E-Financial
Digital Financial Services And The Need for Global Dialogue
The world is a growing and dynamic place. Despite the obvious challenges, it is generally becoming a richer and more prosperous place to live in with more people being lifted out of poverty than ever before.
For people in low- and middle-income countries, digital financial services (DFS) can be a pathway to move and remain out of poverty.
The commercial benefits are increasingly documented with studies showing that the costs of payment transactions can be reduced up to 90% if they are performed through digital channels.
Digital technology can address one of the main obstacles that have been keeping these services out of reach for so many, the fact that they are too expensive for people whose transactions are worth a fraction of a dollar.
However, despite the growing penetration of mobile devices (including smartphones) and continuous technological innovation, an estimated 2 billion people worldwide still remain unbanked.
While everyone has a frequent need to transact to buy products and services, the ability to access or utilize formal financial services, particularly in developing countries, is undermined by numerous legal, cultural, commercial and financial issues, not to mention in many cases the lack of reliable national ID schemes which makes it extremely difficult for poor people to even open a basic account. There is therefore much more that both the public and the private sectors can do together to exploit the potential DFS can offer to bring the most vulnerable segments of the world’s population into formal financial services.
ITU Facilitating The Discussion
At the macro level there is an urgent need to develop mechanisms to operationalize best practices and policy recommendations to allow regulators, operators and providers in the telecom and financial services sectors supporting the DFS industry to grow organically and reach a larger number of low-income people in a sustainable way.
The ITU, through its Focus Group on DFS and the Global Dialogue, is facilitating a discussion between the telecoms and financial services regulators and operators.
There is a strong need for framed collaboration between the two in addition to a clear understanding of the laws and responsibilities.
What Works?
On the regulatory side, having the right rules in place is key to attract medium and long-term investments, provide legal certainty, avoid arbitrage and allow service providers to scale their business without compromising the security, stability and integrity of the financial system. The telecommunications industry has not been slow to act.
However, in many countries new players find it difficult to navigate an environment which is heavily regulated and where for many years only traditional financial players could operate.
Commercially, there needs to be fair competition to guarantee an open, level playing field for the different stakeholders involved in the process.
A better understanding of how the telecommunications and financial services regulators can work better together in a fast evolving market place is important if any system is to be successful. Examples of effective inter-authority cooperation comes, for instance, from East Africa (i.e. Tanzania, Kenya and Uganda) where regulators have been working hand-in-hand to address issues such as consumer protection, interoperability, security of the network where competences are somehow shared or overlapping.
With mobile numbers suddenly becoming bank accounts, customers are increasingly confused about roles and responsibilities if services are disrupted or where to direct their complaints in case of litigation.
Samples of Success
There are numerous examples of success stories we can draw upon. In 2013, the Mexican government managed, for instance, to save an estimated USD 1.27 billion per year, or 3.3 per cent of its total expenditure, on wages, pensions and social transfers. How? By digitizing and centralizing its payments to all government workers.
Another example is represented by M-KOPA which has provided solar electricity to more than 330 000 homes in three African countries. Each solar home system can be repaid in small daily instalments on their cell phones. Innovations like these that elegantly solve urgent problems will make financial services attractive enough that people are willing to assume the risk of leaving the cash-based economy they know and trust.
Digital credit— small loans that can be accessed instantly over mobile devices—are increasingly offered in low-income countries, particularly in sub-Saharan Africa. One of the first to reach scale in a short period of time is M-Shwari, a savings and loan product launched in Kenya in 2012, and now exported into neighbouring countries.
The product is being used by millions of people, a large percentage of whom are below the poverty line, and thus unserved by credit providers, also because of a lack of credit history.
By using alternative data – airtime, credit top up, number of P2P transfers etc. it is now possible to develop alternative scoring systems that have showed a high level of predictability.
The above examples show how technology is stimulating new applications and innovating business models even though scalability and profitability remain major challenges.
Public-Private Cooperation
No one size suits all. Countries can learn from each other and adapt measures to a national context, but the measures can’t be duplicated without being adapted to local needs.
