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Interview

Telecoms, FSI to hugely boost Nigerian Economy in 2021 – CWG’s Business Director

CWG Plc’s Business Director chats with Nairametrics about the economy, telecoms industry and Financial Service Institutions.

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Mr. Abayomi Olomu, the Business Director, Financial Service Institutions at CWG Plc, a Pan-African Information and Communications Technology company, has opined that there is a ray of hope in the horizon for the Nigerian telecommunications industry in 2021 

READ: Afreximbank expands Trade Finance Intermediary Initiative, lists 8 Nigerian banks

In this interview with Nairametrics, he projected that despite the impact of COVID-19 on the global economy in 2020, the industry is expected to grow by at least 5.7%, while the Financial Service Institutions (FSI) is to also experience growth due to increased transaction and a further improvement in the financial inclusion plan. 

READ: How digital transformation will impact Nigeria’s projected $8.79 billion economic expansion

How would you assess the Nigerian economy in 2020?

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The negative impact of the COVID-19 pandemic cannot be over-emphasized, still, the Nigerian economy has shown some resilience and there seems to be a ray of hope in the horizon, judging from certain macroeconomic indicators and recent government policies to help strengthen the Naira.

Taking a critical look into the Nigerian economy this FY2020, the GDP contracted by 6.10% in Q2 and had a mild downturn of 3.62% in Q3 (year-on-year) – this represents an improvement of 2.48% growth rate (comparing Q2 – Q3). It still means that Nigeria recorded two consecutive quarters of negative growth rate in FY2020, the performance of the economy in Q3 2020 reflected residual effects of the restrictions to movement and economic activity implemented across the country in early Q2. After these restrictions were lifted and businesses re-opened, some economic activities returned to positive growth. A total of 18 economic activities recorded growth in Q3 2020, compared to 13 activities in Q2.

READ: How Cryptocurrency is driving economic growth

The oil sector contributed 8.73 per cent to total real GDP in Q3 2020 – down from 8.93% recorded in the preceding quarter, Q2 2020. The non-oil sector contributed 91.27 per cent to the nation’s GDP in the third quarter of 2020, which is 3.54 per cent higher than in Q2 2020. The non-oil sector was driven mainly by Information and Communication (Telecommunications), with other drivers being Agriculture (Crop Production), Construction, Financial and Insurance (Financial Institutions), and Public Administration. In my opinion, we need to focus more on the non-oil sector to drive sustainability.

READ: Over 1 million people took loans from banks below 20% interest rate in 1 year- CBN

Probing further into some specific economic indicators such as inflation rate, unemployment rate, and interest rates, we will be able to make some certain inferences. Consumer Price Index (CPI) rose by 14.23% in October as against 13.71% in September and 12.13% in January 2020. The unemployment rate stood at 27.1% as at Q2 2020, even though this is beginning to reduce gradually.

READ: Zenith USSD banking transaction value rises by 30.8% Y-o-Y to hit N497.29 billion

The interest rate currently stands at 11.50% as against 13.50% in January 2020. Overall, 2020 has not been a great year for the Nigerian economy but the fact that the non-oil sector is growing, which ultimately compensates for the decline in growth in the oil sector is something to cheer about and hopefully, it can be the real motivation that is needed to diversify the economy. Also, judging by the available data and the current economic outlook, the economy was in recession during Q3 and hopefully, it will be out of it by the end of Q1 2021.

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READ: How Crypto can curb Nigeria’s high unemployment rate

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With COVID-19 still around, going forward, what do you think can be done to have an established e-Payment system in Nigeria?

The electronic system of payment has come to stay but the traditional trend of over-reliance on cash transaction by Nigerians happens to be the major challenge to this emerging system. Asides educating the populace on the need to switch to making transactions using e-payment options, the government needs to come up with favourable policies that will encourage people to use the e-Payment options now that physical contact has reduced.

