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CBN Says eNaira Will Make Transactions Cheaper

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Central Bank of Nigeria (CBN) has said that transactions will be cheaper to conduct with eNaira, Nigeria’s digital currency.

CBN Says eNaira Will Make Transactions Cheaper

Godwin Emefiele, governor, who spoke in Abuja at the end of the bi-monthly Monetary Policy Committee (MPC) meeting, said: “Our digital currency which is tagged eNaira will certainly come into operation in October and we are working very hard for this.

“We believe transactions will be cheaper and more efficient as there will be less conflict.”

He said the economy is going digital and “cash cannot play in that space,” adding that “e-naira which will represent the digital equivalent of cash will be used as fiat currency for transactions”.

On how the e-naira will work, Emefiele said: “If you choose to convert some of the naira in your account to e-wallet or digital currency, we will support that.

“When this starts the CBN will move some of the balances in CBN to those banks into digital currency. You go to your bank, you decide to move N2 million from the N10 million you have in your account to digital currency they will debit your account and move it into your e-wallet.

“Then you have N2 million digital currency which you can spend across countries”.

He noted that “the use of cash is declining all over the world,” noting that “with the advent of digital currency, more and more people are adopting the use of electronic money to facilitate little commerce”.

He said cryptocurrencies are private monies that are not regulated, therefore using them is a personal decision.

“if you decide to use them, it means you are taking your risk. If you make your money, we will wish you good luck but if you lose your money, we will laugh at you,” he said.

At the end of the MPC meeting, members of the Committee decided by a unanimous vote to retain the Monetary Policy Rate (MPR) at 11.5 per cent; retain the asymmetric corridor of +100/-700 basis points around the MPR; retain the CRR at 27.5 per cent, and retain the Liquidity Ratio at 30 per cent.

Emefiele said: “The MPC was delighted that inflation had begun to trend downwards, while output growth had remained positive.

“The Committee, however, was of the opinion that there was a need to continue to put in place policy measures that will further and faster drive down inflation, while at the same time accelerate output growth to levels above population growth rate”.

MPC, he said, believes “that there is the need to continue to use its tools that had been adopted so far, even in a more aggressive manner.”

“The MPC, therefore, encourages the CBN to continue using its existing administrative methods to rein in inflation by the use of its discretionary Cash Reserve Ratio (CRR) policy to mop-up liquidity from the banking system as the need arises,” Emefiele said.


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E-Financial

Access Bank Commits to Deepening Financial Inclusion

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Access Bank has restated that it remains committed to providing access to finance for entrepreneurs in the transportation, agriculture, and health sectors this year.

Chizoma Okoli, Its Deputy Managing Director, stated this whilst announcing the bank’s partnership with Solina Centre for International Development and Research (SCIDaR) in Abuja recently.

Okoli noted that the bank had in 2022, launched a project with the goal of boosting the growth of financial inclusion in Nigeria via a number of initiatives and added that the bank has attained outstanding results so far.

She said, “As part of our ongoing mandate, we are committed to providing access to finance for entrepreneurs in the transportation, agriculture, and health sectors this year. In line with this commitment, we have collaborated with SCIDaR to drive inclusion specifically within the health space. This partnership emphasizes our unwavering commitment to fostering financial inclusion and sustainable development across Nigeria.”

Reiterating Chizoma’s comments, Njideka Esomeju, Group Head, Consumer Banking, Access Bank highlighted Access Bank’s dedication to driving inclusion in the health sector stating that the bank stands ready to extend loans to health SMEs, empowering them to expand their businesses and efficiently serve rural communities across Nigeria.

According to her, this strategy not only promotes increased financial stability but also stimulates economic growth in the health industry.

For his part, the Chief Executive Officer, SCIDaR, Dr. Uchenna Igbokwe, explained that insufficient funding has strained Nigeria’s health infrastructure, resulting in subpar performance on health metrics.

Igbokwe noted that the partnership with Access Bank is timely as it aligns with the government’s vision for the health sector and has the potential to strengthen health value chains and could contribute its own quota to the country’s GDP.

