Nigerian telecom companies do not have the right to impose charges on bank customers for using the USSD channel for banking transactions. This is according to the Nigerian Communications Commission (NCC) which released a statement prohibiting attempts by some telcos to start charging Nigerians for the service.
This follows the backlash that greeted the move by the likes of MTN Nigeria to start charging some money every time bank customers transfer money or pay bills using USSD codes.
Here’s the reason: According to the statement, which was signed by the NCC’s Director of Public Affairs, Henry Nkemadu, banks already collect service charge from their customers who use USSD codes for quick banking transactions. Therefore, if telcos should impose their own charges for the same service, it would be tantamount to double billing.
“Consumers already pay service charge to Financial Service Providers for financial transactions carried out through USSD Channels. It is therefore expected that this charge should factor in the Cost of Use of the Telecom Operators’ critical network resources.
“Therefore, Direct End User Billing by network operators for this service would result in double charges for a single transaction. This will inhibit the Federal Government’s financial inclusion target of 80% by 2020.”
What does this mean? First, Nigerians can now be rest assured that they will not be double-charged by both banks and telcos for USSD banking transactions. The USSD channel has become very popular among Nigerians due to its effectiveness. It is also relatively easy to use by non-literates, even as it facilitates the CBN’s financial inclusion bid.
In the meantime, however, there are still some questions to be answered: what would telcos really benefit from rendering the USSD service? Also, can telcos start receiving from the banks part of the money they charge their customers for this service?
A source, who preferred to remain anonymous but is an insider in one of the telcos, informed us that “the banks will continue to bear the costs of providing the service.” The source did not clarify further what exactly this means.
To view the press release by the NCC, click here.
Manufacturing sector in Nigeria and the reality of a “new normal”
The rise in unemployment caused by the pandemic might affect enthusiasm towards the event.
Across the globe, there is a pervading awareness that things will never be the same in the post-pandemic era. Already, some business ventures that were once considered the ‘crème’ of the global economy have taken serious hits in unimaginable measures, and some of the little ones which were regarded as below the rung, are fast rising to match up.
With the new social rules in place, some businesses have come to the sad realisation that they may have to remain closed for much longer than they expected. Even for those businesses that have been allowed to reopen their operations as the world enters a phased and gradual reopening, obvious adjustments still have to be made – including limited physical contact, among others.
In a recent interview, the President of the Manufacturers Association of Nigeria (MAN), Engineer Mansur Ahmed, noted that these new developments have added significant complications to the manufacturing processes and operations.
For one, the 8-week nation-wide lockdown kept most manufacturing companies shut, or at best operating at significantly lower capacity for the best part of Q2. The result of this was reflected in the sector’s indices, both in terms of output and employment.
Resuming operations after the lockdown, the manufacturers have had to deal with the challenges of a completely changed system of operation–one which we now commonly recognise as the “new normal.”
A major change in operation can be seen in the sourcing for raw materials. Besides having to deal with the immediate impact of the border closure on operations, there is now the uncertainty of foreign exchange and its impact on the costs of importation (or smuggling of materials when borders are closed).
Nairametrics wrote about a recent CNBC interview where Partner and Head of Consumer & Industrial Markets at KPMG Nigeria, Obi Goodluck, stated that most Nigerian manufacturers had been compelled to source raw materials locally or risk being shut down completely.
Goodluck explained that prior to the pandemic, most of the Nigerian manufacturing companies imported a significant percentage of their materials from China, but the pandemic had disrupted that supply chain thus compelling them to look for alternatives.
“Specifically from the Nigerian point of view, we will no longer reply on importation of raw materials. As it were, this pandemic started from China and over 80% of Nigeria’s raw material imports come from China and the Asian countries. With the lockdown even in China, that became an issue. As such, companies had to come up with alternative and innovative means of raw material sourcing. Those who already imported raw materials prior to the lockdown relied on their stock until they ran out…”
These alternatives are not just intended to serve as an immediate alternative but can forestall the possibility of such in the future.
Manufacturing companies have also had to rethink the way they transport goods to their customers, in view of the non-pharmaceutical safety rules put in place. One of the regulations in place presently is ensuring minimal physical contact in the processes.
By implications, companies have to rework the way they move their products to the consumers and this has largely impacted on the logistics costs. It also means that deliveries and logistics is ‘the next big thing’ in the Nigerian market.
Having to deal with all these changes at a time when thousands have lost their jobs and primary sources of income is even more of a difficult situation. People generally have less purchasing power now than they did before the pandemic, and so weighing of priorities and opportunity costs will always come to play.
Worse still, they would be paying even more now for the same items, given the extra factors at play in the production process. For instance 1kg sachet of Dangote granulated sugar which sold for N250 before the lockdown, now sells between N800 and N900 per unit, while the 250g sachet which sold for N100 before the lockdown now sells between N250 to N300.
Right now, the manufacturing sector is in that small space between the rock and a hard place, and manufacturers are going to have to make some difficult decisions going forward.
One suggestion that comes highly recommended among experts in the industry is backward integration. At the CBN roundtable discussion in April this year, Nigeria’s richest man, Aliko Dangote had also suggested in his keynote address that backward integration was about the surest way to hasten the long-awaited diversification of the economy.
