BusinesseNaira App Throws 40m Adult Nigerians Off Scheme

eNaira App Throws 40m Adult Nigerians Off Scheme

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November 07, (THEWILL) – Notwithstanding the massive response to the recently unveiled Central Bank Digital Currency (CBDC), eNaira, which about 367,000 consumer wallets and over 58,600 merchant wallets have been downloaded in the first week, findings have shown that about 40 million adult Nigerians will be excluded from the scheme. The CBDC will also not deepen the Central Bank of Nigeria (CBN) financial inclusion strategy in the manner it is being promoted. The eNaira Speed Wallet that is now available on both App Store and Play Store points to this fact.

A basic requirement for accessing the speed wallet App is a bank account. Applicants must have a valid and verifiable account with a deposit money bank as the process demands customer’s key data, such as Bank Account Number, Date of Birth, and the 11-digit Bank Verification Number (BVN). Users must input the required details or create an account before they can be linked to the wallet. Any discrepancy or omission leads to denial of access.

Both President Muhammadu Buhari and Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, have expressed optimism about the positive impact of eNaira on the socio-economic life of Nigerians. The President stated that alongside digital innovations, CBDCs can foster economic growth through better economic activities, increase remittances, improve financial inclusion and make monetary policy more effective. He expressed optimism that the use of CBDCs can help move more people and businesses from the informal to the formal sector, thereby increasing the tax base of the country.

”In recent times, the use of physical cash in conducting business and making payments has been on the decline. This trend has been exacerbated by the onset of the COVID-19 pandemic and the resurgence of a new digital economy. It is on the basis of this that the CBN sought and received my approval to explore issuing Nigeria’s own Central Bank Digital Currency, named the eNaira,’’ The President said.

Also commenting, Emefiele said, “The Central Bank of Nigeria decided to introduce a central bank digital currency (CBDC), the eNaira, which would help in attaining our goals of fostering greater inclusion using digital channels, supporting cross border payments for businesses and firms as well as providing a reliable channel for remittances inflows into the country.”

But the eNaira will exclude 40 million adult Nigerians confirmed to be unbanked. Financial inclusion is a strategy put in place to ensure that individuals and businesses have access to useful and affordable financial products and services (transactions, payments, credit and insurance) that meet their needs, delivered in a responsible and sustainable way. It has been a herculean task to attain by CBN.

Nigeria failed to meet its National Financial Inclusion Strategy target for 2020 to include 80 percent of its adult population into the financial system. This means that 36 percent of Nigerian adults, or 38.1 million of the country’s 106 million (18 years and above) adults, remain completely financially excluded.

“This is a true challenge to the eNaira project. It will remain in the corridor of mainly the urban dwellers and those who have the privilege of accessing bank accounts already. About 40 million unbanked adult Nigerians will remain spectators to the digital currency initiative. They will not benefit from whatever the scheme offers for now until they are financially inclusive, and that will take a very long time,” said Mr Bamidele Johnson, a financial analyst.

He said it is important to draw attention to this anomaly so that the government and the regulatory authorities should quicken action in translating eNaira into real benefit for the less privileged. “It is misleading to claim what the eNaira cannot offer or what it is handicapped to produce so that the necessary corrections can be made,” Johnson added

While the barriers to financial inclusion have been a long time problem, a number of avenues are helping to broaden access to financial services. These windows aim to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives according to demographic imperatives. This calls for advancements in financial technology (fintech), as simple as engaging the services of the ordinary GSM handset and services.

Industry experts have urged the government to expand the Payment Service Bank (PSB) licence to the telecommunication service operators to participate actively in the mobile money banking service. Since they have the penetration and the technology, they will fill the gap that the unbanked 40 million adult Nigerians have created pending the time they will become financially included.

“With the little object (telephone handset) in your hand which contains a tiny sim card, you can transact your business from anywhere, and have the goods and services you require delivered to you – at affordable cost. This was never imagined before the advent of the GSM revolution, 20 years ago. It makes life easier for everyone and creates employment for the courier and logistic firms,” said Agnes Agebona, a Mobile Money/Agent Banking operator in Lagos.