He elaborated that SCIDaR’s increased focus on access to finance and financial inclusion within the health sector, driven by the significant unmet needs and the pivotal role of finance in achieving universal health coverage in Nigeria.

Outlining SCIDaR’s approach, Igbokwe pointed to research and iterative analysis, product development/adaptation, smart subsidies, financial literacy, technology integration, and sustainable partnerships as pillars that are aligned with sustainable Development Goals (SDGs) 1, 2, 3, 7, 8, and 17, accelerating progress towards universal health coverage and economic development in Nigeria.

This collaboration, anchored by the Promoting Accreditation for Community Health Services (PACS) project, aims to bolster the supply chain, enhance productivity, and fortify the economic resilience of SMEs within the health sector, particularly Community Pharmacists (CPs) and Patent and Proprietary Medicine Vendors (PPMVs) across Nigeria.

Through this collaboration, Access Bank and SCIDaR will address the challenges associated with lending to healthcare SMEs, leveraging Access Bank’s tailored financial products and services to enhance their expansion.

Among these offerings are products designed to cater to the credit requirements of health SMEs, while the Access Closa product empowers health SMEs to act as bank agents in underserved communities, thereby increasing their income and financial resilience.


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Online Transfers Dominate in Nigerian Payments Space as ATM Transactions Decline

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The growing smartphone penetration in Nigeria and a shift towards mobile applications as the preferred means of conducting transactions is driving online transfers, relegating ATM transactions to the background.

The growth in mobile phone penetration in Nigeria, coupled with initiatives led by the Central Bank, has led to a sustained shift in user behaviour towards mobile applications as the preferred means of conducting transactions, increasingly replacing traditional cash-based methods.

A new report by Zone, in partnership with TechCabal Insights, sheds light on how Nigerians have transitioned from ATMs as the primary means of conducting financial transactions to online transfers.

In 2012, at the commencement of the CBN’s Payments System Vision (PSV2020), ATM transactions in Nigeria totaled ₦1.98 trillion, while online transfer payments for the same period were valued at ₦31.57 billion. The following decade witnessed an explosion in online transfers.

As of 2022, ATM transactions were valued at ₦32 trillion, while online transfers soared to ₦783.6 trillion, marking an astounding ‪2610.15percent overall increase and a 43.78percent year-on-year growth.

Data from the report reveals that 36percent of Nigerians above 15 own a debit card, with one of the largest card payment companies, Verve, claiming to have issued around 35 million active payment cards as of 2022.

Here are five key insights from the Nigerian Payments Report 2024:

Surge in online transfers driven by digital adoption

The total transaction value for online transfers grew from ₦545.03 trillion in 2021 to ₦783.66 trillion in 2022, marking a substantial 43.78percent year-on-year increase.

The total volume of transactions similarly increased by 36.26percent, from 10.32 trillion to 14.06 trillion within the same period.

This growth indicates an improved digital payment infrastructure, enabling businesses to actively promote online payments and reflecting increased consumer trust in digital platforms for e-commerce, bill payments, and peer-to-peer transactions.

Decline in ATM transactions attributed to increasing smartphone penetration

Although the total transaction value of ATM transactions increased by 53.78percent year-on-year, from ₦21.23 trillion in 2021 to ₦32.64 trillion in 2022, there was an 8.55percent decline in volume, from 4.45 billion in 2021 to 4.07 billion in 2022.

There has been a noticeable evolution in ATM usage over the years. As of 2010, Nigeria had about 7,100 ATMs, rapidly growing to over 11,000 in 2011 due to the CBN mandating banks’ removal of offsite deployment. In the following decade, the number of ATMs doubled peaking at 22,600 in 2021, which has remained as of December 2023.

However, there’s still a demand for ATMs, with an estimated 60,000 ATMs required to meet up with its growing population. This has led to an increasing adoption of alternative banking channels.

This shift underscores a trend towards digital payments, such as POS terminals, mobile wallets, and online transfers, signalling increased smartphone and internet usage. POS transfers experienced a 17.00percent increase in total volume, rising from 982.83 million in 2021 to 1.14 billion in 2022.

