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Covid-19: Opportunity for Govt Payment Digitization and Financial Inclusion in Africa

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By Emmanuel Okoegwale

Since the beginning of 2020, the World had been gripped by the unprecedented COVID-19 pandemic crisis affecting millions of people across all the continents including Africa with global Health institutions and National governments mandating partial or full closure of economic, transportation, social activities which then necessitated governments interventions to reduce impacts to the vulnerable segments of the society through different programs.

In different forms across Africa, citizens are getting cash from their  governments via diverse programs such as Public Works for unemployed persons, social pensions, child support, old age persons and disability grants, social relief, unemployment grants, cash transfer programs, disaster reliefs etc

Governments across Africa often lack the capacity and systems to deliver benefits digitally, to final recipients and cash is the de-facto standard to achieve the three Rs: Paying the RIGHT person, the RIGHT amount at the RIGHT Time whereas digital payment, can guarantee payment certainty with better outcomes.

Due to the contagion nature of the Covid-19, the World Health Organization is encouraging and advising citizens to switch to digital and contactless mode of payments to reduce the risk of face to face transactions. Physical cash had not been proven to transmit the virus, but the physical activities associated with cash, can be a risk.

In most parts of Africa, millions of people do not have access to basic financial services due to many factors such as low literacy, low mobile device ownership, lack of acceptable identification, limited  bank branches, low economic activities which presents a compelling opportunity for government interventions (emergence, short or long term) as a leverage for payment digitization and financial inclusion which can address all the issues militating against the access to formal financial services since governments can provide or waive some requirements and address the low economic activity of intended beneficiaries through the government grants payment.

Digitization will help governments to scale their coverage and reach, in an effective and efficient manner such that millions can be reached instantaneously and simultaneously.

It will save governments enormous cost, improve citizen’s trust, improve accountability, transparency of interventions, reduce physical barriers especially in many parts of Africa with significant infrastructural deficiencies across urban and rural areas.

Aside the scale that can be achieved by going digital, it will also improve economic empowerment of the beneficiaries by enabling access to other basic financial services such as saving, credit, insurance, remittances etc and improve overall economic participation of excluded groups.

Building a digital ecosystem is desirous however care must be taken to ensure the right human and technology capacities are available to transition from cash to digital platforms with the right regulatory environment and support, required to implement such while putting the beneficiary as the central focus when designing the digital systems and processes in highly fragmented digital ecosystems in many parts of Africa.

Some positives already emerging across Africa with financial regulators reducing or removing transaction fees like in Ghana and Kenya while South Africa’s Social Security Agency  recently tested registration via WhatsApp and USSD  for R350-per-month Covid-19  unemployment grants due to be paid to about six millions people over  the next six months and will displace physical food parcels delivered as part of normal relief-of-distress grants.

Malawi will soon launch an emergency cash transfer program targeting about 1 million people and small businesses affected by the coronavirus pandemic with eligible households receiving 35,000 Malawi kwacha ($40) monthly payment through mobile cash transfer starting in May while Namibia already paid the  first  batch of  147,000 grantees, digitally in April.

New approaches in making government to person payments require diverse approaches due to different segments of the community targeted however with proper community and beneficiary segmentation, National governments will be able develop and deplore appropriate payment mechanism that can replace the use of cash and foster financial inclusion which will enable millions to exit the poverty trap.

When governments move their social grants to digital platforms, it creates a platform for access to other basic financial services which are beneficial to the governments, businesses, and the beneficiaries.

Emmanuel Okoegwale can be reached on [email protected]


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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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E-Financial

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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