts  

Following yesterday’s meeting, OPEC and other oil-producing nations led by Russia reached a deal to modestly increase production in January amidst a raging second wave of the coronavirus pandemic though with the prospect of vaccines offering some hope.

Based on the agreement, members of the Organization of the Petroleum Exporting Countries along with Russia and other countries will raise production gradually by 500,000 barrels a day over a 3month period starting in January. The increase, though less than 1% of the global oil market, comes amidst a second wave of coronavirus which is currently weighing on demand.

According to reports, the agreement was a compromise between countries that wanted a much larger increase of two million barrels a day, which was previously agreed on, and others that would prefer to maintain current production cuts of c.7.7mbp. The latter are considering the many uncertainties around the pandemic and the possibilities that demand will remain low. That said, the disagreement between both groups suggests that agreed quotas may not be adhered. Looking ahead, we expect the modest increase in OPEC+ production and the prospects of the discovery of effective vaccines to remain positive for oil prices in the short term if production cuts are adhered to. We however expect the rally in oil prices to be capped by subdued growth in the global economy which would continue to limit
the pace of recovery in oil demand.

Coming home to Nigeria, a combination of both higher oil prices and lower production cuts is needed to fund the country’s 2021 budget which is predicated on a production volume of 1.86mpd and oil price of US$40 per barrel. Amidst a recession, the hope of an economic rebound is largely hinged on sustained rebound in crude prices as the country has suffered a significant slump in revenue largely due to weak oil revenue. Furthermore, the economy continues to face severe dollar shortages due to lower oil receipts which continues to pressure the nation’s FX reserves.

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CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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6 Things to consider when looking for suppliers for your business

By putting these 6 things into consideration, you’ll tailor your supplier-selection process to your unique business needs.



6 Things to consider when looking for suppliers for your business

Great suppliers are a fundamental part of your business. They allow you to produce and get your products and services to your customers. But finding reliable suppliers for your business takes real effort. It requires much more than just skimming through a series of price lists. Here are 6 things to consider when looking for suppliers for your business.

READ: Africa’s internet economy has the potential to reach 5.2% of the continent’s GDP by 2025 – Goggle/IFC

1. Your Overall Budget

Your overall budget is one of the most important things to put into consideration when you’re searching for the best suppliers for your business. While you may not know the accurate cost of certain things, you need to have a clear idea of the amount of money you’re able and willing to spend before approaching potential suppliers. And one good way to do that is by researching how much some of the products and materials you need will cost you.

Assuming your business offers HVAC installation, maintenance, and repair services. You’ll need to know the prices of various HVAC parts, including air filters, belts, capacitors, fan motor, and coil condenser cleaners. The best way to do that is to visit the site of HVAC suppliers in your area and see how much they sell these parts. This information will help you create a reasonable budget. If you’d like a suggestion, you can take a look at Cold Air Central for quality HVAC parts and other products.

READ: China publicly presents its COVID-19 vaccines, 2 doses to cost below $146

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2. Reliability

Reliability is another important factor to consider when picking suppliers. Reliable suppliers provide quality products and materials in a timely manner. It’s always a good idea to work with reputable and well-established suppliers, as they have adequate resources and resilient systems that enable them to deliver without hiccups. But you can still work with small suppliers, especially if you cultivate a meaningful relationship with them.

READ: Port Harcourt Refinery to get a facelift in Q1 2021 – NNPC

3. Stability

When looking for the best suppliers for your business, go for those who are experienced, and have a stellar record of accomplishment. Stability is crucial, particularly if you’re looking for a long-term partnership with a specific supplier or there is only one supplier of a specific product or material that your business requires. You must also ensure the supplier is financially stable before entering any contract with them. A great way to do that is to request the credit history of a potential supplier.

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READ: Nigeria’s Manufacturing Sector contracts for 6th consecutive month

Another great way of finding out if a prospective supplier is stable is to check out review websites for testimonials from previous clients. You can also visit their official social media pages to see how they engage their followers and how they address complaints. If there are so many negative reviews and comments from customers, there is a high likelihood that they’re not going to be the best option for you.

READ: Apple drops 4%, iPhone sales slump

4. Location

Consider location when searching for competent suppliers. Working with distant suppliers may sometimes result in longer delivery times and additional freight expenses. But if you want something fast, dealing with local suppliers might be a wise decision. That doesn’t mean you should overlook distant suppliers. Be sure to review freight policies of far-off suppliers. You may discover that bulk orders might attract free shipping. Or better yet, you can merge different orders to lower costs.

READ: FG, Tiimafrica to provide $5,000 one-time grant to young business owners

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5. Production Capabilities

Look for suppliers who can produce the items you want. To verify the production capabilities of a potential supplier, you must do more than just speaking to a representative. A good one should consistently supply items that meet your standards.  Visiting the supplier is the only sure way to confirm their production capabilities.

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An in-person visit will give you a chance to audit the quality management system of the factory. If you don’t know what to check for during the visit or you want to do away with the cost of traveling overseas to the factory, working with a third-party can be a great option.

READ: TikTok in talks to move global headquarters to London over Chinese tussle with US  

6. Cultural Fit

Check whether the goals and values of a potential supplier are aligned with yours. If they are, then partnering with that supplier would be a great idea. Some of the things that will help you tell whether a potential supplier is a cultural fit include:

  • The type of companies they work with.
  • A detailed quote that meets your specific requirements.
  • Minimum order quality.
  • A deep understanding of your business.



By putting these 6 things into consideration, you’ll tailor your supplier-selection process to your unique business needs. That way, you’ll choose the right supplier who will consistently deliver quality products and materials that your business requires. It could also enable you to cultivate long-term mutually beneficial relationships with your suppliers and reduce stress in selecting partners.


About author

Rachel Eleza, Growth Marketing Director at UpSuite and a part-time writer.

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