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.
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.
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.
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.
Is Luno still going to be trading XRP amid regulators’ legal tussle?
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.
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.
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.
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).
A CredPal credit card can get you anything – CEO, Fehintolu Olaogun
Fehintolu Olaogun, CredPal Co-Founder recounts his journey through founding one of Nigeria’s most innovative startups.
Those moments when you have to return items from your shopping cart due to insufficient cash may now be over for Nigerians, thanks to CredPal’s credit cards.
CredPal goes a step further from your regular financial services institution which offers you a loan when you request, and now gives customers a credit card with which they can shop for their needs and pay in instalments.
CredPal makes use of Visa cards which serves users at POS channels and ATM points, making it a convenient way to access consumer credit. You can think of it as similar to the credit card services offered by companies like American Express across Europe.
Speaking during the Nairametrics Business Half Hour show on Classic FM, CEO and co-founder of Credpal, Fehintolu Olaogun explained that CredPal was birthed due to an observed need for such facilities in the Nigerian space.
“I remember moving into my house at first, and I had to wait for almost four months to get my gadgets because I did not have the bulk sum at the time. This is a situation many Nigerians experience, and they have to put off getting such item no matter how pressing the need may be,” he narrated.
Before starting CredPal, Olorunfemi Jegede was running an e-commerce platform and noticed that customers were often on the lookout for ‘Buy now, pay later’ options. With this observation, the duo decided to work on a checkout payment gateway that would allow the customers to pay later and in instalments.
“Our drive was simply to allow people access credit to buy items and then pay later, and there was a wide acceptance among the customers. So we threw in some more money behind it, reached out to some merchants and money lenders and extended the service to allow people pay their bills. With our credit cards, you can pretty much do anything and you only pay for what you use,” Olaogun explained.
To move things to the next level, there was a need to go beyond bootstrapping and bring in some collaborators and partners. The finance needed for scaling came in a mix of equity, seed funding, and hedge financing from lenders and people who wished to put money. Since both founders had pedigree founding and running a startup, it was easy to get their foot into the door and talk with investors. Another thing they had going for them was an established market need, a working product and huge demand.
Shortly after starting operations, CredPal won $25k and the “Merchant Payments” Challenge for allowing individuals and businesses to pay for purchases in instalments across online and offline merchants, and gained recognition at the Visa Everywhere Initiative for Sub-Saharan Africa.
In March 2019, CredPal was accepted into the Y Combinator Winter batch alongside other African startups like Wallets Africa, Schoolable, and 54gene; and they received $150,000.
In 2020, CredPal raised $1.5 million in a funding round which included US seed-stage accelerator, Y Combinator; Lagos-based fintech investment holding company, GreenHouse Capital; Tangerine Life, a digital insurance company; and other VC firms.
Also in 2020, CredPal was selected and participated in the fifth edition of Google for Startups Accelerator Africa – a 3-month-long programme for the startups which gave them access to mentorship, funding, and PR support, among other incentives.
Market entry and operations
Olaogun recounts that the first step to entering the market was going through the merchants. Most of these merchants encounter retailers and other customers who would wish to purchase more items but are constrained by available funds. It was therefore easier for the merchant to suggest a credit alternative for the customer, who already had a need for such service.
Another tactic that CredPal deployed was the affiliate marketing method where people sign up for free as affiliate marketers, promote the product, and are remunerated monthly based on the number of customers they get for the startup. To adhere to the COVID-19 guidelines, a part of the team works from home while a few work from their operational office in Lagos.
With the low-interest rates, customers can get these credit services for as low as 2.5% interest rate using either the mobile app, or the credit card. Merchants also embrace the service quickly as it allowed them to get the value for their goods almost immediately, and save them the trouble of having to go after debtors.
Getting back the money
The challenge for individuals and institutions in the credit space is often about how to get the repayment done seamlessly, and without having to run after the debtors.
In this light, sentiments across board favour the growth of the credit business as the apex bank has been on the drive to increase lending in the country. The GSI policy which was introduced late last year was targeted at encouraging this move, by authorising the banks to deduct from customers’ accounts directly.
CredPal also partnered with and integrated Pngme’s data SDK and API to acquire user-permissions, mobile-based financial data (such as connected institutions, balances, transactions), to provide a secure and detailed data foundation to manage its subscription base.
This is in line with the vision of becoming the American Express of Africa, a continent that is still largely untapped.
Unemployment, underemployment needs to be addressed with urgency in Nigeria – Jobberman
Femi Balogun of Jobberman Nigeria has highlighted some of the challenges employers and job seekers are currently facing in Nigeria.
Unemployment has been a bane of many countries, especially in Nigeria, as there are projections that the nation’s unemployment rate will reach an all-time high of 31.4% in 2021.
In this interview with Nairametrics, the Head, Research, Evaluation and learning efforts at Jobberman Nigeria, an online career portal, Femi Balogun, explained that not enough jobs are being created. In 2018, he said Nigeria only created about 450,000 new jobs while over 5 million people joined the labour force.
To him, limited interaction between employers and job seekers as well as policy and cultural constraints are at the core of the employment challenges the nation currently is facing. Excerpts:
How would you assess unemployment in Nigeria, especially with the second wave of Covid-19?
Unemployment has been a critical issue for the country and this has deepened due to the COVID-19 pandemic. According to the National Bureau of Statistics (NBS), between Q3 2018 and Q2 2020, Nigeria’s unemployment rate rose from 23.1% to 27.1%, while the underemployment rate rose from 20.1% to 28.6%. Recent projections also suggest that, in 2021, Nigeria’s unemployment rate will reach an all-time high of 31.4%.
