E-Financial
Nigerians Cautious over CBN’s eNaira
Hundreds of thousands of Nigerians have opened digital wallets to hold the eNaira, Africa’s first digital currency, but sceptics warn that broad mistrust of the government could hurt its adoption.
According to Financial Times, with the launch of the eNaira on October 25, Africa’s most populous country became the latest country to launch a digital currency, leapfrogging many other central banks around the world.
France, China and Germany are all testing e-currencies.
Six Caribbean countries have already launched digital currencies.
In a sign of how the development of official digital currencies is gathering speed, the G7 group of advanced economies last month laid out guidelines to ensure the currencies will “support and do no harm” to the traditional monetary and financial system.
Razia Khan, chief economist for Africa and the Middle East at Standard Chartered Bank, said central banks were reacting to “the demonstrated need to adopt digital payment channels” in the wake of the pandemic, and seeking “to remain in the driving seat of the process, and not see unregulated digital currency alternatives get greater traction”.
A senior Central Bank of Nigeria official said that the currency’s first week and a half — when nearly 400,000 new wallets were registered in dozens of countries and customers made 12,500 transactions worth 46.3m naira ($113,000) — was a “resounding success”. This was despite customers complaining about a cumbersome sign-up process.
Analysts questioned whether the digital version of the naira — which is built on blockchain technology, but is not a cryptocurrency — can fulfil the central bank’s goals for it: lowering transaction costs, boosting cross-border flows including inward remittances, bringing more people into the financial system and allowing for more targeted social and welfare spending.
“The issue is that all of this can already be adequately addressed using the existing financial payments system,” said Adedayo Ademuwagun, analyst at Songhai Advisory.
“Nigeria is the fintech capital of Africa, so there are just so many options, so many ways to pay somebody, and pay them fast, already.”
At the official eNaira launch last month, Nigerian President Muhammadu Buhari said it could boost Nigeria’s gross domestic product — which was $432bn last year — by $29bn over the next 10 years.
Ronak Gadhia, an analyst for emerging markets-focused investment bank EFG-Hermes, said low-cost transactions could make the eNaira “quite significant and disruptive . . . but there’s some uncertainty about how widespread it will be used”.
More than half of Nigerians lack a formal bank account, the informal economy represents more than half of GDP and 95 per cent of transactions are still done in cash.
“The government effectively knows every transaction you carry out [with a digital currency] and in a place like Nigeria where there’s a bit of mistrust between ordinary Nigerians and the government there may be scepticism in terms of adoption,” he said.
He pointed to how the central bank froze the accounts of people involved in the #EndSARS anti-police brutality protests that swept Nigeria last year.
“The eNaira actually makes it even easier if the government wants to shut down someone’s account . . . or even the whole system,” he added.
The eNaira launch comes nine months after the central bank effectively banned cryptocurrencies including Bitcoin, which were used to fund the #EndSARS protests, on the grounds that they jeopardised the financial system and could be used to fund terrorism. Nigeria has quickly become one of the biggest markets for cryptocurrencies in Africa, with citizens using it to get around capital controls, to generate income amid rampant unemployment and to hedge against the perpetually depreciating naira.
The decision to effectively ban crypto was condemned by many in the burgeoning Lagos fintech scene, which has attracted billions of dollars in venture capital in recent years.
Victor Asemota, a Nigerian tech investor, echoing the sentiments of others, said he was “at a loss on what eNaira is meant to solve”, in a post on Twitter last week. He argued that mobile money products offered by some Nigerian fintech companies already streamline payments and reduce transaction costs.
Gadhia agreed, but cautioned that it was too early to discount the eNaira’s potential. “In the context of the scale that Nigeria offers it seems low, but I wouldn’t say it’s entirely disappointing or surprising,” he said. “It seems modest at this stage, but I think it’s still early days.”
Access Holdings PLC, a leading financial services group, has echoed the need for ethical considerations in using Artificial Intelligence (AI), calling stakeholders in the financial industry to factor its sustainability implications.
This call to action was driven by a compelling keynote address delivered by Lanre Bamisebi, Executive Director of IT & Digitalisation at Access Holdings, at the Smart Banking Summit 2024 held in Kenya on Wednesday.
Speaking on the topic, “AI Guardians: Securing Compliance and Mitigating Risks,” Bamisebi’s keynote shed light on the imperative to strike a balance between innovation and responsibility as the banking sector and broader society embrace AI’s transformative potential.
“Artificial Intelligence has the power to revolutionise our societies. Over the years, this has become increasingly evident, offering unprecedented opportunities for growth, efficiency, and innovation. From enhancing customer service to optimising risk management, AI’s potential benefits in finance are vast.
However, as we embrace AI, we must also ensure that its deployment is ethical, secure, and compliant with regulatory standards to mitigate risks effectively,” he said.
As the transformative power of AI continues to fuel innovation, concerns remain about its negative impact on the environment. According to OpenAI researchers, since 2012, the amount of computing power required to train cutting-edge AI models has doubled every 3.4 months.
They also posit that by 2040, the emissions from the Information and Communications Technology (ICT) industry will reach 14 per cent of the global emissions, with the bulk of those emissions coming from ICT infrastructure, particularly data centres and communication networks.
Speaking to these concerns, Bamisebi said, “The exponential growth of AI adoption must be met with thoughtful consideration for its environmental footprint. As we harness the power of AI, we must prioritise sustainable practices to mitigate its energy consumption and carbon emissions, ensuring a harmonious coexistence between technological advancement and environmental preservation.
