Business News
The growing electronic payment option in Nigeria impeded by trust, real fear of losses
Nigeria has witnessed a surge in the adoption of electronic payment service over the last few years for convenience and ease of transactions.
It is no new knowledge that electronic payment provides another way to send and receive money online, pay for goods offline and Nigeria has witnessed a surge in the adoption of the service over the last few years for convenience and ease of transactions.
In January alone, electronic transactions hit a whopping N10.89 trillion nationwide according to NIBSS report, a 29% increase in compared to N8.41 trillion recorded in January 2019. The overall electronic payments figure is an aggregate of transactions carried out on Point of Sale terminals, mobile inter-bank transfers, NIBSS’ Instant Payments, e-bill payments and central pay across the country.
However, in spite this significant adoption, there is still a sizable number of people (and we are not talking about unbanked population here) with fears, who are not convinced to get on the bandwagon and explore e-payment platforms in their daily need to transact.
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Some of these myths that keep holding people back from enjoying the many benefits that come with electronic transactions are:
- Trust: A major concern that still deters many consumers from using digital payment channels, mostly because of the perceived security risks due to exposure of their paying instruments or account details, which they believe could lead to financial losses.
- Comfort with cash transactions: Many are comfortable with using cash to complete transactions and are not in a hurry to make changes, despite the ease and convenience of using digital channels.
- Transparency: Many still believe or have a perception that having every transaction be tracked or monitored could invite unnecessary scrutiny or higher taxes or reveal transactions that they will otherwise keep under the radar.
- Fees: Merchants and Consumers avoid additional fees imposed for using electronic channels. Although this is gradually changing, there is still the perception that these channels are expensive so people find ways to avoid the charges.
Despite these challenges, Nigeria continues to witness steady adoption driven by the ecosystem which includes regulators, banks, Fintechs and other Financial Service Providers. It is clear that the space will continue to grow as we see simpler solutions, gains in Financial Inclusion and stronger value propositions for Merchants and Consumers.
Fintech
[READ MORE: Nigerians dump PoS, as transactions drop by N59.26 billion)
The following are some of the recent game-changing innovation that has driven electronic payment adoption in Nigeria in recent years;
- USSD banking: The Unstructured Supplementary Service Data (USSD) pioneered by e Tranzact and popularized by the Guarantee Trust Bank (GTB) is one of many payment innovations that have transformed the way many Nigerians transact. In 2018, people using interbank instant payments on USSD platforms grew by 35% to N261.7m. The USSD technology is perfect for a country like Nigeria seeing how it offers a simple browsing experience through a menu system on any mobile device. It is technology for anyone and everyone.
- PoS and Agency banking solutions: Agency banking has been a major contributor to financial inclusion in the country. A form of branchless banking that is cost-effective and easy in terms of providing financial services mostly with the use of POS terminals and now expanded to mobile transfers and more.
- Instant Transfers: A platform that allows for immediate transfer of value or funds to the beneficiary. IN 2019, bank’s instant transfers’ value was at N442tn with over 90million transactions nationwide. The rise in preference for instant transfers has resulted in a steady decline in the use of bank cheques, and cash withdrawals.
- Utility Payment Platforms: The digitization of utility payments has been a breakthrough for the tech space and many people have come to enjoy the benefits of paying their utility bills in the touch of a few buttons.
READ ALSO: Konga unveils new USSD features, ATM card-less initiative
Processing payments electronically, some would argue also lowers cost, as we tend to spend less on paper and postage. Also, the platform can help businesses improve customer retention in comparison with those offering only traditional means of payments.
Business
CBN launches framework for advancing women’s financial inclusion in Nigeria
The CBN in collaboration with EFInA has launched a framework to advance women’s financial inclusion.
The Central Bank of Nigeria on September 29, 2020, virtually launched the framework of advancing women’s financial inclusion. This was disclosed in an online event tagged “Access to Finance Framework for Women” and anchored by Dr Paul Olukpe.
The framework was conceptualized by the Financial Inclusion Special Intervention Working group and developed by the CBN in collaboration with EFInA and Women’s World Banking with input from over 50 stakeholder institutions.
The overarching vision of the framework is for Nigeria to be globally recognized, with an inclusive financial sector that has closed the gender gap by 2024. The framework further itemizes 8 strategic imperatives for driving improved access to finance for women in Nigeria.
In the online event monitored by Nairametrics, the Deputy Governor, Financial System Stability of the Central Bank of Nigeria, Mrs. Aisha Ahmad justified the new initiative by citing EFInA’s last report on financial inclusion in 2018 as a yardstick.