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READ: Nigeria generates N416.01 billion from Company Income Tax in Q3 2020

The fundamental issue of trust must also be addressed. The government needs to take the fight against cybercrime more seriously and assure the people that it is safe to transact online.  The regulatory body must ensure that the failed transaction rate is reduced to the minimum and peradventure it happens, a reversal should be done almost immediately. This can be achieved when there is a seamless line of communication between our financial institutions.

READ: CIBN: Our economic challenges are of a global dimension – Emefiele

Lastly, licenses should be issued to more mobile money providers because they will be able to operate in remote areas where banks may not be situated. This will increase the financial inclusion rate by accommodating the illiterates and ignorant in the cashless policy agenda of the government.

How would you describe the CBN’s financial inclusion drive in Nigeria and its impact?

The financial inclusion drive has been identified globally as a vehicle for economic development and since its adoption by the CBN, it has seen the exclusion rate drop from 53% in 2008 to 46.3% in 2010 with a target of 20% by 2020. The channels for delivering financial services have been equally targeted by CBN, with deposit money bank branches targeted to increase from 6.8 units per 100,000 adults in 2010 to 7.6 units per 100,000 adults in 2020, microfinance bank branches to increase from 2.9 units to 5.5 units; ATMs from 11.8 units to 203.6 units, POSs from 13.3 units to 850 units, Mobile agents from 0 to 62 units, all per 100,000 adults between 2010 and 2020.

READ: ValuAlliance posts N237.96 million profit in Q3 2020; up by over 1000% Y-o-Y

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In line with CBN’s vision, CWG has world-class cutting-edge solutions that will help to bring this vision to reality. CWG has a range of solutions from ATM AAS to POS solutions. Till date, CWG has successfully installed over 4000 ATMs and manages over 2500 ATMs for banks across Nigeria.  Our Finedge solution will further help to advance the Microfinance industry in Nigeria; Also, we have started pushing other solutions that cut across the commercial banks, Stockbrokers, mobile money providers, asset management, insurance and PFAs.

READ: Non-oil sector to contribute 80% of Nigeria’s revenue in 3 years – FIRS 

What are your predictions for the Nigerian Economy in 2021?

With COVID-19 vaccines now being approved for use by most countries, it means there will be an improvement in the global economy come 2021. The global price of crude oil is expected to increase, and the global manufacturing industry will also record increased production. That said, the Nigerian economy should be out of recession by the end of Q2 2021 with a steady drop-in inflation rate due to the proposed opening of the land borders and also, a global increase in production. The prices of raw materials should also reduce, and this will impact our manufacturing sector positively.

The unemployment rate is expected to contract by at least 1.3% before the end of Q2. With the recent AFCFTA agreement, there will be an increase in the GDP as many MSMEs will benefit from these initiatives. The GDP is expected to increase by at least 2.1% before the end of the year.

The Non-oil sector will continue to experience growth with the telecommunications industry expected to grow by at least 5.7%. The FSI will also experience growth due to increased transaction and a further improvement in the financial inclusion plan. State Governments will also want to increase spending as election year is drawing closer. They would want to embark on projects that will be campaign-worthy and as a result, we might experience a significant rise in government spending come 2021.

Many banks in Nigeria rely on CWG’s expertise to operate. What exactly is CWG offering financial institutions in Nigeria?

CWG offers ATM installation and management service to banks and the company is taking it further through her ATM AAS initiative. We provide cloud services and software solutions to over 60% of all financial institutions in Nigeria and have successfully implemented and supported Finacle, the foremost core banking application for most Nigerian banks. We also play in the Risk management space by helping the financial institutions mitigate against risk such as Employee Fraud, AML, Credit risk etc.

CWG also provides products and services such as Finedge (It enables MFB to effectively reduce operational costs and challenges relating to IT resources), Vericash (a banking software that delivers a robust and unified Pan African mobile solution such as mobile banking and mobile wallets), and POS in the FSI space.