“We must embrace our roles as guardians, and place comprehensive regulatory frameworks, ethical standards, and continuous learning at the fore of our considerations so that we create a future that is safe, inclusive, and prosperous for all,” Bamisebi charged.
Themed ‘Navigating the Next: Africa’s Leap into Smart, Secure, and Inclusive Banking’, the summit was a pivotal gathering of leaders spearheading the digital evolution in the African banking and finance space.
Other contributors at the summit include Winnie Kaaka, Head of Product and Digital Banking, Access Bank Plc; Harry Hare, Co-Founder and Chairman, dx5; Moses Okundi, CIO/CTO, Absa; Tim Theuri, CISO, Safaricom/M-Pesa Africa; Daniel Adaramola, CISO, SunTrust Bank Nigeria Ltd; Steve Njenga, Founder and CEO, Metis Technology Solutions Ltd, and more.
Securities and Exchange Commission (SEC) has said that it will soon issue a framework that will guide the capital market in the proposed recapitalisation exercise by banks.
Dr. Emomotimi Agama, acting director General of the SEC, disclosed this during a meeting with the executives of the Institute of Capital Market Registrars (ICMR) in Abuja at the weekend.
According to the acting SEC DG, “We are on top of the issues around the recapitalisation exercise, very soon we will come up with a framework to guide the market.”
Agama also stated that the Commission is willing to interact with various segments of the capital market to ensure that all pending issues are resolved in the interest of the market.
Also speaking, Mr. Bola Ajomale, acting executive Commissioner Operations SEC, urged the registrars to embrace technology which he said is the best way to ensure timeliness and also sanitise the system.
He said “You are a major central point that we have worked with over time. There is risk because technology is competing with you. It will be useful to talk to your members to embrace technology as that is the best way to make life easy for everyone is to sanitise the system.”
In his remarks, Mr. Seyi Owoturo, resident of ICMR, said registrars have a duty to ask questions when transactions happen so as to make the market safe for everyone adding that with the banking recapitalisation coming, registrars need to embrace technology as there is going to be serious demands on their capacity.
Serigne Dioum, chief executive officer of MTN Group Fintech, has reaffirmed his outfit’s commitment to driving financial inclusion across Africa, leveraging innovative solutions to empower individuals and businesses.
Recounting the Group’s journey, he noted that it currently boasts of over 70 million customers and an ecosystem of more than 2 million merchants across 16 operations.
He also highlighted the company’s success in lending, with over $2 billion disbursed in loans to customers last year, stressing that it is working towards building Africa’s largest FinTech platform by
“Our FinTech journey began in 2007 in Uganda, and since then, we have expanded our footprint across 16 operations… From humble beginnings as a wallet business, we have diversified our services to include payment, international remittance, lending, and insurance… And now we have a business with more than 70 million users and more than 2 million merchants across our footprint, which is 16 operations.”
Despite significant growth, Mr. Diuom pointed out that 90 percent of transactions in Africa are still cash-based, indicating the vast untapped potential for digital financial services.
As such, he emphasised MTN’s role in addressing the prevalent cash-based transactions and low penetration of credit and insurance services through innovative solutions and strategic partnerships.
He added that MTN Group Fintech is leveraging new technologies such as blockchain and AI to enhance services and improve credit scoring.
“Our vision is to create a seamless ecosystem where anyone, from anywhere, can access financial services with ease. We think that the future for Africa, when it comes to Fintech is bright, because the African population is still growing, and the penetration of Fintech is still low. When it comes to fintech penetration, I think the number that comes to mind is that 90% of transactions are still cash-based.
“For us, we do not compete against any bank, but we compete against cash. And our work every day is to identify the use cases that are still touch base, and see how we can digitalize them for our platform,” he noted.
Innovantics Bags Best Biometric Banking Solutions of the Year Award @ ABoICT 2024
Access Holdings Seeks for Responsible Use of AI @ Smart Banking Summit
Nigeria’s Luxury Car Market to Experience steady Growth Despite Risising Inflation
9PSB CEO says Financial Inclusion, Key Facilitator to Poverty Reduction and Economic Prosperity
Digital Access Program’s SIDE Initiative to Catalyze Innovation and Impact in Nigeria
INTERPOL Appoints Uche, Nigerian CP as Chairman, African Heads of Cybercrime Units
Odu’a Investment Declares N1.961Bn as Profit Before Tax
SLTV Breaks Pay TV Monopoly, Offers Affordable Alternatives to Nigerians
Airtel Hosts Interactive Knowledge Session for Secondary School Girls
Binance Alleges Request of $150m Bribe by Some Nigerian Officials
E-Financial3 days agoCBN Sacks 300 Staff, 14 Directors Affected
E-Business3 days agoCITAD Launches Artie Robot, Coding Training of Girls in Kano
News3 days agoNigeria’s GDP Growth Declined By 2.98 Percent In Q1 2024 – NBS
E-Financial1 day agoUBA Shareholders Commend 2023 Superlative Performance, Dividend Payout
News1 day agoAMMBAN Decries Mandatory CAC Registration of POS Agents
E-Financial1 day agoHere’s How Your Teens Can Celebrate Children’s Day with MPulse at Its Finest!
Telecom1 day agoNigeria Showcases Digital Social Investments at APRA 2024
Telecom1 day agoDiscover TECNO POVA 6 Neo’s Budget-Friendly Features