MTN Nigeria, the largest mobile telecommunication firm in the country has reported a 23% rise in its FinTech revenue. This was confirmed by the company CEO, Ferdi Moolman in the company’s notes to the results.
Higher revenues: MTN reported a record N1.169 trillion in revenues for the year ended December 2019 up 12.5% year on year. Profit for the period under review was N202.1 billion up 38.7% year on year. The blistering result was backed by revenue growth across its voice and data services.
According to the Moolman, “voice revenue growth remained healthy at 8.4% and accounted for 72% of service revenue” as Nigerians continue to rely on GSM to contact loved ones and contract businesses. “Voice traffic increased by 7.6%, supporting revenue growth” he continued.
MTN has also recorded an increase in data revenue which it ascribed to “greater population coverage, a revamp of our data portfolio and initiatives to drive 4G device penetration” adding about N219.3 billion in revenues only. Data contributed 18.8 to service revenue.
On FinTech the MD/CEO revealed the division’s revenue growth was 23.3% “supported by increased adoption of MTN Xtratime our airtime lending service.” MTN does not disclose revenue from FInTech separately and captures it only as part of Value Added Services (VAS).
The company VAS business rose from N32.2 billion to N37.1 billion and includes airtime lending and mobile money (Fintech), subscriber identification module (SIM) back up services and voice-based services. According to Moolman, MTN launched a super agent service in August which helped increase their network of agents to about 108,000. He also said “the Agent network served almost one million customers in the first four months of operation” just as it focusses on further expansions.
Doubles down on FinTech: MTN also revealed plans to widen its FinTech service offering “from basic transfer service and airtime/data sales to a more extensive bouquet, including cash deposit and withdrawal services, bill payments and facilitating -e-commerce” it concluded.
MTN’s foray into the FinTech space has often been viewed as a game-changer in a very competitive and dynamic FinTech space. With its huge balance sheet and brand power, the company has a large cash pile that it can throw into space.
Competition: Several feelers from rival commercial banks suggest the banks have stifled MTN’s entrance into the challenger banking space as they believe they do not have an equal playing field. For example, MTN’s technological assets give it more advantages and access to customers through mobile while banks are still expected to retain physical branches increasing its cost of operations. Nigerian Banks are also strictly regulated compared to other FinTech players who are allowed to innovate and create products without much regulation.
In an interview last year (April), Fidelity Bank CEO, Nnamdi Okonkwo made this point clear when he said,
“You know it has been a prolonged push by the telecommunications companies to come into the banking space. We don’t have a problem with that. Let them be subjected to the same regulatory conditions that we have because you are talking about depositors’ money. So, once all of us are subject to regulatory control, we will all do banking together. I think the sky is big enough and as banks, we are not sleeping, that is why you see some of us deepening our digital platforms.”
BREAKING: CBN reduces MPR to 12.50%, holds other metrics
Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50% and retains CRR at 27.5%, Liquidity ratio at 30%.
The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 13.50% to 12.50%.
Governor, CBN, Godwin Emefiele, disclosed this while reading the communique at the end of the MPC meeting on Thursday in Abuja. Meanwhile, other parameters such as the Cash Reserve Ratio (CRR) remained at 27.5%, Liquidity ratio at 30%.
Details later …
Just in: Buhari seeks approval from green chamber to borrow fresh $5.5billion
Buhari, is also seeking the approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.
President Muhammadu Buhari is seeking the approval of the House of Representatives to borrow fund to finance capital projects at the federal and state (to support state governors) levels in the 2020 budget.
This request was disclosed via the official twitter handle of the House of Representatives.
The president’s letter, which indicated that the fund would be sourced locally and internationally, was read on the floor of the House of Representatives by the Speaker, Femi Gbajabiamila, during plenary on Thursday, May 28, 2020.
In the letter to the lower chamber, Buhari, is also seeking the approval for the revised 2020-2022 mid-term expenditure framework (MTEF) which became necessary as a result of the crash in crude oil prices and the cut in the production output.
Although the tweet did not contain the total amount of loan that is being requested, reports suggests that the President is seeking approval to borrow the sum of $5.513 billion from external sources to finance 2020 budget deficit and support state governments to meet challenges caused by the coronavirus pandemic.
President @Mbuhari is also seeking the House approval to borrow locally & internationally to finance capital projects as well as finance projects to support state governors in the 2020 budget
The letter was referred to the House Committee on loans & debt management. #HousePlenary
— House of Reps NGR (@HouseNGR) May 28, 2020
CBN’s MPC unlikely to cut rates, as Nigeria’s foreign reserves hit $36.16 billion
Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira.
The CBN’s Monetary Policy Committee (MPC) is expected to leave the interest rate of 13.5% unchanged during its meeting later today.
The projection is coming on the heels of macroeconomic fundamentals released by the National Bureau of Statistics (NBS), which showed that inflation rose to 12.34%; its seventh consecutive monthly rise and highest level since April 2018.
Note that Nigeria’s inflation could potentially rise to 14% by the end of the year due to a higher VAT and a weakened naira. Therefore, in order to minimise the risk of exacerbating inflationary pressures, the CBN is unlikely to further cut rates. This possible outcome from the MPC meeting will help stimulate economic growth, just like it did in 2019.
Meanwhile, despite the foreign exchange liquidity crisis being experienced in the currency spot market, data obtained from CBN revealed that the country’s foreign exchange reserves have further increased to $36.16 billion (Gross Estimate) as of 28th of May, 2020.
The surge in Nigeria’s external reserves is due to the fact that the price of crude had gained more than 40% since the deadly COVID-19 pandemic started, coupled with reports that foreign investors are returning to Nigeria. The disbursement of $3.4 billion emergency facility by the International Monetary Fund (IMF) to CBN has also been a contributing factor.
Recall that the CBN Governor, Godwin Emefiele, had promised more liquidity in the currency market, assuring that all genuine dollar demands would be met.
However, an Interest rate expert, Ola Oladele, during a phone chat with Nairametrics, advised that the CBN should keep its word by boosting Nigeria’s Forex supply as the persistent downtrend in the currency black market continues. She said:
“The depreciation of the naira in the parallel market as a result of low supply of FX from official sources and less optimistic outlook on the economy due to falling oil prices.
“The BDCs haven’t received supply from official sources since our borders were closed and the crash in oil prices has made natural sellers of FX more cautious.
“We hope that the recent statements by the regulator will restore confidence and subsequently, supply to the market.”