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper.The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference.The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - abiola.odutola[email protected]

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Exclusives

China Harbour Engineering Company latest equity infusion into Lekki Port is $221million – CEO, Lekki Port

CEO, Lekki Port LFTZ, discusses how Lekki Port will create an immense macro and catalytic economic impact on Lagos State and Nigeria in general.

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China Harbour Engineering Company latest equity infusion into Lekki Port is $221million - CEO, Lekki Port

Contrary to allegations that lack of fund has been the major source of delay of the Lekki Deep Sea port project, the management of the port has cleared that such claim is false and that it recently got an equity infusion worth $221 million from China Harbour Engineering Company, its major shareholder.

In an interview with Nairametrics, the Chief Executive Officer, Lekki Port LFTZ Enterprise Limited, Mr. Du Ruogang, talked on the catalytic economic impact on Lagos State and Nigeria, which include the creation of about 170,000 jobs and approximately $201 billion in revenue to State and Federal agencies from taxes, royalties and duties. Excerpts:

It appears the completion date has been shifted several times for a while now. Specifically, when will the facility be ready for business? Is the deadline realistic and how prepared are you?

Personally, as the CEO of Lekki Port, with full responsibility for delivering this project, I am fully committed to ensuring the project completion by the end of 2022. My team and I, in conjunction with the EPC Contractor, are working very hard to meet this deadline, and we are doing our best to anticipate any unforeseen circumstances that can derail this goal, so we can eliminate them and stay focused. We are very committed to honouring our pledge to the Honourable Minister of Transport, Rt. Honourable Rotimi Amaechi for a 2022 completion date. This was in November 2020 when he visited the port site.

READ: Lekki Deep Sea Port must be operational by 2022 – Amaechi

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What would be the impact of Lekki Port on the Nigerian economy after completion?

Lekki Port, when operational, will help to ease the congestion in existing ports and generally upgrade the continued development of the maritime and port facilities in Nigeria. With full collaboration from all port users and the regulatory authorities, we hope to cut down the operating costs and improve efficiency of doing business in Lagos, Nigeria.

What are the pressing challenges faced by the management, are there any funding issues?

There are no funding issues. All the equity partners have fully funded the project, with the latest equity infusion being the $221million received from China Harbour Engineering Company.

READ: Tolaram to spend $1.1 billion on West Africa’s biggest port 

There are 4 beneficiary owners of The Lekki Port LFTZ Enterprise Limited, the sole operators of Lekki Seaport i.e. Four China Harbour Engineering Company, Tolaram Group, Lagos State Government and the Federal Government through the Nigerian Ports Authority (NPA). Which of these entities is the majority shareholder of the company and what percentage shareholding does each of these entities have?

China Harbour Engineering Company and Tolaram Group jointly hold 75% of the project through Lekki Port Investment Holding Inc. The other shareholders are Lagos State Government (20%) and the Nigerian Ports Authority (5%).

Do you have any plan to list the company on the Nigerian Stock Exchange?

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Yes, at the right time Lekki Port intends to list the company on the Nigerian Stock Exchange.

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READ: China Development Bank, Sanwo-Olu sign $629m facility to complete Lekki Deep Seaport 

What is the financial benefit of the port (after completion) to the Nigerian economy?

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When completed, Lekki Port will create an immense macro and catalytic economic impact on Lagos State and Nigeria in general. This includes the creation of about 170,000 jobs and approximately $201 billion in revenue to State and Federal agencies from taxes, royalties and duties. Also, over the term of concession, there will be direct and induced business revenue impact of $158 billion as well as qualitative impact on manufacturing, trade and commercial services sector.

In summary, Lekki Port will have an aggregate impact of approximately US$ 361 billion on the Nigerian economy.

READ: Lekki Port to commence operations by 2022

Five years into your operation, where do you see the Lekki seaport?

Lekki Port when operational will help to ease the congestion in existing ports and generally upgrade the continued development of the maritime/port system in Nigeria. Within five years of operation, we hope to have become the transhipment hub for the West African region.

