World Bank Approves $1.08 Billion Loan for Nigeria The World Bank has sanctioned a $1.08 billion loan to Nigeria aimed at enhancing education quality, bolstering household and community resilience, and improving nutrition for underserved groups. This funding responds to economic challenges intensified by the COVID-19 pandemic and supports Nigeria’s economic reforms initiated in 2023. Reuters
Nigeria Appoints Former Shell Executive to Lead State-Owned Oil Group President Bola Tinubu has appointed Bayo Ojulari, a former Shell executive, as the new head of the Nigerian National Petroleum Company (NNPC). This move aims to rejuvenate the nation’s oil sector amid challenges like large-scale theft and declining production. Reuters
Silicon Valley Bank (SVB) was a commercial bank with the headquarter in Santa Clara, California US.
As of June 30, 2016, SVB had a 25.9 percent market share, making it one of the biggest banks in the country and the largest bank in Silicon Valley based on local deposits.
Silicon Valley Bank provides financial assistance to startups, individuals, investors and international innovative companies to achieve their ambitious objectives. “SVB is the financial partner of the innovation economy”
The second-largest bank failure in American financial history occurred on March 10, 2023, as a result of a bank run on SVB’s deposits, and the Federal Deposit Insurance Corporation was appointed as receiver.
Nigeria is currently undergoing a critical financial reform. The President and the Governor of Central Bank of Nigeria (CBN) had concluded plans and implemented currency change and swap programs.
The new currency change Policy had taken everyone by surprise but with much more polical implications.
The past 8 years in Nigeria, the currency in the economy had risen from N1.4 trillion to N3.23 trillion. The proportion of currency outside the banks grew from 78% in 2015 to 85% in 2022. As at October 2022, only N500 billion was within the Banking System while N2.7 trillion remained permanently outside the system; this development poses a great threat to the economic growth.
The CBN has therefore commenced the processes of absorbing the old currency notes of N200, N500 and N1000 with clear directives to concerned individuals.
The following are the required steps to deposit the old Naira Note:
Visit the selected bank branch with printed receipt to deposit your old N1000, N500 and N200 notes into your bank account.
Deposit above N500,000 will only be made at any of the CBN branches in the country.
While the N500 and N1000 notes have been declared a Non Legal Tender, the old N200 banknotes is expected to circulate as legal tender till April 10, 2023.
The Central Bank of Nigeria (CBN) under Sections 2(d), 33 (1) (b) and 47(2) of the CBN Act 2007 issued the regulation for Bill Payments in Nigeria, 2017 to promote sound financial system.
The guidelines are primarily to facilitate the development of an efficient and effective payments system in Nigeria.
The CBN have established and defined key players in bill payment policy to help achieve her objectives. The following are the stakeholders:
Payer – the individual or corporate entity making a bill payment.
Biller – a registered entity/merchant that receives funds from the payer as consideration for the provision of service or product.
Payer’s Bank – the bank where the payer maintains the account that is debited to make the bill payment.
Biller’s Bank – the bank where the Biller maintains the account designated to receive proceeds of payment made by the payer.
Payments Service Provider (PSP) – a person licensed by the Central Bank of Nigeria to provide services involving direct interactions with the payment, settlement and clearing systems and payment system arrangements, as the Bank may authorize from time to time and may include a bank, Mobile Money Operators or Other Financial Institution that is connected directly to a Biller without any service intermediary.
The Bill Payment regulation has opened up the digital space in Nigeria. Before now, typical payment for services like electricity, water, airtime, cable TV are often done physically. Individuals would visit physical outlets of the service providers to make payment.
The CBN regulation have opened up opportunities to all the players in the industry:
Pros
Efficient Collection by Service Providers. For example, The Nigerian Electricity Regulatory Commission (NERC) revealed collection of Power Distribution Companies (Discos) in Nigeria for 2022. “The total revenue collected by all Discos in 2022/Q2 was N188.29 billion out of N265.68 billion billed to customers. This corresponds to a collection efficiency of 70.87 per cent which represents 1.53 pp increase compared to 2022/Q1 where the average collection efficiency was 69.34 per cent,” the report stated.Collection efficiency is an indicator of the proportion of the amount that has been collected from customers relative to the amount billed to them by the Discos”
Seamless Mode of Payment. It has become easier and faster for Payer to make payments for services. Fintech companies,Banks and even the Telcos have good platforms on PC’s or mobile devices where bill payments are being made.
Cheaper Mode of Payment. Due to the competitive business environment created by the CBN, Payers can now access incentives for bill payments. For example, Servpay.ng offers very competitive bonuses for every transaction Payers carry out on their platforms. They also offer Reffer and Win promo. These and many more are the benefits from the CBN regulation.
Employment Opportunities. This regulation have created millions of employment for Nigeria youths. It has created bigger players in the industry which in turn have employed professionals to join their team.
Cons
A. Network Availability. Unstable payment network poses a major concern in the industry. The service providers or the Billers must continually increase their capacities to handle high traffic as Payers engagement increases.
B. Cyber Crime Vulnerability. In Africa, the cybercrimes has recorded a massive rise in the first six months of 2022, “with phishing and scams hitting 438 per cent and 174 per cent in Kenya and Nigeria, respectively”, the Guardian Newspapers. reported on August 3, 2022.
According to the Economic and Financial Crimes Commission, ” over 2,800 persons convicted of cybercrime in 2022″
Overall, the financial sector in Nigeria is fast developing with lots of prospects for investors
The Central Bank of Nigeria on Tuesday 6th of December 2022 issued a directive to all deposit money banks and other financial institutions on the new cashless policy. The Apex Bank before now had come up with various measures of encouraging cashless transactions in the country. CBN had launched eNaira digital payment which has received over 500k download as at the time of writing this report, other measures include approval of more agency banking operators to encourage financial inclusion.
According to the statement released by the Apex Bank on the revised withdrawal limits:
OTC withdrawal for Individuals N100k, for Corporate N500k. Penal for withdrawal above it is 5% individual and 10% corporate.
No.3rd party cheque above 50k allowed OTC subject to N10m max. for transfer.
ATM withdrawal is 20k max per day. 100k per week.
Only N200 denomination to be loaded on ATM machine.
POS withdrawal is max of 20k.
No withdrawal shall exceed N5m for ind. & N10m for corp in a month but with charges.
Pros
This is a welcoming development as the new policy will eliminate substantially cash maintenance cost and grow financial inclusion in the country. Payment for goods and services are expected to be done via the PoS, Mobile money or online banking services. For instance, Servpay.ng provides online platform where basic utility bills payments can easily be made with bonuses on every transaction.
Cons
To firm up this policy, the CBN must ensure the commercial banks have uninterrupted digital services. The Apex Bank must come up with clear KPI’s and sanction when poor services are rendered to bank customers. Recently, the banks have been providing very poor digital services across board. Payment transfers are delayed or declined after several hours, failed transactions are never reversed automatically after 24hr. These and many more challenges are what the bank customers are forced to live with.
This new Policy will take effect from 9th of January 2023.
