BANKING

The Role of Digital Banks in the Success of the Nigerian Cashless Policy

Published

1 year ago

role-digital-bank-cashless-policy-in-nigeria

Digital Banking And Cashless Policy in Nigerian

The Nigerian digital banks have played a significant role in helping the Central Bank of Nigeria (CBN) implement its cashless policy: Digital Banking And Cashless Policy in Nigerian

While the CBN planned to reduce the amount of money in circulation through its currency redesign, it failed to understand that traditional banks can’t enforce the policy.

As cash became scarce, the pressure on the banks to deliver effective online banking services intensified. Unfortunately, most banks crumbled under pressure as there were many failed transfers, declined POS transactions, and poor or no network in most conventional banks’ systems.

However, the digital banks rescued Nigerians and helped the CBN enforce the cashless policy to an extent. This article discusses the role of digital banks in helping the CBN implement Nigeria’s cashless policy.

The Role of Digital Banks in the Success of the Nigerian Cashless Policy

How Digital Banks are Promoting Cashless Transactions in Nigeria

Here are the ways digital banks are promoting cashless transactions in Nigeria:

Encouraging the Use of Electronic Payments

Digital banks have made it easy for people to carry out electronic transactions such as money transfers, bill payments, and online shopping. With the ease of making these electronic transactions, the need for cash has been significantly reduced as you can do almost everything online.

The recent cash scarcity before the general elections in Nigeria proved how prepared the digital banks were to enhance cashless transactions. While conventional banks struggled to handle the influx of failed transaction complaints, digital banks received accolades for the rate of online transaction successes on their platforms.

Providing Innovative Payment Solutions

Innovative payment solutions like virtual cards, e-wallets, etc., have improved electronic payments and enabled people to transact without cash. This is an area most conventional banks still need to catch up with. But thanks to digital banks, people can easily make electronic payments on local and international platforms. Banks like Mintyn have virtual Gift cards that customers can use to make purchases on online stores without needing their debit cards.

Improving Financial Inclusion

Digital banks have made it possible for people who do not have access to traditional banking services to participate in the financial system. There are many areas in Nigeria with no banks, and the people resort to other means of saving and investing their money.

But with the help of digital banks, these people in remote places now have access to banking services. They can make savings, invest in financial assets and transact among themselves without needing cash.

Reducing the Cost of Banking

Thanks to digital banks, people now enjoy low-cost banking services. There’s no need to pay card maintenance fees, SMS charges, and other unnecessary charges that traditional banks use to make banking expensive for people.

With the way digital banks have made banking affordable with low charges and cashless transactions, more people are opening bank accounts, increasing the success chances of the cashless policy.

Enhancing Security

Digital banks have invested heavily in financial security systems to protect customers’ funds and data. You can now monitor every transaction in your account and easily detect when something is missing. This is made possible with digital banking tools and security measures to secure your account from online scams.

The boost in confidence people now have to make electronic payments due to improved security has contributed to the success of the Nigerian cashless policy.

Advantages of Digital Banks in Promoting the Nigerian Cashless Policy

There are many advantages the digital banks have offered Nigerians while playing their role in the success of the Nigerian cashless policy. Here are some of them:

Convenience

Technological advancement involves all aspects of the economy, and the banking sector isn’t left behind. While traditional banks struggle to make banking seamless and convenient for their customers, digital banks gain customers from their inefficiencies.

People want to perform almost all banking transactions without leaving their homes, offices, or wherever they are. Digital banks discovered this need and went on to provide it. Now, you can make transfers, online payments, and international remittances from anywhere without going to the bank or touching cash.

Imagine what happens when you need to send money to a relative in another part of the country or world for an urgent need. And the only way you can do that is to go into the banking hall. That’s quite an inconvenience. Now, with a digital bank account, you can wire transfers to people in other parts of the world without visiting your bank.

Faster Transactions

At the peak of the cash scarcity during the Nigerian general elections in 2023, most traditional banks failed their customers woefully. It was already bad that people had insufficient cash to perform basic daily transactions. But worse, most traditional banking apps failed to function effectively.

One of the significant reasons people carry cash is to avoid being disappointed by failed or delayed transfers at the point of payment. These were the cases at the peak of the cash scarcity in February and March 2023. Transfers didn’t go through, POS payments were declined, and the banks’ apps and other channels were out of network to perform even light transactions. People were stranded and disappointed as there was no cash nor working banking apps for them to carry out transactions.

However, digital banks like Mintyn, Opay, Kuda, V bank, etc., came to the rescue of Nigerians. Most transactions with these banks were fast and successful, and many people had to open online bank accounts.

Cost-effectiveness of Digital Banking

Besides offering more convenient and faster banking services, digital banks offer more affordable banking services than conventional banks. This is one of its major roles in promoting the cashless policy in Nigeria.

