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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%.

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Active bank accounts in Nigeria surge to 111.5 million as COVID-19 drives account opening

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.

READ: How to protect your bank accounts from hackers and fraudsters

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.

READ: Value of shares traded by top 10 stockbrokers up 133% despite COVID-19

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.

READ: Twitter freezes password reset to address cyberattack

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

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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.

READ: UBA reports profit of N30.1 billion for first quarter of 2020

To access the data in full, click HERESource: Computations from NIBSS data

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Chidi Emenike is a graduate of economics, a Young African Leadership Initiative Fellow and an Investment Foundations certificate holder. He worked as a graduate Teaching Assistant in the Federal College of Education Kano and is also a trained National Peer Group Educator on Financial Inclusion

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    Corporate deals

    Access Bank moves to acquire BancABC Botswana

    The Nigerian bank would buy just over 78% of BancABC Botswana for an undisclosed cash amount of about 1.13 times the book value plus a two-year deferred payment.

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    Access Bank , #EndSARS: Access Bank Debunks aiding military onslaught against Lekki protesters

    According to a memo published today, Access Bank, Nigeria’s largest lender, has agreed to buy a majority stake in African Banking Corporation of Botswana for cash, only a month after buying a South African bank.

    Stagflation and dollar shortages in Nigeria have frustrated industries and shrunk the lending sector, prompting Access Bank to extend across the African continent. Atlas Mara said in a statement on Monday that the Nigerian bank would buy just over 78% of BancABC Botswana for an undisclosed cash amount of about 1.13 times the book value plus a two-year deferred payment.

    Access Bank now has a presence in ten African countries thanks to the agreement with ABC Holdings, a local subsidiary of Atlas Mara, a London-listed company. It should be completed by the end of the second quarter.

    Herbert Wigwe, the Chief Executive Officer of Access Group, told the public that the company is focused on growth. “We remain committed to a focused and deliberate expansion strategy in Africa, which we believe will generate solid, long-term returns,” the bank said.

    According to Access Bank, BancABC is Botswana’s fifth-largest bank, with a strong retail loan portfolio and plans to expand into corporate and small-to-medium-sized business lending. Nigerian lenders have been looking for new ways to increase profits in the face of slowing domestic inflation, falling government bond yields, and an increase in restructured loans as a result of the COVID-19 pandemic.

    In March, Access Bank paid $60 million for a majority stake in South Africa’s Grobank, making it the first Nigerian bank to enter the country. It has also recently signed agreements in Zambia and Mozambique. Access Bank is restructuring into a holding firm to drive its international growth with more than $16 billion in reserves and an emphasis on corporate and retail banking.

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    Business News

    How API fintech startups are driving access to financial data across Africa – CEO, Mono

    In an interview with Abdulhamid Hassan, CEO of Mono HQ, a fast-rising API fintech startup, we got to understand how their services are beneficial.

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    In recent times, we have seen APIs grow from just a curious term among tech enthusiasts to become a core to many businesses. API’s have been highly valuable to developers and businesses because it acts as a communication channel between two services.

    In Nigeria, API fintech startups have made a tremendous impact in the fintech space with the rise of API startups like Mono, Okra, and Onepipe that are building Africa’s API infrastructure for institutions and third-party companies for different purposes. These startups have garnered investors in a very short period of operation.

    Why API startups?

    An API makes it easier to integrate applications and services as it facilitates communication between them. APIs allow businesses to create ecosystems around their operations. Today, they are responsible for connecting people and systems thereby enabling the creation of a better user experience by simplifying access to information.

    For example, instead of building its own mapping and payment services, Uber was able to leverage public APIs like Google Maps and a payment gateway and then deliver them in a mobile application that ended up changing the entire transportation industry across the globe.

    Why open banking is important

    Open banking is a banking practice that provides third-party financial service providers open access to consumer banking, transactions, and other financial data from banks and non-bank financial institutions through the use of application programming interfaces (APIs).

    Since fintech startups are fundamentally focused on providing financial solutions, they need access to financial data to continually create new solutions and also prove their value to prospective users. Open Banking provides the opportunity in the form of convenient access to financial data and services for them to scale up their customer base and products.

    However, open banking also poses security threats such as data breaches due to poor security, the potential for a malicious third-party app to clean out a customer’s account, or insider threats from financial institutions that have become relatively widespread as more data becomes interconnected.

    In an interview with Abdulhamid Hassan, CEO of Mono HQ, a fast-rising API fintech startup, we got to understand what they do and how their services are beneficial.

    What was the inspiration for founding your startup?

    The inspiration behind founding Mono came in a conversation between myself and Prakhar. We had just realized how difficult it was to find a service that could put all our financial accounts in one place so we could see them at the same time. There’s nothing quite like relating directly to a problem because it means you have first-hand knowledge of the difficulty it presents. We decided to build an app that could power account linking, and that’s how we walked into founding Mono.

    What does Mono do and what sets you apart from other fintech startups?

    Mono builds APIs and infrastructure that makes it easy for developers and businesses to create better experiences for their users. Our APIs act as a conduit to enable these businesses to access data and financial accounts. We don’t think of ourselves as a fintech startup, we’re more a data company that makes innovation possible. Today, it’s mostly fintech companies that we support with our user identity/account verification, statement collection, and direct debit services. Tomorrow, it could be Edtech or health tech.

    What problems are you trying to solve in Nigeria and Africa?

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    Today, in Nigeria, there are lots of companies with products that require their customers’ financial data to function. Banks don’t have public APIs for businesses and developers to consume. Without this information, services that provide value to customers cannot be delivered optimally. But now, through our APIs, people are able to securely link their financial accounts, share their bank data like statements, transactions, and balances in seconds with other businesses.

    Businesses are also able to verify the identity and account information of their users and more. With this infrastructure and these insights, businesses can provide better services and experiences for their customers, mitigate identity fraud, and even create new products off the back of these possibilities.

    So, we’re solving the problem of inaccessibility to data and financial accounts, and enabling businesses to innovate and build for their customers.

    Do you believe Nigeria is truly ready to adopt an open banking system?

    We believe that while Open Banking is a fairly new financial practice in Nigeria, its adoption is spreading rapidly. This innovation can grow to make the adoption necessary, rather than something the financial system in the country has to be ready for.

    What would be the role of API companies such as yourself in encouraging open banking in Nigeria?

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    Apart from powering more businesses in the African ecosystem to create endless possibilities and personalized experiences for the everyday user, our role is also to be an example of upheld data and privacy ethics.

    What are your plans for expanding into other African markets?

    Mono started out in Nigeria, but our mission is to power the internet economy in Africa. Our expansion plans see us moving into Ghana and Kenya, first to understand each market and the ways that Mono’s services can solve their problems, and then establish ourselves there.

    Bottom line

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    Since APIs are an effective way to enable the digital transformation of businesses, the ability for businesses to innovate and become early adopters of API services is the key to success and this will allow companies to move into new markets that they may never have considered.

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