Mobile app transfers, with a total volume of 831.54 billion in 2021, increased to 1.86 trillion in 2022, reflecting a 123.85percent change in transaction volume. The total transaction value for mobile app transfers increased from ₦53.20 trillion in 2021 to ₦111.12 trillion in 2022—a noteworthy 108.84percent year-on-year growth.

Smartphone penetration in Nigeria is growing and is projected to hit 60percent by 2025, with over 143 million Nigerians owning smartphones. The uptick suggests confidence in the security provided by digital payment platforms, showcasing progress toward financial inclusion.

Mobile money operators witness remarkable growth

Mobile money (MMO) transfers in Nigeria witnessed a 151.18percent increase in total volume, rising from 248.5 million in 2021 to 714.5 million in 2022. Concurrently, the total transaction value rose from ₦8.06 trillion in 2021 to ₦19.4 trillion in 2022, marking a significant 140.73percent year-on-year increase.

The convenience and accessibility offered by mobile money services, particularly in remote or unbanked areas, have been key drivers of this growth.

NIBSS Instant Payment (NIP) gains traction

Transactions via the Nigeria Interbank Settlement System (NIBSS) witnessed a 47.99percent increase in total volume, rising from 3.47 billion in 2021 to 5.14 billion in 2022. The total transaction value surged from ₦271.95 trillion in 2021 to ₦387.07 trillion in 2022, representing a 42.33percent year-on-year increase.

Regulatory initiatives driving payment system evolution

An emphasis on the role of regulatory initiatives in driving the evolution of Nigeria’s payment system plays prominently. The CBN’s PSV2020 and PSV2025 have been instrumental in promoting digital payments and financial inclusion.

Through NIBSS, the CBN provides the framework for Real-Time Gross Settlement (RTGS). The growth of payment methods and channels, such as online transfers, NEFT transfers, and NIP transfers, is a testament to the effectiveness of these initiatives.


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E-Financial

World Environment Day: Union Bank Advocates for Environmental Restoration

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Union Bank, one of Nigeria’s foremost financial institutions, has reemphasised the need to preserve and restore the global habitat through sustainable environmental practices. This clarion call was made during an event organised in partnership with the Nigerian Conservation Foundation to commemorate this year’s World Environment Day.

The program, held on June 5th, 2024, at the Lekki Conservation Centre in Lagos State, brought together various stakeholders, including environmental rights activists, international partner agencies, corporate institutions, government agencies, and students of select secondary schools, to deliberate and engage in activities marking World Environment Day.

One of the main events on the day was a tree-planting exercise involving various participants and stakeholder representatives. The tree-planting activity was in keeping with this year’s celebration theme, “Land Restoration, Desertification, and Drought Resilience,” advocating for the rejuvenation and revitalisation of land devastated by deforestation, erosion, and desertification globally and in Nigeria in particular.

Speaking during the program, Patricia Iwhewhe, Head of Citizenship and Sustainability at Union Bank, echoed the importance of preserving our environment. According to her:

“Land degradation and erosion are not things stakeholders and policymakers can afford to ignore or gloss over. We all must get involved in helping restore and reclaim parts of our environment badly impacted by deforestation and desertification.

“Union Bank, as a sustainability champion committed to the preservation of our dear planet, appreciates and recognises the responsibility we have as humanity to look after our environment.

“We will continue to support and participate in programs dedicated to protecting and enriching our precious habitat”.

Stakeholders like the Nigerian Conservation Foundation (NCF) have also been invaluable partners in progress and are at the forefront of helping to preserve and protect nature and its resources. This has served to not only improve the quality of human life but also to sustain present and future generations. NCF’s advocacy over the decades has positively impacted and influenced Nigeria’s environmental policy.

Union Bank will continue to be a dependable ally in supporting this noble cause of environmental preservation.

Union Bank, through its diverse range of projects and interventions, has demonstrated its unwavering commitment to bequeathing a safer, healthier, and more sustainable environment. The bank’s tangible contributions serve as a beacon of hope, inspiring a brighter and more sustainable future for all.


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