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Africans Embrace Bitcoin to Send Money Abroad

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Developing countries from Africa and Asia are rapidly adopting Bitcoin in a bid to circumvent steep bank charges when sending money abroad.

This is according to Bitcoin payment processor Bitwala which notes that when sending money abroad, local banks’ models favour corporate profit over people’s need and their own convenience over fast speeds.

Founded in 2012, Germany-based start-up Bitwala allows users to transfer euros over the Single Euro Payments Area payments using Bitcoin. Users must first download a Bitcoin wallet.

The start-up says for the majority of businesses and individuals in the developing world, foreign exchange remains a critical inhibitor to their success or sometimes access to basic food and medicine.

“While our early adopters have come from Europe and North America, more recently we have seen a steep adoption rate among users sending money to and from developing countries on the African and Asian continents,” says Jörg von Minkcwitz, CEO of Bitwala.

Transferring cash via a bank or money transfer operators like Western Union or MoneyGram can be costly. According to the Overseas Development Institute, the average charge to transfer $200 to Africa using traditional money transfer services is 12%.

Bitwala says in total, the number of sign-ups from developing countries is coming closer to those in the US and EU. Taken together, users from developing countries form approximately 30% of Bitwala’s new sign-ups globally.

“Our daily Web site visits also reflect this growing trend. Bitcoin users in North African countries are a growing proportion of Bitwala’s user base, making up 4.4% of visitors, up from historically 2% and surpassing Switzerland,” says Von Minkcwitz.

“Banks charge a lot of fees and manipulate currency exchange rates to their advantage, resulting in a huge cost to customers all over the world,” he notes.

According to Bitwala, at a cost of $4 billion per year, international transfers to Africa are the most expensive in the world. Furthermore, it notes, online and offline businesses continue to pay a steep price for transferring money abroad or even domestically as the majority of banks charge between 10%-19% on any transfers to, from and within African countries.

The start-up points out that while transferring money to South East Asia is cheaper than it is to Africa, banks and intermediaries doing so charge high enough fees that take away a significant amount of people’s hard-earned money.

“Let’s consider the case of Jane, a hypothetical expat in Berlin who relies on banks and money transfer services to support her parents living in Beijing. She sends €500 to them regularly each month. As a customer of one of the European leading banks, it costs her a total of €47.7 each month to make that transfer. Over a year, this number rises to more than €570. If she were sending €2 500 per month – it would cost Jane a total of €1 441 per year just in transfer fees,” Von Minkcwitz says.

He explains the recently leaked document from Santander, a major Spanish banking group, confirms the dangers of using banks.

In 2016, the bank made €585 million solely from international money transfers, making up 10% of all of its revenue. In addition to transfer fees, the bank also made another killing by controlling its foreign currency exchange which helped it earn €290 million, Von Minkcwitz says.

“Perhaps the most shocking part is that 80% of all global money transfers are still conducted via banks and conventional monetary transfer channels. Bitcoin offers a much more efficient method of sending money abroad. This is done by shortening the time involved in trade settlements and securing the best exchange rate.

“Most importantly, the strength of Bitcoin and the blockchain technology it relies on is that it allows you to send money across borders without paying the steep fees charged by traditional gatekeepers like Western Union, MoneyGram, Ria and others.”


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Nigeria CommunicationsWeek believes that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. So since 2007, we have devoted our energy to independent reportage of technology and how they affect lives.

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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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