Essentially, we hope to be doing our own part in increasing commercial operations in Nigeria and indeed, across the entire West African region.

READ: Dangote makes about N2.47bn from cement sales every day

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In terms of marine infrastructure, we are aiming for global standards. Vessels will approach through a 9 km long and 19 m deep navigation channel reaching the 600 m wide turning basin. The port is protected against the ocean waves and currents by a main breakwater of 1,900 m long and a secondary breakwater of 300 m, providing a controlled environment for the handling of vessels alongside the 1,500m quay at a water depth of 16.5 m, and 3 Liquid Bulk Jetties with 19m water depth. For safe and secure handling of shipping, berthing facilities for marine services (tugboats, pilots’ boats) are provided as well.

READ: Dangote Cement, MTN, Nigerian Breweries, 9 others raise N478.4 billion from commercial papers

The Container Terminal will have a 1,200m long quay for 3 container berths and a storage yard with over 15,000 ground slots. The terminal is designed to support a throughput of 2.7 million TEUs annually. The Dry Bulk Terminal will have an available quay length of about 300m which will be sufficient to accommodate 1 berth for a Panamax size vessel (75,000 DWT).

The Liquid Berths will be capable of servicing vessels up to the size of 45,000 DWT initially, with design flexibility for expansions, catering to an increase to a capacity of 160,000 DWT. The berth will be equipped with loading arms and connected by pipelines running along the breakwater to carry cargoes between tank farms and the vessels. Finally, there will be in-built technology that allows for screening and processing which will promote efficient movement of goods within 48 hours.

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Business Half Hour

How PR can transform the future and profitability of a business – CEO, Mosron Communications

Tolulope Olorundero, a PR expert and Strategic & Communication Consultant highlights how businesses can profit from public relations.

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Critical things for value proposition in public relations – with CEO Mosron Communications

Public Relations is one of the most effective ways to build on marketing strategies and create a solid online reputation. Companies that have caught onto this are investing a tremendous amount of time and effort into staying on top of their PR strategies, and they are seeing even larger returns with better ROI.

Public relations is about sending the right messages to the right place and the right people, creating a stronger brand reputation. PR agencies work alongside their clients to help them achieve this and promote them within their client’s industries. PR is an area that can transform the future and profitability of a business. Used properly, PR can give a company the ability to overcome almost any obstacle it may face. This is some of what makes PR so essential.

Seating on the hot seat of Nairametrics’ Business Half Hour, Tolulope Olorundero, a PR expert and Strategic & Communication Consultant highlights how businesses can profit from public relations. Olorundero has exceptional skills in Crisis Management and Digital Communication. She is the Founder & Principal Consultant at Mosron Communications and the Chairperson of the Association of Nigerian Women in Public Relations.

I have always loved to read books, so I started as an editor while I was in secondary school. My father was a journalist and he usually comes home with newspapers, so the first thing I would do is to pick up the newspaper and check out some errors. It was just not working well for me that all I can see were errors. So that was what conditioned me to know what to look out for when something is not written well in a book. Bottomline is that it inspired my interest to become an editor. So, when I got to the university, I was editing materials for my course mates, I was also head of publicity for my local church in school and apparently, I decided to do things around public relations. So Mosron communications started as an editorial company,” she said.

Mosron Communications is a public relations consulting firm that provides public relations & communication services to businesses, organizations, and service brands across sub-Saharan Africa. According to Olorundero, Mosron communications started full-time in January 2019, though she had it as a side hustle as an editorial company since 2016.  She later steered the company to a public relations company in 2019, as both are interwoven as there is no way one can say he or she is a public relations person, and not be able to write or edit content.

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Speaking about funding as it relates to her business, she said when she started, there was no funding, and it was completely a bootstrap.  Though her business started as a side hustle, during this period she had a full-time job, and she was able to save up part of her salary. Also, when she started her PR firm full-time, she had to convert a room in her house to an office to enable her to save the cost of renting an office space.