Digital banks have made it more convenient and affordable to perform financial transactions online than with cash. Why stay long in a queue to withdraw cash from the bank when you can perform most of your transactions without cash and at more affordable rates?

With most online banking accounts, you can make transfers, online payments, and POS transactions without incurring the usual charges it costs to use conventional banks’ apps.

Improved Security in Digital Banking

Every person who runs interstate businesses will tell you that carrying cash around is risky. In many cases, traders who go to the northern, southern, or eastern part of Nigeria from other zones to buy goods have been robbed on the road, and their cash taken away. In some cases, it can be an issue of misplacing a purse or wallet that contains cash meant for a transaction.

These are problems the digital banks have helped solve by improving the security of their banking systems. People are now more confident in carrying out transactions using their bank apps.

Conclusion

The naira scarcity and failure of traditional banks to rise to the occasion prompted digital banks to seize the moment as Nigerians sought a means to perform their day-to-day transactions. The cashless policy will take a while to be fully implemented. But the Nigerian fintech industry has shown how possible it is.

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BANKING

Afreximbank Acts as Joint Lead Manager on Ecobank Transnational Incorporated’s USD 400mn Senior Unsecured Note Issuance

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The proceeds of the note will fund general corporate purposes of the issuer, including refinancing of a USD350 million senior bridge-to-bond loan facility that was jointly coordinated by Afreximbank in March 2024.

African Export-Import Bank (“Afreximbank”) (www.Afreximbank.com) is pleased to announce that it has successfully acted as Joint Lead Manager and Bookrunner on a USD 400 million 10.125% Rule 144a/RegS senior unsecured note issuance by Ecobank Transnational Incorporated (“ETI”) due in October 2029.

The note issuance achieved peak orderbook oversubscription of 2.1x, backed by more than 70 high-quality and diverse investors comprising development finance institutions, asset managers, commercial banks and insurance companies from Africa, the UK, USA, Europe and the Middle East.

Professor Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, commenting on the transaction, said: “We are pleased to have supported Ecobank Transnational Incorporated (“ETI”) in placing the first public Eurobond issuance by any Sub-Saharan African financial institution since 2021, following our bridge financing support earlier in the year. This transaction underscores Afreximbank’s capacity and readiness to structure innovative market access solutions for our pan-African banking partners.”

Afreximbank’s Advisory and Capital Markets (ACMA) department acted as Joint Lead Manager and Bookrunner on the issuance, working alongside international and African partners.

Distributed by APO Group on behalf of Afreximbank.

BANKING

International Islamic Trade Finance Corporation (ITFC) and the Central Bank of Nigeria Successfully

Published

2 months ago

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International Islamic Trade Finance Corporation (ITFC) and the Central Bank of Nigeria Successfully

These workshops form part of ITFC’s Integrated Trade Solutions (ITS) framework, aligning with the organization’s goal of providing holistic trade financing interventions in OIC member countries.

The International Islamic Trade Finance Corporation (ITFC) (www.ITFC-idb.org), a member of the Islamic Development Bank (IsDB) Group, in partnership with the Central Bank of Nigeria (CBN), successfully concluded a workshop on Non-Interest Banking and Trade Finance in Nigeria. Held from 17th to 19th September 2024 in Abuja, the sessions aimed to enhance capacity and knowledge in Islamic banking principles, trade finance products and services, and how different financial toolkits are applied in Islamic finance from operational and business perspectives.

International Islamic Trade Finance Corporation (ITFC) and the Central Bank of Nigeria Successfully

Nigeria’s Islamic finance industry, valued at US$3.8 billion, is one of the major Shariah compliant industries in Africa. Despite some challenges such as low public awareness and a smaller capital base compared to conventional banks, Islamic finance has been substantially contributing to reduce financial exclusion and improve access to affordable finance in the country. The three-day workshop was designed to bridge prevailing knowledge gaps focusing on key areas such as Sukuk issuance and main non-interest banking products basics.

Delivered under ITFC’s Integrated Trade Solutions framework, the workshop equipped professionals with the skills to promote Islamic finance in Nigeria while also highlighting ITFC’s wide range of trade financing services.

Participants reported a significant boost in understanding Islamic banking and trade finance, and the workshop showcased ITFC’s contributions to economic development through sustainable financial solutions.

Eng. Nasser Al Thakair, ITFC, remarked: “ITFC is committed to supporting Nigeria’s efforts in Islamic finance, tailoring this workshop to address the unique challenges faced. We will continue to provide the expertise and financial backing needed to grow Islamic finance in Nigeria and beyond.”

Over 30 professionals from the Central Bank of Nigeria, non-interest banks, and other financial institutions attended, further advancing Islamic finance in the country.

As Nigeria positions itself as a leading market for Islamic finance in Africa, ITFC remains dedicated to advancing trade finance and supporting the growth of the sector for long-term economic impact.

Distributed by APO Group on behalf of International Islamic Trade Finance Corporation (ITFC).

