Financial Services
Active bank accounts in Nigeria surge to 111.5 million as COVID-19 drives account opening
NIBSS report reveals the number of active bank accounts surged by 14.41%.
Nigeria’s active bank account increased by 14.41% from 97.485 million active accounts to 111.54 million, data from the Nigerian Inter-Bank Settlement System Plc (NIBSS) reveals.
The increase is a big boost to achieving the National Financial Inclusion Strategy (now revised) goal aimed at reducing the financial exclusion rate from the baseline figures of 46.3% in 2010 to 20% in 2020.
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Key metrics
- Nigeria recorded a total of 160, 038 bank accounts for the period under review, 30.31% of the accounts translating to 48.5 million accounts were dormant. However, the percentage of dormant accounts reduced within the period under review when compared to the April 2020 figures, while the absolute number increased.
- As of April 2020, approximately 45. 90 million accounts were dormant which is about 32% of the total bank account obtainable, while in May 2020, the absolute number increased to 48.5 million, however it was only 30.31% of the total bank accounts which is 1.69% down.
- Total savings account increased by 13.8% from 114.13 million accounts recorded in April 2019 to 129.91million accounts in May 2020. Also, Current accounts increased by 3.59% from 24.3 million accounts to 25.17 million accounts.
- The financial Inclusion rate as of 2018 was 63.2% which is a 4.4% increase in the 2016 figures of 56.8%. The figures are bound to improve in 2020. To achieve the 70% benchmark in 2020, it is pertinent to leverage on technology to provide affordable financial services.
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The licensing of Payment Service Banks and digitization of most of the Deposit Money Banks services have in a long way contributed to the continued improved performance of the financial inclusion figures.
Why the surge?
Nairametrics had reported the impact and opportunities available for financial service agents in Nigeria during COVID-19. The report highlighted that the Central Bank of Nigeria excluded super-agents from the list of financial institutions exempted from government lockdown restrictions and the positive multiplier effect of this announcement.
The lock-down period reinforced the position of agent banking as an important part of the financial ecosystem. They are close, convenient, and cost-effective. On an operational basis, most agents had to rebalance through ATM to meet liquidity needs.
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On why the total active, savings, and current accounts increased during the period under review irrespective of the gloomy economic situation, Mr. Samuel Olaniyan, a banking expert informed Nairametrics that “the increase is partly due to the lack of better investment alternatives and also due to the lockdown”.
For example, fixed deposit rates and treasury bills rate within those periods were around 1-2% and most people with maturing investments would rather keep their money in their savings (3.5%) and some would rather not invest at all.
Secondly, due to the pandemic, there wasn’t a lot of money moving around and a lot of people had to make sure their savings is safe and secure (of course in their bank accounts).
READ: CBN grants licenses to 3 Payment Service Banks
Why this matters
As one of the National Financial Inclusion targets, by 2020, an excerpt from the Revised Nation Financial Inclusion Strategy reads thus; ‘‘It is expected that 60% of the total adult population which translates to 6.3 million people should have been financially included. The 2020 revised strategy target for Agents pegs it at 476 Agents per 100,000 adults. The justification for this new figure is based on recent developments in the financial sector aimed at taking financial services to the unserved and under-served using branchless platforms such as Agent banking and digital platforms. It is estimated that at least 500,000 Agents should be available to serve about 105 million adults population in Nigeria by the year 2020. This gives about 476 Agents per 100,000 adults”.
From the above set targets, it is not out of place to state that despite the remarkable progress made in the number of active bank accounts and savings which are important metrics in the financial inclusion drive, there is still a room for improvement as far as meeting the financial inclusion target is concerned.
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To access the data in full, click HERESource: Computations from NIBSS data
Debt Securities
Ecobank Nigeria secures N50 billion 10-Year subordinated loan
Ecobank Nigeria has secured a N50 billion, 10-year bilateral subordinated loan.
Ecobank Nigeria, a subsidiary of Ecobank Transnational Incorporated (‘’ETI’’) has announced that it has secured a N50 billion, 10-year bilateral subordinated loan.
This is according to a disclosure signed by the Group Head, Adenike Laoye and sent to the Nigerian Stock Exchange, as seen by Nairametrics.
The bilateral funding will enable the bank to maintain stable liquidity and improve its balance sheet, especially the capital adequacy ratio by an estimated circa 300 basis points.
What they are saying
The disclosure from the bank read thus:
“Ecobank Transnational Incorporated (“ETI”), the parent of the Ecobank Group, announces that one of its significant subsidiaries, Ecobank Nigeria, secured N50 billion, 10-Year bilateral subordinated loan.
