A new report by PwC Nigeria has revealed that the COVID-19 pandemic is expected to have a disproportionate impact on Nigerian financial technology (FinTech) companies, depending on which segment each of them operates in.
As the report clarified, every company in the Nigerian FinTech space will be adversely impacted by the pandemic. However, the degree of the impact depends on what services each of them offer.
FinTechs that are most affected
The report stated that FinTechs whose core businesses entail lending and offering payment services are bound to be the worst hit by COVID-19. Interestingly, the majority of the FinTechs in Nigeria play in these two segments.
As the report explained, FinTechs operating in the loan segment will be affected simply because a significant number of their clients will be unable to fulfill their loan obligations. This is due mainly to the economic fallouts of the pandemic, which triggered a recession that ultimately resulted in many employees losing their jobs. A part of the report said:
“The payments segment will be impacted by the decline in global FinTech investments, which could hinder capital required for physical upgrade or expansion of digital infrastructure and services. For the digital lending segment, the impact of the lockdown measures on business activities, employers, employees, entrepreneurs, and other entities could affect the ability of lending clients to pay back short-term loan obligations as at when due.”
But are some opportunities
That said, the situation is not all gloomy and hopeless. As the report pointed out, the pandemic and subsequent lockdown measures that were imposed by the government, helped to shift most transactions online. Recall that a lot of banks shut down their branches, even as customers resorted to e-banking services to meet their financial needs.
The report noted that FinTechs are in a good vantage point to take advantage of the current situation. In other words, as social distancing continues to be a norm (even as bank customers are encouraged to use online mediums), FinTechs can take advantage of the situation by facilitating easy online payments whilst increasing their profitability in the process.
You may download the full report by clicking here.
UPDATED: CBN revises timelines for resolution of dispense errors, refund complaints
The apex bank said this is in line with its resolve to enhance the quality of service bank customers are given. Nigerian banks are, therefore, required to implement the revisions starting from June 8, 2020.
The Central Bank of Nigeria, CBN, has revised the timeframes for the resolutions of all botched online transfers, POS transactions, and ATM withdrawals.
According to a brief statement that was posted on its official Twitter handle this evening, the apex bank said this is in line with its resolve to enhance the quality of service bank customers are given. Nigerian banks are, therefore, required to implement the revisions starting from June 8, 2020.
Below are the revisions
In line with the revisions, any failed ATM transaction that occurs when a customer tries to withdraw from their bank must be reversed instantly. In the event that instant reversal fails due to technical challenges, the money must be manually reversed within a 24-hour period. Note that prior to the revision, the timeframe for such reversal is usually three working days.
a.1 Failed “On-Us” ATM transactions (when customers use their cards on their bank’s ATMs) shall be instantly reversed from the current timeline of three (3) days.
— Central Bank of Nigeria (@cenbank) May 31, 2020
Similarly, the resolutions for failed ATM withdrawals occurring when bank customers use their ATM cards on other banks should not exceed 48 hours, the CBN said. Before now, such a resolution would normally take three working days.
Also, starting from June 8, banks will be required to resolve all disputed/failed online transfers and POS transactions within 72 hours. In other words, resolution for such disputes shall no longer be taking five working days as it used to.
In the meantime, the apex bank advised banks to ensure that all pending failed transactions/complaints are resolved “within two weeks starting June 8, 2020”.
“Meanwhile, key service providers in the Nigerian payments system have also committed to establish an integrated dispute resolution platform for the industry and enhance their payment system infrastructure and processes to reduce incidences of transaction failure,” the statement further disclosed.
Why Nigeria must invest in digital technology – El Rufai
Nigeria needs to look for a way to move from the agrarian and industrial into the services sector, and ICT is a way to do that.
If Nigeria is to join the richer countries of the world, she must invest aggressively in technology, improve local production, and cut cost of governance.
These were some of the opinions presented by experts during a virtual colloquium tagged Government Unusual: Innovative Economic Solutions to Unlock Mass Prosperity held on Saturday afternoon.
While making a presentation at the Rauf Aregbesola colloquium, Governor Nasir El Rufai noted that investment in digital technology must become a priority if Africa hoped to join the league of developed countries. He said,
“Investing aggressively in digital technology is the only way Africa can preserve its growth and continue to lift people out of poverty. We must invest in the digital because henceforth, every sector of governance and living will depend on the digital.”