There were concerns about how fast the industry could integrate with the agricultural sector so that more of the local produce went into the industries, but the manufacturers were optimistic that this could be worked out in time to enable them enjoy waivers and benefits in the African Continental Free Trade Agreement (AfCFTA).
It was agreed that the backward integration would require some support moves from the government in creating the right financing and regulatory environment for industries, so that they could integrate more local input in their processes and products and strengthen the supply chain.
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The MAN president had already assured that the CBN promised that investment in the sector would go towards supporting manufacturers to go into backward integration. If the financial sector could also review its regulations to capture current realities and the needs of the manufacturing sector, more could be achieved in less time.
The Economic Sustainability Plan of the federal government also captures quite a lot to show that the manufacturing industry has a place in the government’s plan, but a seamless implementation remains to be seen. The struggle to ensure that Nigeria produces what Nigerians consume is still on.
In light of new realities, the Unified Exchange Rate proposed by the Central Bank of Nigeria (CBN) could also help to create some stability in the FX. Once the exchange rate is more certain and stable, businesses and investors can make definite plans on imports and exports.
Instead of the current situation where the manufacturing sector contributes less than 10% of the GDP, Nigeria is definitely capable of having a manufacturing sector that contributes as much as 25% or more to her GDP, and this should be the target.
China will not accept any Microsoft-TikTok deal
Trump had raised security concerns about TikTok’s entry into the United States.
China has vowed to fight against the US’ desperate attempt to force Chinese technology firm, ByteDance, (TikTok parent’s company) into selling the company’s US operations to Microsoft.
An editorial piece on China Daily Newspaper, which is state-owned, was straight to the point when it declared that the “US administration’s smash and grab of TikTok will not be taken lying down.” The piece then went ahead to describe America’s moves against TikTok as a “theft” and said the government would respond in due course.
“After vowing to ban the popular short-video sharing app TikTok in the United States on Friday, the White House is reportedly weighing the advantages of allowing Microsoft to purchase its US operations. Such shilly-shallying is a tactic the US administration employed during the trade deal negotiations with China,” the editorial explained.
Why the Chinese are angry: Some hours ago, President Donald Trump gave the world’s most valuable software maker (Microsoft), tactical approval to go ahead with the acquisition of TikTok. Consequently, China, through its state-backed paper, disclosed that it had “plenty of ways to respond if Trump’s administration carries out its planned smash and grab.”
The Backstory: Recall that Nairametrics reported that the world’s biggest software maker, Microsoft, was in talks with ByteDance, the Chinese owners of TikTok, over a possible acquisition of its US operation.
The offer by Microsoft seems to be an escalation of President Trump’s recent attacks on TikTok and other Chinese tech startups. President Trump, in June, had raised security concerns about TikTok’s entry into the world’s largest economy.
Edo, Rivers, Ondo, Katsina, 17 others attract zero investment in 4 months
Lagos topped the list of states that attracted investments during the period under consideration.
About 21 states in Nigeria attracted zero investments in the last 4 months according to data from the Central Bank of Nigeria.
According to data, the following states, Rivers, Ondo, Edo, Sokoto, Oyo, Abia, and Anambra recorded zero capital importation in the last 4 months. Others are Adamawa, Bauchi, Benue, Borno, Cross River, Delta, Ebonyi, Enugu, Imo, Kastina, Kogi, Kwara, Osun, Oyo, Yobe, and Nassarawa states.
This information is contained in the Capital importation report obtained from the Central Bank of Nigeria, CBN. The report also detailed the total amount of fresh investments attracted to the Nigerian economy during the period.
Note that most of the states that failed to attract investments during the period under review also failed to attract any investments in 2019. This means that it is either the necessary steps were not taken by the governments, or foreign investors could not find attraction in the states or the environments were simply not conducive for investment.
Lagos outshines FCT, Niger, 5 other states
As expected, Lagos topped the list of states that attracted investments during the period under consideration. Lagos attracted the highest amount of $5.39 billion during the period. The investment inflow into the state represents over 87% of the $6.17 billion.
Lagos is followed by the Federal Capital Territory which attracted a total investment inflow of $754.01 million.
Niger State attracted a total investment inflow of $11.60 million. Sokoto State also attracted $2.50 million, while Kaduna State attracted the sum of $1.98 million and Ogun attracted $1.70 million.
Kano and Akwa Ibom states recorded investment inflow of about $700,000 and about $237,000 respectively among others.
The limited investment inflows into some of these states clearly indicate that the states are not really attractive to the investors, even before the pandemic. The Managing Partner, FA Consult, Peter Adebayo, explained that the nation’s economy is not attractive enough to pull investments to states that lack the desired viability.
“Most of the investors are scared of insurgencies in the country, though such is limited to some parts of the nation, except for the well-connected investors that are given special attention,” he said.
Back story: Last March, Nairametrics reported that Ekiti, Kogi, Sokoto, Bayelsa, Ebonyi, Gombe, Jigawa, Abia, and five other state governments failed to attract investments in 2019.