“The bilateral funding provides stable medium-term liquidity to the balance sheet of Ecobank Nigeria and positively improved its balance sheet ratios, especially the capital adequacy ratio by circa 300 basis points. The transaction proceeds would be deployed to support Micro, Small and Medium Scale Enterprises (“MSMEs”) and Small Corporates.”
What you should know
Ecobank Transnational Inc. had earlier recorded 11% rise in its interest income to N139.6 billion for Q3 2020, as captured by Nairametrics.
- Subordinated loans have lower priority than other debt instruments in case of liquidation. They are only repayable after other debts have been paid.
- This debt can either be secured or unsecured and it typically has a lower credit rating and higher yield than other senior debt.
Financial Services
Niger Insurance Plc gets shareholders nod to restructure business
Niger Insurance Plc has announced plans to restructure its insurance business into distinct but mutually dependent business entities.
Niger Insurance Plc has obtained shareholders’ approval to restructure its insurance business into general, life and business insurance, with each segment to be structured as a separate legal entity.
This is part of the resolutions passed at the 50th Annual General Meeting of Niger Insurance Plc., held on 20th of January, 2021 at Peninsula Hotel in Lekki, Lagos.
The decision to restructure the company is in a bid to make it more efficient and profitable to stakeholders, especially as efforts are geared towards overturning a loss of about 1,1723.2% Year-on-Year, earlier made by the company in its last reported financial statement, Q2, 2020, as reported by Nairametrics.
Other key decisions reached at the 50th AGM include;
- The re-appointment of Mr Ebi Enaholo and Mrs. Olufemi Owopetu as Directors of the company.
- Acceptance of the presented financial statement for the year ended December 31, 2019 and the report of the audit committee, directors and auditors.
- Directors were authorized to fix the remuneration of the auditors.
- Directors were authorized to appoint external auditors to replace retiring auditors of the company.
- The appointment of four individuals as members of the audit committee.
- A decision to restructure the company’s business capital was also reached.
In case you missed it: The shareholders of Niger Insurance Plc in the 49th Annual General Meeting approved the decision by the company’s board to raise additional capital to the tune of N15 billion, in a bid to meet the revised recapitalization targets for general and life insurance companies.
What you should know: The House of Representatives had in December 2020 directed NAICOM to suspend the mandatory deadline for the first phase of 50%-60% of the minimum paid-up share capital for insurance and reinsurance firms.
Financial Services
CBN says revised new cheque book to become fully operational from April 1, 2021
The CN has announced plans to discontinue the use of old cheque books with effect from March 31, 2021.
The Central Bank of Nigeria (CBN) has in a circular to all Deposit Money Banks (DMBs), accredited Cheque Printers/Personalisers, and the Nigeria Interbank Settlement System (NIBSS), stated that the revised cheque book will become fully operational from April 1, 2021.
The apex bank has directed all DMBs to enlighten their customers on the revised cheque book, introduced across all banks as full enforcement of its usage will commence on the stated date.
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The disclosure is contained in a circular that was issued by the CBN and signed by its Director Banking Services, Mr Sam Okojere.
The CBN in the circular noted that the clarification became necessary as some stakeholders had been interpreting the circular differently from the intended purpose.
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The CBN in the circular stated, ‘’Please refer to our circular dated 9th December, 2020, referenced BKS/DIR/CIR/GEN/02/042 on the above subject.
It has come to our notice that some stakeholders interpret the circular differently from the intended purpose. Consequently, it has become imperative for the CBN to issue the following clarifications;
- The parallel run, in which old and new cheques are allowed to co-exist, will end on 31st March 2021, and thus only new cheques would be allowed in the clearing system from 1st April 2021.
- Full enforcement of the second edition of the Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) Version 2.0 will commence April 1, 2021 and the NCS/NICPAS 2.0. Sanction grid will be fully operational on April 1, 2021.
- All deposit money banks are (therefore) directed to actively enlighten their customers and ensure necessary provisions are put in place for a smooth migration to the New standard.
- The extension of full implementation date from Jan. 1 to April 1, 2021 is due to outbreak of the Covid-19 pandemic and the impact it had on the Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) Version. 2.
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What you should know
- It can be recalled that in an earlier circular issued on the revised cheque book, the CBN had put the cut-off date for the parallel run of the old and new cheques at August 31, 2020.
- This was further extended to December 31, 2020, with only new cheques intended to be allowed in the clearing system from January 1, 2021, due to the outbreak of the coronavirus pandemic and the impact it had on the project.
- This further adjustment of the deadline gives room for more sensitization by the deposit money banks to their customers, taking into consideration the disruptions that have happened in the economy.
READ: CBN temporarily suspends cheque clearing during Coronavirus lockdown