He added that one of the lessons from the COVID-19 pandemic was the need for Nigeria to embrace technological advancement so that Nigerians could benefit from the numerous opportunities that came with it; and pointed at the recent decision to crash right of way charges as the first way to go.
In agreement with his position, CEO Lotus Capital, Mrs Hajara Adeola, added that investment in technology was the best way to get Nigerian youths to take advantage of global opportunities without migrating to other countries.
“Nigeria needs to look for a way to move from the agrarian and industrial into the services sector, and ICT is a way to do that. Our youths are innovative and capable, so if we can train our youths in technology, then we can get homegrown solutions to some of our issues without them having to migrate” she said during the panel discussion.
Infrastructure for business
Unless infrastructural developments are shaped and directed towards business developments, the country will continue to invest in infrastructure which have no benefits.
“You don’t shape infrastructure as how you think it makes sense. you do it in a way that follows the money because ultimately that is where prosperity comes for everybody,” Chairman of Citibank Nigeria limited, Yemi Cardoso said.
The global terrain continues to change and Nigeria must develop a framework to align its growth strategy with the changes, identifying and eliminating bottlenecks as we go forward.
The colloquium, which was held online (via zoom), had over 700 participants across several countries, and was also streamed live on Youtube.
Panelists at the colloquium were Mallam Nasir El-Rufai, Governor, Kaduna State; Sen. Abubakar Bagudu, Governor, Kebbi State; Mrs. Hajara Adeola, CEO, Lotus Capital Limited; Mr. Bismarck Rewane, CEO, Financial Derivatives; Dr. Joe Abah, Country Director, Development Alternatives Incorporated (DAI); Dr. Yemi Cardoso, Chairman, Citibank Nigeria, and Boason Omofaye, the Moderator.
Dr Yemi Kale, Statistician General of the federation and CEO of the National Bureau of Statistics (NBS) was also present.
What Nigeria is not getting right with PPPs
We need to develop greater capacity for our public service to engage in public private partnerships. PPP is not a gift. The public sector is not charity and so you need to understand what you are doing with them.
To achieve the Sustainable development goals, public-private partnerships (PPP) is not just an option for Nigeria but a necessity. That is because it is not possible for government alone to raise the kind of money needed for it.
According to Dr Joe Abah, Country Director, Development Alternatives Incorporated (DAI), the government needs to provide a safe and stable environment for the private sector to invest, and also restructure public-private partnerships in order to get more value out of it.
Speaking during a virtual conference on Saturday, he referred to a report from the United Nations general assembly which stated that Africa needs “an incremental amount from $200 billion to $1.3 trillion per annum to be able to achieve the SDGs”.
This, he noted, calls for restructuring of public private partnerships, to harness the strengths of both sectors towards sustainable development.
“We need to develop greater capacity for our public service to engage in public private partnerships. PPP is not a gift. The public sector is not charity and so you need to understand what you are doing with them.
“We need to monitor performances very closely and that is one thing that the private sector does very well that we don’t do in the public sector,” he stated adding that the public sector needs to have delivery target tied to remunerations.
Removing socio-economic constraints
In his presentation, chairman of Citibank Nigeria limited, Yemi Cardoso stressed the need to remove constraints that hinder people from thriving.
“In one of the studies done where they looked at 8 high-growth countries, they discovered that there were no identical policies in all of them, but there was a common theme – liberate people from their societal economic constraints and they flourish,” he said
He explained how tax rates and regulations that frustrate free enterprise could also impede a countries growth and pointed out countries that had removed such bottlenecks.
According to him, the negligible tax rates in Hong Kong are a source of encouragement to businesses, and so is the ease of doing business in Singapore.
“There is also Macedonia where the sectoral competitive strategy is focused on attracting foreign direct investment (FDI) in automotive industry. Malaysia has also reduced dependence on agricultural exports by paying attention to manufacturing,” he added.
If Nigeria could focus on her competitive advantage, tweaking it as the time changes and attracting strategic investments to the country, she would well be on her way to economic prosperity.