A number of factors contribute to this. Firstly, is that not enough jobs are being created – in 2018 for instance, Nigeria only created about 450,000 new jobs while over 5 million people joined the labour force. Furthermore, gaps within our education system also contribute to this challenge as World Bank data suggests that 18 – 20% of tertiary graduates will require training interventions for about 1 – 4 years to become employable. At the same time, limited interaction between employers and job seekers as well as policy and cultural constraints are that core of the employment challenge we are currently faced with.
The issues that mitigate such high levels of unemployment and underemployment needs to be addressed with urgency.
If Nigeria is home to about half of West Africa’s young people, what size of the population are jobless?
With a population of 200 million, young people make up half of the country’s population. According to PWC unemployment is highest amongst youth between 15-34 years (41% amongst 15-24-year-olds and 31% amongst 25 – 34-year-olds), and this group constitutes 35% of the country’s population – one of the largest in the world.
Data from the Nigerian Bureau of Statistics has also shown that the number of unemployed 24-year-olds [40% of the youth labour force] in the country has almost tripled to 14 million since 2014.
How would you assess skill gaps in Nigeria and what sectors are most affected?
Our evaluation of the jobs market shows high competency in digital skills at entry-level positions but as the skills required advance, there is a dramatic fall in qualified candidates and applications made. For instance, there is an overwhelming skills gap in three subsectors – Software Development, Digital Analysis and Network & Cybersecurity.
Within the Software Development cluster, our findings indicate that 73% of job seekers rate their proficiency at a beginners level across skills such as computer programming, cloud infrastructure, UI/UX, web design, mobile development and design thinking. Likewise for Digital Analysis and Network & Cybersecurity clusters.
This creates a demand gap for positions such as Security Engineering, Data Science, Cyber Security and Security Architecture with a demand scale ranging between 10% and 45%.
Within the Digital Marketing sub-sector, data suggests growing competencies in social media management and content development with proficiency ratings above 40% at advanced levels. Identifying a skills gap in Sales, Marketing Campaigns and Search Engine Optimisation with proficiency levels as low as 8.13% and no higher than 16.92%.
Based on your experience and available data, what are the factors responsible for this gap?
Although young people are described as digital natives, there is a digital literacy gap which excludes young people from harnessing the opportunities that the digital economy presents. This can be attributed to challenges such as insufficient access to the internet, dated curriculum and lack of career development courses.
This challenge can, in part, be linked to gaps within the education system that prevents young people from developing skills (technical and soft skills) and gain the required confidence to be employable.
This gap in human capital optimisation is at the core of the inefficiency in Nigeria’s labour market as Nigeria captures only 49% of its full human capital potential, compared to a continental average of 55%, ranging from 67% in Mauritius to 44% in Chad
What role do you think the government can play in addressing these issues?
The improved performance of the digital sector is, in part, derived from improvements in reforms and governance. In order to take advantage of emerging opportunities within the digital sector, the Federal Ministry of Communications and Digital Economy launched the National Digital Economic Policy and Strategy (NDEPS). This has helped to forge partnerships towards advancing an inclusive digital economy.
To achieve the goal of lowering the access barrier to digital tools for the citizens, the government has set a benchmark of 95% digital literacy rates to be achieved in the next ten years (2030) through States and LGAs support.
It is expected that through the policy, young people will be equipped with the necessary skills to acquire decent jobs while transforming Nigeria into a leading digital economy.
What precisely do you suggest government should do?
There are a number of things the government can do: One is to invest in Human Capital Development. The government can do well by strengthening education institutions and supporting reforms in education to develop industry-relevant curriculum for improved skills, while also galvanising support for digital skills and soft skills training especially for women and marginalised communities.
Another is to Create an Enabling Environment. A friendly regulatory environment is imperative for the digital economy to grow. Similarly, investing in infrastructure that enables ICT adoption (such as broadband internet and electricity) are crucial.
Support the Innovation Ecosystem: Courting public-private partnerships to stimulate and sustain the demand for the use of digital platforms as well as advancing policies that improve business climate will be useful in boosting investment opportunities.
What are the most sought after roles businesses are looking out for in the employment market based on the data from the Jobberman site?
We have seen an increase in roles in the technology sector since April 2020, when we ran our “Unity in Adversity” campaign. Technology had most of the new jobs with 18.79%, followed by banking, finance and insurance with 9.27% and education and training with 6.78%.
What can we do differently in our educational system to better prepare our graduates for the jobs out there?
A transparent jobs market which gathers live data about the various sectors, job demands and skills required will help to strengthen educational institutions and support reforms in education, as well as develop industry-relevant curriculum. Jobberman is striving for a 100% transparent market which will only be achieved when all jobs are posted online.
We are on the cusp of the Fourth Industrial Revolution, children in primary school need to be developing IT skills so they can make the transition from school to work.
What are the challenges you go through gathering data?
I think it’s mostly the availability of accurate information. Data capture and storage is becoming increasingly important on the continent but we are just starting to build. We had to go through extra effort to make sure that all the information we provided in the report was true and up to date.
COVID-19 has made it even more difficult to collect data both quantitative and qualitative. Now we have to conduct interviews and focus group discussions online. The pandemic has also helped us to realise that online data collection is a growing culture with a wide gap to cover.
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