The Focus Group is providing a toolkit that can be tailored accordingly.
From now to the beginning of January 2017, when our remit will conclude, we will be publishing a series of deliverables which will include a set of recommendations that a broad range of stakeholders can utilize. Our objective is to help accelerate the work being done around the world by local policy and decision makers, influencers and providers of technical assistance on digital financial inclusion.
Sacha Polverini (@sacha279) joined the Bill & Melinda Gates Foundation’s Financial Services for the Poor (FSP) team in December 2012 as Senior Program Officer – Regulation and Policy. A graduate of University L.U.I.S.S Guido Carli in Rome, Sacha holds a Master’s degree in European Political Studies from the Universite’ Libre de Bruxelles. In addition he has completed the post-graduate management program at Solvay Business School, Ecole de Commerce de Solvay, Brussels.
The next currency crisis could accelerate the shift of the roughly $315 billion global stablecoin market into a digital-dollar alternative for citizens in emerging economies, notably in regions like sub-Saharan Africa and Latin America.
As local fiat currencies face devaluation and high inflation, citizens and businesses are increasingly utilizing smartphone-based stablecoins (such as USDT and USDC) as hedges and primary mediums of exchange.
According to the International Monetary Fund (IMF), the rapid adoption of dollar-linked digital assets—particularly in countries heavily affected by inflation like Nigeria—poses significant risks to monetary sovereignty.
With up to 95% of surveyed individuals in some African markets preferring to receive payments in stablecoins over local fiat, the rising volume of these decentralized, cross-border channels weakens domestic currency demand and dilutes the effectiveness of local monetary policy.
IMF observed in a report titled “Stablecoins in Nigeria: A Growing Cross-Border Channel” noted that the widespread use of stablecoins poses risks to monetary sovereignty, particularly as more individuals and businesses turn to digital dollar-linked assets for savings and transactions.
Nodding in agreement is Future Investment Initiative Institute (FII Institute), a non-profit organisation run by the Public Investment Fund, Saudi Arabia’s main sovereign wealth fund.
FII Institute said that central banks face structural challenges.
And according to the institute, when citizens move savings out of national banks and into private digital wallets, conventional capital controls lose their grip.
Institutions like the Bank for International Settlements warn that interest-bearing stablecoins compete directly with domestic-currency deposits, complicating financial oversight and making smartphone-based transfers incredibly difficult for authorities to monitor.
In Nigeria, Naira depreciation has pushed users toward dollar-stablecoins, according to report by Gino Matos in cryptoslate.com.
A stablecoin is a type of cryptocurrency designed to maintain a steady value by pegging its price to a reserve asset, such as a fiat currency (e.g., the U.S. dollar) or a commodity (e.g., gold).
They act as a bridge between traditional money and the digital asset world, providing the speed of crypto without the extreme price swings of assets like Bitcoin.
Federal government has reopened three federal government of Nigeria (FGN) bond issues valued at N1.2 trillion for subscription as part of efforts to raise long-term funds from the domestic debt market.
The Debt Management Office (DMO), which announced the offer on Tuesday, said the three reopened bond issues are each valued at N400 billion.
According to the DMO, the first offer is the January 2035 FGN Bond, a 10-year reopening, carrying an interest rate of 22.60 per cent per annum.
The second is the May 2028 FGN Bond, a 15-year reopening, with a coupon rate of 15.45 per cent per annum, while the third is the June 2037 FGN Bond, a 20-year reopening, also valued at N400 billion.
The office said the bond auction is scheduled for July 20, while successful subscriptions will be settled on July 22.
It explained that the bonds are offered at N1,000 per unit, with a minimum subscription of N50 million and additional investments in multiples of N1,000.
For the reopened bonds, the DMO said successful bidders would pay a price based on the yield-to-maturity that clears the auction, in addition to any accrued interest on the instruments.
Interest on the bonds will be paid every six months, while the principal will be repaid in full on the respective maturity dates.
The DMO reaffirmed that FGN bonds are backed by the full faith and credit of the Federal Government and constitute obligations chargeable on the general assets of the federation.
