New CBN target for MFBs means credit to SMEs, financial inclusion – analysts

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The new policy by the Central Bank of Nigeria (CBN) that will ensure Microfinance Banks (MFB) open new 64 accounts per month is an initiative that will not only improve credit for Small to Medium Enterprises (SMEs) but also spur financial inclusion, analysts have said.

As part of attempts to reach its financial inclusion target, Nigeria’s apex bank on June 20th 2019 anchored a goal of 64 new customers per branch every month for microfinance banks in the country.

According to Gbolahan Ologunro, a Research Analyst at Lagos-based CSL Stockbrokers, the move by CBN is geared towards improving the flow of credit to the SMEs while also including them into the formal financial sector.

“What CBN is trying to achieve is to improve credits to SMEs, considering Microfinance Banks are set up for the purpose of providing traditional banking services to SMEs,” Ologunro explained.

The other objective is to “spur financial inclusion by bringing those small enterprises that are yet to be included into the formal financial sector to the banking net.” he added.

In a letter addressed to all Microfinance Banks on the revised national financial inclusion target, the apex bank said one of the resolutions reached at the recently held stakeholders’ forum was the setting up of the target for the MFBs to ensure each of their branches are able to open 774 new bank accounts per annum.

“Consequently, all MFBs are hereby requested to implement the above resolution and disseminate same to all their branches (where applicable) to ensure concerted efforts towards achieving the overarching target of 80 percent financial inclusion by the year 2020,” the CBN instructed.

On October 23, 2012, Nigeria’s apex bank in collaboration with industry stakeholders launched the National Financial Inclusion Strategy (NFIS) aimed at reducing the financial exclusion … Read More...

One year to CBN’s financial inclusion vision 2020, cashless link still missing

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On Monday, the eve of the Ramadan celebration, anyone who worked into most of the banks in Nigeria would have noticed the unprecedented crowd of people inside the halls.

At a branch of GTBank in Apapa, the queue for customers waiting to collect cash over the counter was so long, the staircase was nearly blocked, and more people were still trooping in to get some cash for the holidays. The bank even had PoS ready for people with debit cards that couldn’t access the machines due to network. A few minutes later, the bank informed people on the deposit queue that due to network problems, there will be delay in posting their transactions.

At different ATMs around Ajah-Lekki axis in Lagos, people also waited on queues for hours waiting to withdraw cash to spend. Shopping malls and other merchants ditched their PoS machines and transfer options for cash payment because of erratic network fluctuations was delaying transactions and shoppers were beginning to agitate.

At a popular restaurant at Ikorodu, the manager pre-informed customers before they ordered for drinks or meal that money transfers was not allowed, PoS was not working, only cash was accepted. One visibly angry customer whipped out his phone and displayed the message his bank had sent him on Tuesday, 4 June, 2019:

“Dear esteemed customer,

We sincerely apologize for the delay you may have experienced in processing transactions on our digital platforms. This is due to a challenge with our national switching service platform designed for facilitating electronic payments.”

He turned to this reporter and asked “Why does it happen every weekend or holidays when they know people are going to need to make payment?”

It is barely days since Godwin Emefiele, the governor of Central Bank of Nigeria (CBN) commenced his … Read More...

PayAttitude drives financial inclusion with first multi-bank USSD, app

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PayAttitude has developed the first multi-bank USSD and applications to facilitate efficient banking transactions in Point on Sales (POS), Automated Teller Machines (ATM) and mobile (person-to-person transactions) with just phone number. PayAttitude is a financial technology company that leverages on innovative technologies for payments and financial transactions with focus on mobile and digital payments. The…

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New ways to assess credit worthiness of MSMEs

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Micro, Small and Medium Enterprises (MSMEs) face several challenges when trying to expand, especially in accessing adequate funds to finance their operations and growth, but their credit worthiness can now be assessed by exploring alternative data, the World Bank has said.

Estimated at 37 million, Nigerian MSMEs are said to have a finance gap of $158.13 billion, data compiled from the 2017 MSMEs report by the World Bank and Finance Forum with the title: MSME FINANCE GAP- Assessment of the Shortfalls and Opportunities in Financing Micro, Small and Medium Enterprises in Emerging Markets, show.

The Washington-based financial institution says that MSMEs play a huge role in facilitating economic development due to their flexibility and affinity to innovation, “even more so in emerging economies with a high contribution from the informal sector.”

“Access to credit for MSMEs and individuals can be enhanced and expanded by promoting the use of alternative data in credit reporting,” World Bank said.

Out of the total 162 million formal micro, MSMEs in developing countries, of which 141 million are micro-enterprises, and 21 million are SMEs, Nigeria accounts for one of the countries with the highest number of MSMEs.

“Three countries – Brazil, China and Nigeria; contribute 67 percent to the total number of MSMEs, which is equivalent to 109 million enterprises. There are close to 12 million SMEs in China alone, which represents 56 percent of all SMEs in developing countries,” World Bank noted.

World Bank’s claim on the use of alternative data in assessing credit worthiness of MSMEs can be affirmed by the 2016 report by Global Partnership for Financial Inclusion (GPFI) as it said in its G20 publication that it encourages service providers to use multiple sources of digital data for evaluating consumer and small and medium enterprise Read More...

How do we transition to a cashless society in Nigeria?

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In the second week of April insight2impact, Lagos Business School and Data Science Nigeria hosted an event at the Lagos Oriental Hotel. The topic for the evening was “The future of digital payments in Nigeria”.

Earlier that day, the insight2impact staff (who are from South Africa) needed to pay a local service provider for the event. The first hitch was, while the service provider owns a bank account, they did not have a POS device to accept on-the-spot digital payments. The visiting team attempted to transfer money directly into the provider’s account but were unable to transfer from a South African credit card to a Nigerian bank account. The team then attempted to withdraw cash from an ATM. They were again unsuccessful, as the amount was too high – they were unaware of the withdrawal limits at ATMs in Nigeria. They even attempted to swipe for cash at the bureau de change, but there was no POS at the time, nor enough cash. Eventually, multiple staff members withdrew many small amounts – enough to pay a deposit (about half the total fee) and guaranteed the remainder via international transfer.

The POS challenges or the ATM withdrawal limits will not come as a surprise to many Nigerians, but it did remind us that while we are excited about the potential of digital payments in Nigeria, the reality is much more sobering. With this incident in mind, the burning question posed at the event was “How do we transition from where we are to a cashless future?” Or, more realistically, how do we become a cash-lite society/economy?

The nationwide push for adoption of digital payments is admirable, but we must first consider our infrastructure – a challenge across many areas of our lives. If the underlying payments … Read More...