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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

FG Makes u-Turn on Bank Account Re-Registration

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Federal government on Friday apologised for asking all account holders in financial institutions in the country to re-register their personal details.

FG makes u-Turn on Bank Account Re-Registration

Recall that the federal government had on Thursday ‎ordered that all persons holding accounts across financial institutions and insurance firms should complete and submit self-certification forms to their respective financial institutions.

The notice issued by the government to that effect read, ‎“This is to notify the general public that all account holders in Financial Institutions (Banks, Insurance Companies, etc.) are required to obtain, complete, and submit Self – Certification Forms to their respective Financial Institutions.

“Persons holding accounts in different financial institutions are required to complete and submit the form to each one of the institutions. The forms are required by the relevant financial institutions to carry out due diligence procedures, in line with the Income Tax Regulations 2019.‎”

The directive raised eyebrows, as account holders already possessed Bank Verification Numbers.

Following widespread condemnation that trailed the directive, the Federal Government backtracked on Friday, saying the fresh guidelin‎e was not for all Nigerians.

The government attributed the development to misinformation.

The clarification issued by the government on Friday read, ‎“We apologise for the misleading tweets (now deleted) that went up yesterday, regarding the completion of self-certification forms by Reportable Persons. The message contained in the notice does not apply to everybody. ‎FIRS will clarify Nigerians on the objectives of the directive.”

Also on Friday, FIRS, in a statement posted on Twitter, explained that the guidelines were only for non-residents, as well as people paying tax in more than one country.

Parts of the FIRS statement read, “The Self Certification Form is basically to be administered on Reportable Persons, holding accounts in Financial institutions, that are regarded as “Reportable Financial Institutions” under the CRS.

“Reportable persons are often non-residents and other persons, who have residence for tax purposes in more than one jurisdiction or country.”

“The information that indicates an account holder is a resident for tax purposes in more than one jurisdiction, is expected to be available to Financial Institutions during account opening processes, for the KYC and AML purpose.”


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Stanbic IBTC Bank Disowns Lagos ATM Fraudster

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Stanbic IBTC Bank PLC has disowned Tope Olajide, 22-year-old fraudster arraigned for theft of customers deposits.

Stanbic IBTC Bank Disowns Lagos ATM Fraudster

The Bank said this in a statement on Wednesday.

The statement said: “The attention of the management of Stanbic IBTC Bank PLC has been drawn to news currently circulating in the media, about the alleged arraignment of staff of the Bank on charges bordering on the theft of customers deposits.

“The Bank would like to clarify that the defendant, a 22-year-old Tope Olajide, IS NOT, and was at no point in time an employee of Stanbic IBTC Bank PLC.

“The alleged culprit was apprehended around 7:30 am, on Thursday, 27 August 2020, by security operatives after he was exposed by CCTV footage using ATM cards he had allegedly stolen and converted, to make withdrawals from the accounts tied to the stolen ATMs.

“The CCTV footage also showed the alleged culprit pretending to assist customers at ATMs whilst also attempting to fraudulently dispossess the customers of their ATMs.

“He was subsequently arraigned before an Ikeja Magistrate Court on Monday, 14 September, for stealing the debit cards of two customers and using them to unlawfully withdraw the sum of N427,000.

“The Bank would also like to implore members of the public to be security conscious when conducting transactions at ATMs. Customers are advised to report any suspicious actions around them to security operatives who are usually stationed around the Bank’s ATMs, when carrying out transactions at any of our ATM locations.

“As an organisation, we hold dear the values of integrity, and we will continue to prioritise the safety of our customers effectively.”


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Buhari Okays Establishment of CBN-Led Infraco

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President Muhammadu  Buhari has approved the establishment of an   Infrastructure Company (Infraco) to be driven by the Central Bank of Nigeria (CBN) in partnership with the African Finance Corporation (AFC) and the Nigerian Sovereign Investment Authority (NSIA).

Buhari Okays Establishment of CBN-Led Infraco

Mr. Godwin Emefiele, CBN governor

This is coming  on the heels of the foreign reserves’ slump to $36 billion following a cocktail of monetary policy interventions by the apex bank to cushion the scathing effects of the COVID-19 pandemic on the economy.

Mr Godwin Emefiele, CBN governor, made these disclosures in Abuja at the annual conference of the Chartered Institute of Bankers of Nigeria (CIBN) with the theme: Facilitating a Sustainable Future: The role of Banking and Finance.

According to him, Infraco would enable the use of private and public capital to support infrastructure investment that will have a multiplier effect on growth across critical sectors.

“This entity would also be able to raise funds from the capital markets and mobilise long term finance to address some of our infrastructure needs, while providing reasonable returns to investors. “We believe this well-structured fund can act as a catalyst for growth in the medium and the long run. The support of the banking community will be important in achieving this objective.

“A well-built infrastructure system, comprising hard infrastructure such as roads and ports, and soft infrastructure such as broadband penetration, can have a multiplier effect on growth by enabling the expansion of business activities in the country”, he explained.

On foreign reserves, Emefiele attributed its crash to the decline in foreign exchange earnings and subsequent adjustments in the value of the naira to the dollar.


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