A study showed that financial inclusion activities boomed during the first three quarters of 2020: January-March (Q1) before lockdown; April-June (Q2) when there was the COVID-19 lockdown; and July-September (Q3) after lockdown – when gradual relaxation of restrictions was effected. Findings revealed that COVID-19 crisis had mixed impacts on POS facilities – minimal in the aspects of transaction in volume and value only. But there was an overall accelerated tempo made possible by telecom services.

Analysis of the findings showed that POS transactions value, which recorded N1.009 trillion in the first quarter of 2020, dropped by N32 billion to N976.91 billion in the second quarter during lockdown, representing 3.17 per cent; to climb by N223 billion to N1.20 trillion in the third quarter or 22.82 percent. The N3.18 trillion total transaction value for three quarters of 2020 was 83 per cent compared to N1.74 trillion in the corresponding period of 2019.

Transaction volume of 138.62 million in the first quarter did not record significant change for the second the quarter of 2020 hit by the COVID-19 lockdown. The figure for the second quarter was 138.65 million showing the severe impact of the lockdown on businesses. Most businesses that use POS for transactions were forced to shut down their operations and close their physical offices following the restriction of movement ordered by the government.

However, activities picked up in the third quarter with transactions Volume hitting 162.62 million – a difference of 23.97 million representing 17.38 per cent rise. Total Volume for the three quarters was 400 million as against 289 million for the corresponding period of 2019 representing 38 per cent upward trend. The rise was occasioned by the return of most businesses and companies to the normal working hours attended before the coronavirus outbreak. Findings also showed that many people resorted to POS business as alternative activity to sustain their means of livelihood hit by the lockdown.

This can be deduced from the number of POS terminals registered and deployed during the periods under review. While transactions value and volume showed no increase in the second quarter of 2020, which was the peak of the lock down, the numbers of POS registered and deployed rose from 965,589 and 918,456 to 1,488,711 million and 1,130,379 million, representing 54.17 and 23.2 per cent, respectively.

When compared with the corresponding period of the preceding year, POS registered and deployed showed 55.0 per cent and 47.77 raise per cent: from 2.7 million to 4.17 million and 2.16 million to 3.12 million, respectively.

The aftermath of the pandemic crisis tremendously added a fillip to the alternative payment channel and became a boost to financial inclusion. The renewed vigour indicates a rapid drive of the financial inclusion project, according to reports by the NIBSS, during and after the peak of the COVID-19-induced lockdown.

It is a good sign that POS transactions did not suffer any setback of considerable dimension arising from the pandemic crisis. This suggests that a greater number of people are embracing the POS as an alternative payment system. It is also an indication that the poor service delivery of the banks’ ATM terminals most of the time, forced financial services consumers to patronize the POS operators.

The NBISS in its 2020 half year report stated that POS transactions which hit N1.64 trillion in the first five months of 2020 was the highest in four years. The value of transactions done across POS channels in Nigeria increased from N1.14 trillion recorded between January and May 2019 to N1.64 trillion within the same period in 2020.

The report implies that the total value of transactions from POS machines rose by N500 billion, which represents a 43.8 per cent increase in five months. The total volume of POS transactions also increased from 152.6 million to 228.86 million within the period under review. This indicates that the volume increased by 76.26 million, or 49.9 per cent.

“As people effect transactions on the POS, they are calling the recipients on their GSM handsets. In fact, billions of naira worth of transactions go on every day with the use of the GSM facilities. You can see what the telecoms revolution has done within the short time it occurred in August 2001. Billionaires and millionaires have been created seamlessly,” said Mike Ibunor, a fintech expert.

•Editor’s Note: Airtel and MTN have been granted Payment Service Bank Licence.

About the Author

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Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

Sam Diala, THEWILLhttps://thewillnews.com
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.

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