General Manager, Nairametrics, Mr Chris Pemu, in an interview with THISDAY Newspaper spoke on the need for Nigerians to leverage new financial technology solutions to serve their business needs, as well as how businesses will survive in the post-COVID-19 era. Excerpts:
Technology is expensive to deploy despite its many advantages. How can small businesses leverage technology to grow their business in line with your vision?
It is true that small businesses all over the world including Nigerian firms, typically find the cost of deploying technology as a barrier to adoption. However, there have been advances in the suite of technology solutions that micro-enterprises can leverage including in Nigeria. The key is for micro-enterprises to think critically about their core business services, as well as, which business tasks they plan to outsource. Depending on the decision matrix, appropriate lower-cost alternatives can be leveraged. As examples, businesses need to ask the questions: do you really need to rent an office space if you can start out with just a website and use shared workspaces for your meetings? Do you really need to hire advertising and marketing staff from day one, if you can reach followers on social media platforms? The use of lower-cost technology objectives enables small businesses to keep overhead costs low during the startup phase and focus on core revenue-generating services such as product development and customer service which drive growth.
What factors led to the establishment of Nairametrics in 2013 and what has been its focus and driving force?
Nairametrics started in 2013. Ugodre Obi-Chukwu, an accountant and the founder of Nairametrics started blogging via his blog site ugometrics.com in 2011 after he observed that most articles on personal finance and financial analysis were from foreign financial websites and blogs. In 2013 he founded Nairametrics, a name coined by dropping “Ugo” for “Naira” as we sought a website that was not about him or his opinion. Nairametrics Financial Advocates was registered in 2015 as a limited liability company in Nigeria.
What is unique about Nairametrics and what differentiates its contents from others?
At Nairametrics, our content is different from the rest because we provide financial and business-related news. However, we do it in such a simple way that it is itself unique. We are reporting the news to capture the attention of people who are just starting a journey to be educated in financial matters, backed with digital contents. Our articles are also straight to the point, typically between 200 to 400 words. We are also not limited to written news content, and we produce newsletters, reports, and various multimedia content online and on social media for millennials.
What are your strategies for recruiting the right team?
Nairametrics has a young dynamic team of self-starters who share the underlying passion to provide relevant financial and business content to our audience. Therefore, we try to recruit the most talented individuals in separate fields while looking out for the intangibles like passion, zeal, hard work, and a desire to raise the profile of the brand. We have a growing team of about 30 individuals and we are still looking to expand.
Most people at the grassroots lack of proper financial investment guide in today’s digital era. As an advocate of financial literacy, what will be the advice of Nairametrics?
With regard to financial literacy, there is simply no substitute for training and education. Thankfully the key authorities recognise financial literacy as a barrier to financial inclusion in Nigeria and are increasingly focusing their efforts on this pillar of financial inclusion. Specific programs include CBN’s Financial Literacy Framework, the Nigerian Stock Exchange X-Academy, as well as, the SEC Nigeria’s Financial Literacy Technical committee (FLTC).
As an advocate of financial literacy, what are your views about financial transactions in the informal sector, where there is heavy cash flow among traders?
I’m assuming this question suggests that the majority of transactions in the informal sector are cash-based. If so, I understand the perception that there are a lot of cash transactions in the informal sector. However, before we discuss Nigeria’s financially excluded population, we must first commend the authorities for the ongoing work being done to migrate the banked population from cash and cheque-based channels to electronic banking channels. The apex banking regulator releases an annual CBN Payments Channel report which, tracks volumes and values of financial transactions conducted across the various channels in Nigeria such as Cheques, ATM, as well as, electronic channels. If we accept ATM transactions to be synonymous with cash dealings, then what you can see from the report is that the use of manual cash/cheques is reducing as a proportion of overall activity. In 2015, ATM activity was 7.1% of overall activity, which N3.9 trillion out of N56.3 trillion in total financial transactions. Cheques accounted for 11.0% of overall activity, which is N6.2 trillion out of N56.3 trillion total financial transactions, However, by 2019 ATM activity was only 3.8% of the total, which was N6.5 Trillion of N171.5 trillion. Cheques accounted for only 2.6% of total or N4.5trillion of N171.5 trillion. In other words, ATM and cheques combined now account for less than 7% of financial activity in 2019 compared to 18% of activity in 2015. This dramatic change is simply reflected in the growth of alternative payment channels which facilitate the peer to peer cash transfers such as Mobile Money, Agent Banking, Web Transfers, as well as, mechanisms for seamless bill payments such as e-bills and Remita. The adoption of these new electronic channels by Nigerians has resulted in a g4outstanding 400% growth from N33 trillion in 2015 via electronic channels to N135.4 trillion in 2019. However, the above improvements only benefit the “Banked” population in Nigeria.
The Central Bank of Nigeria (CBN) is keen to have Nigeria as a cashless economy, but Nigeria is still regarded as a heavy cash nation, where the volume of financial transactions is done with physical cash. How can this financial narrative be changed?
Financial products are not different from any service or application in the world. Everything requires a basic level of literacy. Even the use of mobile phones, television, driving a car all requires a basic level of literacy. If we are being honest, Nigerians are great adopters of technology when they can clearly see the benefits and it fits the lifestyle of an average Nigerian. As an example, 83% of the Nigerian population has a mobile phone with smartphones adopted by a whopping 39%. Notably, for smartphone adoption, Nigeria is the 4th in Africa only behind South Africa, Tunisia, and Kenya. In other words, adopting advanced technology isn’t the problem when the incentives are clear and there is minimal change to lifestyle including adoption costs. Thus, the challenge is in establishing the right incentives for Nigerians to leverage new financial technology solutions to serve their needs. Technology solutions that require the average Nigerian to download an app to make purchases on e-commerce platforms for goods that cost tens of thousands may be targeting the wrong market. However, a USSD/mobile phone-based solution for getting microloans of between N1,000 to N10,000 repayable at the end of the week will likely be of interest to the average Nigerian. In other words, FinTech startups need to continually deliver solutions focused on helping end-users solve their existing problems. Fintech should continually deliver solutions that integrate into the existing workflow and lifestyle of Nigerians rather than creating new workflows. From a FinTech perspective, creating the right solution requires research and development which costs money, then the FinTech companies need to test the market and then hope for profitable and sustainable end-user adoption.