Speaking further on public relations, she said what motivated her to follow the path of PR was that people are digitally connected in today’s world, and PR helps companies to create a strong online presence that is highly visible to their target audience. Therefore, PR agencies provide businesses with support and guidance to help them market themselves online while being constantly ready to step in when a disaster occurs, or something threatens to damage the image of the company.

During the session, Olorundero mentioned that some people have this misconception that public relation is media relations.  She made it clear that there is a need to let the business public and even the public know that there is more to public relations than media relations.  Speaking further, she stated that there are four cultural things in terms of value propositions from a communications PR perspective. And they are.

  1. Corporate communications.
  2. Stakeholder management.
  3. Corporate event management.
  4. Reputation management

She explained that the role of Corporate Communication from a PR perspective has to do with building relationships with customers and responding to inquiries from the public. She emphasised that the duties in this area include producing newsletters, brochures, and other printed materials designed for the public. Corporate communicators manage a company’s website and social media presence, which includes monitoring what customers and clients are saying about the company on social networking websites and responding to inaccurate posts or requests for information.

Also, she said communication professionals are responsible for responding directly to calls and emails from customers with questions about a company’s plans or activities.

For Stakeholder Management, she said effective management of relationships with stakeholders is crucial to resolving issues facing organizations. She stated that stakeholders hold the key to the business and social environment in which organization operates and therefore its subsequent financial and operating performance. Thus, the effective management of stakeholder relations should be an essential focus of PR and organizational activity.

Speaking further on the third value proposition from a communications PR perspective which is Corporate Event Management, she asserted that while a company will most likely have an events manager, the function usually comes under public relations as conferences, exhibitions, and events are designed to generate publicity as well as generate sales leads.

The company may sponsor sports, arts, media, education, science and social projects and institutions, and TV programmes. Events are often linked to sponsorship. A company can sponsor an event or organise its own events, for example, for its sales team, its clients and prospects, its personnel, its distribution network, etc.

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Lastly, for Reputation Management, she indicated that it is their incorporating efforts and campaigns to bury negative reviews, information, or search results and promote content that positively accentuates the desired image.

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In addition, she advised business owners, corporate organizations & entrepreneurs on the importance of public relations, saying it aids businesses when it comes to online visibility and brand management. She said in this part of the world everybody thinks they can handle their PR themselves and some might end up diminishing their brand at the course of doing so.

However, it is crucial for you to hire an experienced hand to manage the Public Relations of your company as PR is an area that can transform the future and profitability of your business.

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Interview

The presence of institutional investors will help Africa’s crypto market mature – Luno

Luno Exchange talks to Nairametrics on Bitcoin, Institutional Investors in Africa, trading XRP and its presence in Nigeria, amongst others.

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The world’s most popular crypto, Bitcoin, in recent weeks has been on price levels not seen since the era of this financially dynamic market.

Investments from leading global business brands like MicroStrategy, Square, Paul Tudor Jones, MassMutual, and SkyBridge Capital are further indisputable evidence of such investors in the flagship crypto market.

Also, playing into the hands of Bitcoin bulls are macros showing majority Bitcoins in circulation are illiquid and therefore hardly accessible for buying, which points to a bullish investor sentiment as large amounts of BTC are being hoarded – which reduces sell pressure.

READ: Why companies/firms need to pay staff in Bitcoin: using Patricia as a case study

Although recent price actions reveal that as Bitcoin makes a new high, traders’ significant amount of profit-taking usually takes place in form of a market correction, and that’s why there is a significant amount of market volatility as sellers and buyers try to take hold.

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Marius Reitz, General Manager for Africa, Luno, talks to Nairametrics on Bitcoin, Institutional Investors in Africa, trading XRP and its presence in Nigeria, amongst others.

What is your take on the news of U.S banks using Stablecoins as a settlement infrastructure?