About the International Islamic Trade and Finance Corporation (ITFC):

The International Islamic Trade Finance Corporation (ITFC) is a member of the Islamic Development Bank (IsDB) Group. It was established with the primary objective of advancing trade among OIC member countries, which would ultimately contribute to the overarching goal of improving the socioeconomic conditions of the people across the world. Commencing operations in January 2008, ITFC has provided over US$75 billion of financing to OIC member countries, making it the leading provider of trade solutions for these member countries’ needs. With a mission to become a catalyst for trade development for OIC member countries and beyond, the Corporation helps entities in member countries gain better access to trade finance and provides them with the necessary trade-related capacity-building tools, which would enable them to successfully compete in the global market.

FINTECH

Kazang Pay launches card acquiring service in Zambia

Published

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Kazang (www.Kazang.com), the prepaid value-added services (VAS) and card acquiring business within JSE-listed fintech Lesaka Technologies, has launched its Kazang Pay card acceptance solution for merchants in Zambia. Kazang Pay makes it affordable for merchants to accept card payments on the same Kazang terminal they use to sell prepaid products and services.

Kazang Pay launches card acquiring service in Zambia

The Kazang Pay enabled terminal in Zambia accepts VISA debit and credit cards as well as mobile wallet payments. Payments are settled to the merchant’s Kazang wallet on the same day. It’s as easy as letting the customer tap or insert their bank card and enter their PIN on the secure scramble PIN pad.

Kazang operates around 12,000 VAS terminals in Zambia. The goal is to enable the majority to accept card payments over the next six months. Benefits to merchants include low transaction fees and no monthly terminal rental fee for those that meet a modest monthly transaction threshold as well as the opportunity to grow their business through card acceptance.

Kazang is Zambia’s largest VAS point-of-sale terminal provider, enabling mobile money payments, bank and mobile money cash in and out, bill payments, airtime, Zesco, and many other prepaid services on one platform. The addition of card acceptance makes the platform even more comprehensive for merchants and consumers alike.

The launch of Kazang Pay in Zambia follows the introduction of the solution in South Africa, where around 60,000 small and micro merchants use Kazang Pay to accept card payments. In Zambia, there are around 3.8 million debit, credit and ATM cards in issue and 41,000 point of sale (POS) terminals in place. The value of POS transactions has grown to K 111.4 billion by 2022 from less than K 20 billion in 2018, according to the Bank of Zambia.

Says Leon de Wit, managing director at Kazang Zambia: “Zambia has made enormous strides in terms of financial inclusion, with card usage and penetration growing at a rapid pace. With Kazang Pay, merchants can now easily accept card payments on the same all-in-one terminal they already use for vending of VAS products.

“Card transactions help merchants to grow basket sizes and potentially attract more customers, and at the same time, reduce the risks and costs of handling cash. Moving towards digitalised payments will also enable merchants to track sales, manage cash flow, and create a footprint that could make it easier for them to access loans.”

Ashley Naidoo, director of Kazang Pay in South Africa says: “Our Zambian merchants have eagerly embraced our card acquiring service as a valuable part of our one-stop solution. Following the launch of Kazang Pay in Zambia, we have seen higher VAS sales across our merchant base and much-improved merchant retention and with our card acquiring solution we now appeal to a broader merchant base.”

Distributed by APO Group on behalf of Kazang.

ABOUT KAZANG:
Kazang (www.Kazang.com) is a leading provider of cash and digital solutions to merchants in Southern Africa’s informal economies. Our fintech solutions include a diverse range of value-added services (VAS), card acquiring, secure cash vaults and supplier payments platforms. Operating with a network of approximately 90,000 active devices, we process approximately 2.2 million transactions daily in markets such as South Africa, Namibia, Botswana, and Zambia.

We are dedicated to helping small and medium merchants grow and succeed, through increasing their sales, making their businesses more efficient and reducing their risks with its holistic portfolio of products and services. Kazang is a member of Lesaka Technologies (https://LesakaTech.com).

ABOUT LESAKA TECHNOLOGIES, INC:
The Connect Group and Kazang was acquired by Lesaka Technologies, Inc. in April 2022. Lesaka Technologies, (Lesaka™) is a South African Fintech company that utilizes its proprietary banking and payment technologies to deliver superior financial services solutions to merchants (B2B) and consumers (B2C) in Southern Africa. Lesaka’s mission is to drive true financial inclusion for both merchant and consumer markets through offering affordable financial services to previously underserved sectors of the economy. Lesaka offers cash management solutions, growth capital, card acquiring, bill payment technologies and value-added services to retail merchants as well as banking, lending, and insurance solutions to consumers across Southern Africa.

Lesaka has a primary listing on NASDAQ (NasdaqGS: LSAK) and a secondary listing on the Johannesburg Stock Exchange (JSE: LSK). Visit www.LesakaTech.com for additional information about Lesaka Technologies (Lesaka ™). $LSK / $LSAK