The Central Bank Governor said there would be life after COVID-19 pandemic and advised Nigerians to consider an alternative plan for survival after the COVID-19 crisis. What should financial institutions do to reposition Nigeria after the economic lockdown?
Of course, there will be life after COVID-19. However, imminent concerns are that the new normal for businesses will involve some degree of physical distancing, as well as, the use of protective facial coverings. From a financial institution’s perspective, physical distancing will mean that customers will need to have banking options which allow them to avoid coming into bank branches to conduct business such as Contactless Banking. These contactless banking options will need to go beyond electronic payments and cover the entire spectrum of banking products. This transition to contactless banking requires significant investment in human capital to train and retain competent staff, as well as, investment in technology both in terms of product delivery, but also in terms of cybersecurity. The drive to contactless banking in Nigeria across all products will be key to ensure minimum disruption to financial services, as businesses return to normal. It will be ideal to ensure that corporations are able to seamlessly access loans, make deposits and facilitate transaction settlement with minimum physical contacts with bank branches and personnel in a post-COVID-19 world. Especially as this virus is expected to be with us for a while even after a vaccine is manufactured, thus, we’ll need to be able to conduct business as usual at least from a banking perspective.
What are the best strategies for business survival in the face of lockdown occasioned by the effect of the COVID-19 pandemic?
Businesses must activate their Business Continuity Plans (BCP) to make sure they are still a growing concern. There are cases of businesses losing 75% of all their revenue, some 100% all over the world. Therefore, the BCP is an effective way for the business to protect its assets and key personnel. It remains an important risk management strategy and it has to be reviewed periodically to ensure it is up-to-date. Organisations who have activated their BCP plans are currently in a better position to survive this pandemic, and all well-positioned to succeed post-COVID-19.
Most Nigerians are afraid to register for online banking transactions because of the perceived fear of online fraudsters. How will you address the fear of such people and redirect them to become financially included?
The CBN’s annual payment channels statistics report shows that the use of internet/web as a payment channel has remained flat in 2019 at 0.3% of total activity or N478.1 billion out of 171.5 trillion, compared to 2015 at 0.2% of total activity or N91.5 billion out of N56.3 trillion. There are various reasons for this low online/web usage rate which can partially be attributed to the following factors. Nigeria is dominated by mobile-based platforms for e-commerce rather than a desktop-based market. Especially as there are very few Nigerians who have the financial means to own desktops or laptops, let alone afford the power generator costs to operate these devices and then subscribe to the data plans required to connect these laptops to the internet let alone for e-commerce transactions. Thus, given the country’s demography, it is only logical that online transactions will continue to be a fraction of the overall activity compared to the other electronic payment channels. Nigeria is a high-context culture society, and in high-context cultures and transactions are more likely to be successful when the buyer has a perceived or real relationship with the seller. Such that there is sufficient communication between both parties to increase trust. Thus, the average Nigerian relies on personal interaction and relationships when making purchases, especially for big-ticket items.
Again, Inadequate Nigerian consumer protection laws continue to act as a drag to e-commerce transactions including online/web transactions. In countries such as the UK, USA, Germany, China, etc. consumer protection laws allow users to return unsatisfactory purchases within a defined period subject to terms and conditions set by the retailers. However, in Nigeria such isn’t obtained. Thus, the fallback option of ensuring you trust the retailer you are buying from. However, despite these factors which limit online/web-based transactions, domestic trade continues to boom in Nigeria driven by low-cost electronic channels which continues to soar. Thus, the lesson here is for businesses to provide customers with multiple payment channel options, but more importantly, businesses need to ensure customers can easily interact with them, leverage low-cost options such as social media. Instagram, WhatsApp, Twitter, LinkedIn for customer communications, and then mobile money for transaction settlement.
Technology is evolving with Artificial Intelligence (AI) and the Internet of Things (IoT). How can Nairametrics leverage big data analytics to provide appropriate solutions for the financial market?
From a Nairametrics’ perspective, we have recently launched our own app that both Android and Apple users can download to keep up to date with actionable business on the go. Given our core focus of financial literacy and investor advocacy, we see huge opportunities in big data analytics, specifically, in the areas of market research and predictive analytics. As an example, we’ve been tracking prices of household items such as food, and plan to expand this market research to other areas. The underlying data presents interesting insights at a very basic level with which we correlate with macro stats from CBN and NBS to give our audience actionable insights. As we expand our data repository and the functionality of our app, we expect to deploy more bespoke real-time analytics for the Nigerian retail investor. So, this is a space to watch.
The government is keen on financial literacy, which is at the very core of Nairametrics’ vision. What is the level of commitment from Nairametrics to achieve this goal?
In the Nigerian school curriculum, there is a gap and absence of personal finance courses, a situation that has left many individuals with no training on personal finance, while some have to be self-taught. We have come up with various initiatives as our contribution to improving financial literacy in the country. We have ‘Everyday Money Matters’, which is a show powered by Nairametrics on Lagos talks 91.3 FM where a litany of issues pertaining to personal finance is discussed. If Nigerians can create wealth individually it will have a multiplier effect on the nation.