(READ MORE: Banks’ loans to private sector increase by N3.50 trillion in one year – CBN)
Recall that EFInA 2018 Financial Inclusion report indicated gender imbalance and a clear need to attend to the issue of growing female financial exclusion. For example, the report stated that 40.9% of females were financially excluded as against 32.5% of males. Mrs. Ahmad remarked that perhaps, the figures might even be wider if unattended to especially in this period of crisis.
Mrs. Ahmad urged financial institutions to address structural issues limiting women’s access to finance by understanding and developing products that are specifically tailored to address such issues.
Why this matters
Empirical studies have shown that supporting a stronger role or empowering women is a key enabler in reducing poverty, stimulating economic growth and ensuring sustainable development. Citing ‘’The Power Parity Report by McKinsey’’, the Director of development finance department of CBN, Mr Yusuf Philip Yila, stated that the economic consequences of pursuing gender equality include a potential addition of $28trillion to global annual GDP by 2025.
This framework is a big boost to achieving SDG’s goal of gender equality and Nigeria’s financial inclusion targets simultaneously.
Business
HealthPlus crisis: Alta Semper directors reported to Police for trespassing
HealthPlus has made a formal complaint to the Police following its ensuing battle with Alta Semper.
Nigerian Pharmacy Chain, HealthPlus Ltd which is in a battle for control with private equity firm Alta Semper Capital took a new twist as Health plus reported Alta Semper directors to the police last week, as observed in a document seen by Nairametrics.
In a letter sent to the Assistant Inspector General of Police on the 25th of September, HealthPlus stated, “We had the presence of unknown persons around our head office locations.”
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The locations stated were 4 HealthPlus branches in Lekki, Lagos.
HealthPlus stated further, “We are aware that there are unauthorized and illegal plans by certain persons to take over our company premises to steal sensitive company property and assets, and ultimately take over operations of the company”
The 4 persons mentioned by HealthPlus are; Zachary Fond and Ivan Genadiev (both Alta Semper Directors), Ernest Eguasa, CFO of company and an unidentified middle-aged white man.
Explore the Nairametrics Research Website for Economic and Financial Data
Niarametrics reported last week that HealthPlus Limited appointed Chidi Okoro as Chief Transformation Officer.
However, the announcement set off a chain of allegations and counter-accusations, including online media mudslinging with both sides trying to court public sympathy for who is in control of the company.
Economy & Politics
P&ID dispute: UK Court orders $200 million guarantee to FG
Nigeria’s Foreign Exchange Reserves was boosted after a London Court ordered the release of $200Million placed as security in the case against P&ID.
A London Commercial Court has ordered the release of a $200 million guarantee as security to be paid to the Nigerian government in the P&ID $10 billion Arbitral Claim.
This was disclosed in a social media statement by the Central Bank of Nigeria on Tuesday.
Nigeria's Foreign Exchange Reserves was this morning boosted by over $200Million when the London Commercial Court ordered the release of the $200Million guarantee put in place as security in respect of the execution of the much discredited P&ID $10 Billion Arbitral Claim.
— Central Bank of Nigeria (@cenbank) September 29, 2020
Nairametrics reported earlier this month that The Federal Government secured a landmark victory in its bid to overturn a $10 billion arbitration judgment award against it in a case against Process and Industrial Developments (P&ID).
READ: Nigeria seeks bank documents of former President, others over $9.6 billion P&ID case
The Court said that Nigeria has established a strong prima case that the contract was procured by bribes paid to insiders as part of a larger scheme to defraud Nigeria. He said that there is also a strong prima face case that the P&ID’s main witness in the arbitration, Mr Quinn, gave perjured evidence to the tribunal, and that contrary to that evidence, P&ID was not in the position to perform the contract.
In today’s statement, the CBN said, “Nigeria’s Foreign Exchange Reserves was this morning boosted by over $200Million when the London Commercial Court ordered the release of the $200Million guarantee put in place as security in respect of the execution of the much discredited P&ID $10 Billion Arbitral Claim.”
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“The court also awarded a £70,000 cost in favour of Nigeria in addition to an earlier award of £1.5m.”
On January 31, 2017, an arbitration tribunal had ruled that Nigeria should pay P&ID, the sum of $6.6 billion as damages and breach of contract after a 2010 deal for a gas project in the Niger Delta part of Nigeria collapsed. The pre and post judgement accrued interest of 7% has seen the amount standing against Nigeria, rise to almost $10 billion, an amount that will be a serious dent on the country’s external reserve.
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