This is a huge win for crypto and stablecoins as it adds credibility for mainstream adoption. In theory, stablecoins are meant to be less volatile than the completely decentralised cryptocurrencies like Bitcoin that many people are familiar with. One of the primary reasons people are drawn to stablecoins is to hedge against volatility during market dips – either in cryptocurrency or your own local currency. Another is that when selling crypto, you may want to keep your funds on the platform, ready for your next move.

READ: Over $20 billion pumped into crypto market by big investors

How would you rate the presence of institutional investors in Africa, if low, why?

2020 was a record year for institutional investment, with MicroStrategy, Mode, Square and more moving huge percentages of their cash reserves into bitcoin in a bid to move away from fiat currency. However, the numbers in Africa are still small. The presence of institutional investors in Africa’s crypto market will help the industry mature and become more efficient, however, there needs to be a better understanding of crypto’s use cases and regulation to attract this level of investor.

In recent months, there have been some strides made towards enforcing regulation by African countries. In July 2020, legislators in South Africa enforced rules for a national framework with FATF anti-money laundering standards, including but not limited to cryptocurrency. Countries such as Kenya, Ghana, Lesotho, Swaziland, Uganda, Zambia, and Zimbabwe have advised discretion regarding cryptocurrency usage while not actively banning them. Whilst regulation is beginning to pick up across Africa, further regulation throughout the continent is necessary in order to attain higher institutional investment in the region.

READ: 4 cryptos gain over 400% in a month, far outperforming Bitcoin

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Is Luno still going to be trading XRP amid regulators’ legal tussle?

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Whilst we do not have any customers in the USA, we are aware of the SEC’s lawsuit against Ripple and are monitoring proceedings very closely. However, with the case still in its infancy, it is too early to draw any conclusions. In the event of XRP being classified as a security, we’ll reassess listing it on our platform to ensure we remain compliant with regulatory obligations in all our regions. For the time being, until there is more clarity on this issue, we don’t intend to remove XRP from Luno.

READ: World richest man, Jeff Bezos holds 5% of his wealth in cash

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Nigeria is one of your biggest markets, why haven’t you established a strong physical presence here?

Nigeria is our fastest-growing market and we have a growing on-the-ground team in Lagos. Last year, we grew from 4million customers in May to 6million customers in December and thousands of these new users came from Nigeria, South Africa, Zambia and Uganda, resulting in a 100% increase in trading volumes during this period.

Hence, we are continuing to monitor the growth and are committed to providing the resources necessary for servicing the Nigerian market adequately. Ultimately, we promote open and equal access to cryptocurrency for everyone globally.

READ: Bitcoin jumpstarts strongly, daily trading volume hits $25 billion

Why has Luno Exchange not broken into the top 20 exchanges in terms of trading volume?

It depends on which rankings you are looking at and which metric you are using. At the moment, we are currently ranked 14th on Crypto Compare’s list of the top 287 exchanges, which factors in security processes, the quality of crypto assets listed on the platform and the strength of the company’s team. Ranking aside, we recently hit the 6 million customers’ milestone, with an expansive global reach, spanning across over 40 countries. To date, we have processed more than USD$14 billion in transactions.

READ:  Crypto investors lose $530 million within a day

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Will Bitcoin fall to zero and why?

There has been no shortage of predictions of when Bitcoin is going to ‘die’. According to 99Bitcoins’ Bitcoin Obituary, which documents every instance a major press publication calls Bitcoin or cryptocurrency ‘dead’, Bitcoin has now died 395 times since 2010. Yet, it’s still here. In 2020 alone, there were at least 13 predictions that Bitcoin would die and 3 of such already this year.

Our advice is that people should obtain independent and verifiable advice before making a decision on how to engage with Bitcoin and other cryptocurrencies. It’s also important to be aware that Bitcoin and other cryptocurrencies are volatile. Price fluctuations can be violent and it’s important that consumers don’t risk inappropriate amounts of money (never invest more than you can afford to lose).

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