- RedTech CEO, Emmanuel Ojo has said that the recent naira float by the Central Bank of Nigeria would help attract more foreign investors into the fintech space.
- He also noted that the naira float would help with the foreign processing of transactions whereby the digital payment sector can earn their income in foreign currency.
- Central Bank of Nigeria (CBN) had given commercial banks and dealers in the forex market the green light to sell forex freely which is at a market-determined rate.
RedTech CEO, Emmanuel Ojo has said that the recent naira float by the Central Bank of Nigeria would help attract more foreign investors into the fintech space.
He made this statement during an exclusive interaction on Nairametrics Twitter space.
Highlighting the advantages of the naira unification on digital payment systems in Nigeria, he said there would be more foreign investors coming into the Nigerian fintech industry.
He said:
- Possibly this would also attract more foreign investors into the fintech space going forward.
- Based on how they work around having a unification of exchange rates, foreign investors could now decide to localize their fees since there’s a supporting policy to allow them to repatriate their funds at the end of the day.
The negative impact of the naira float on digital payment
Talking about the negative impact of the naira float on digital payment, Emmanuel Ojo said it would make purchasing software and other technological solutions which supports digital payment services more expensive.
He said:
- “Based on the advancements of digital payments, we’ve also seen an uprise in cyber-attacks and there’s a need for us to up our game in cyber security
- Now we have solutions – software and hardware that we must purchase so that we can ensure that the consumers are protected.
- For instance, you have hardware usually called HSMs that handle key management systems of data that are encrypted particularly when it comes to ISO messaging and card transactions.
- Now these tools are quite expensive. But now with the floating of the naira, purchasing them would be more expensive than we used to experience.”
He also noted that the naira float would help with the foreign processing of transactions whereby the digital payment sector can earn their income in foreign currency like the US Dollar which is an advantage to them.
Backstory
A few weeks ago, Nairametrics reported the Central Bank of Nigeria (CBN) gave commercial banks and dealers in the forex market the green light to sell forex freely which is at a market-determined rate.
This policy was in line with the promise of President Bola Tinubu to unify the multiple exchange rate in the market.
It meant that Nigeria is now operating a freely floating exchange rate as banks could now sell forex at market-determined rates.
As of yesterday, the exchange rate between the naira and dollar on the official Investor & Exporter Window closed at N763/$1 ahead of the Salah Break.
According to data from the FMDQ Securities Exchange, the naira opened at N760.5 per dollar at the investor and exporter (I&E) window but weakened to close at N763/$1.
Opportunities for Digital Payments
Emmanuel Ojo also said RedTech aims to provide payment systems to ease the mode of transactions in various localities and with the naira float policy, it would make it easier to facilitate foreign transactions.
He said:
- For instance if you have to do transactions in other countries, rather than you spend in foreign currency, you get to spend the local currency within that country.
- In terms of exporting your commodities, you always make gains in Fx.
- So rather than you gaining in Fx and losing in Fx, we could give you a structure whereby you gain in Fx when you have to export and while you have to purchase you could purchase in local currencies.
He also noted that infrastructure developments would be important for the growth of digital payment services in Nigeria and other African countries.