It added that the bonds qualify as trustee investment securities under the Trustee Investment Act and enjoy tax exemptions for eligible investors, including pension funds, under the Company Income Tax Act and Personal Income Tax Act.
The bonds are listed on the Nigerian Exchange (NGX) and FMDQ Securities Exchange and also qualify as liquid assets for banks in computing their liquidity ratios.
FGN bonds are long-term debt instruments through which investors lend money to the Federal Government in exchange for periodic interest payments and repayment of the principal at maturity.
Gigbanc, Nigerian fintech startup, has announced it is winding down operations, after three years, citing a tough fundraising climate.
Paul Omoregie Okundaye, and Babatope Oni, co-founders of Gigbanc
The company, which set out to build cross-border financial infrastructure for African freelancers, creators, entrepreneurs and businesses, confirmed the decision in a statement signed by its co-founders.
“After careful consideration, Gigbanc’s leadership has made the difficult decision to wind down operations,” the company said, adding that the move “reflects the broader funding environment affecting early stage startups in Africa, a challenge that has been widely documented across the ecosystem.”
Since its founding, Gigbanc grew a community of more than 150,000 people across multiple countries and processed over $7.28 million (N10 billion) in payment volume, helping thousands of users receive their first international payment.
The company also ran conferences, fellowships and community events aimed at connecting entrepreneurs and creators across the continent.
`Despite the shutdown, Gigbanc said it is not walking away emptyhanded.
The company disclosed that it is in active acquisition discussions with a prominent financial infrastructure firm, with further details to be shared once the process closes.
Paul Omoregie Okundaye, co-founder and CEO, and Babatope Oni, co-founder and CTO, framed the closure as the end of a chapter rather than the erasure of Gigbanc’s impact.
“While Gigbanc is winding down operations, we don’t see this as the end of what we built together. Instead, we see it as the completion of an important chapter,” the founders said. “The relationships, lessons, community, and impact we’ve created will continue to outlive the company itself.”
The founders thanked users for their trust throughout the company’s run, citing everything from transactions and feature requests to bug reports and criticism as forces that shaped the product
“We leave this journey incredibly proud. Proud of our team, who gave everything they had.
Proud of the community that rallied behind us,” they said.
Gigbanc’s exit adds to a growing list of African startups that have shut down or scaled back operations in recent years as venture funding on the continent has tightened, with founders increasingly citing capital scarcity as the primary driver behind closures and consolidations.
Next Currency Crisis May Turn $300Bn in Stablecoins into National Currencies
NIHSA Warns States of Possible Flood within Seven Days
FG to Raise N1.2 Trillion via Fresh Bond Offer – DMO
Gigbanc Nigerian Fintech Startup Closes Shop after 3 Years
Mbunabo, Nigerian Filmmaker Accuses Ghana TV Stations of Pirating Nollywood Films
NRC, Ponzi Scheme Collapses Resulting Loss of Billions of Naira
Nigeria Launches FreeTV Nationwide
NASENI Moves to Digitize CCB’s 5m Assets Declaration and Operations
Lebara Nigeria Launches Lebara Play, Africa’s First Telecom-Owned Micro-Drama Platform
CANAL+ Partners Samsung to Pre-Load DStv Stream on New Samsung TVs In Nigeria, Other African Countries
News2 days agoXora Finance, Fintech Firm Refuses to Hire Nigerians over Alleged Dishonesty
Telecom2 days agoNCC Advances Dig Once Policy, Engages Stakeholders on Cost-Based Framework for Duct Sharing
Telecom2 days agoNCC to Keynote Telecom Sector Sustainability Forum 7.0
General News2 days agoFG Secures Fresh $208.3m World Bank Loan for Cash Transfer
News2 days agoHow Ponzi Scheme Victims can Seek Legal Remedies — Lawyers
News2 days agoPalmPay Nigeria Appoints Samuel Oluyemi as Chief Operating Officer
General News2 days agoSERAP Sues INEC over Alleged N800Bn 2027 Tinubu Campaign Fund
E-Business2 days agoKaigama,Catholic Archbishop of Abuja Warns against Misuse of AI