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Bank Customers Shun Cash Deposits Into Domiciliary Accounts

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Nigerian 1000 Naira notes

Bank customers are shying away from making cash deposits into their domiciliary accounts three days after the Central Bank of Nigeria lifted the ban on foreign currency deposits, our correspondent has learnt.

The CBN had Monday said holders of ordinary domiciliary accounts were allowed to deposit foreign currencies into their accounts, a move that ended a six-month embargo on the banks from receiving cash deposits from the customers.

Bankers at some branches of Guaranty Trust Bank, First City Monument Bank and First Bank of Nigeria in Lagos told our correspondents on Thursday that customers had not been coming to make dollar deposits.

Industry analysts said the lack of certainty about whether customers could transfer or do transactions with the deposits was the major factor discouraging foreign currency deposits by customers, stating that the central bank needed to address that.

The CBN had on August 5, 2015 banned the payment of cash into domiciliary accounts in a bid to stop illicit financial flows in the Nigerian banking system.

A spokesperson of one of the banks, who pleaded anonymity, said, “The directive from the CBN was silent on whether customers can transfer the deposits, and I know there are concerns about that. Possibly, this is one of the things the Bankers’ Committee might want to discuss at its next meeting.

“I am as confused as the rest of the bank customers. I don’t really understand what the central bank is trying to do. A lot of the things they are saying we are not really clear about it. The banking industry is still very confused.”

The Head, Media and External Relations, FirstBank, Mr. Babatunde Lasaki, said, “People have been coming to deposit money into their domiciliary accounts in our bank.”

A currency strategist at Ecobank Nigeria, Mr. Kunle Ezun, said, “One would have thought that with that directive, there would be opportunity for business. But basically, I think it has a mooted effect on the banks because it doesn’t create any business; rather, it creates more burdens on the banks.

“When you deposit your dollar cash with the bank and the bank has no outlet for those dollar cash, then you create more problems for them because they will need to pay premium on those deposits. Meanwhile, those deposits are not being utilised. Today, the CBN is not allowing the banks to do wire transfers.”

The CBN needs to come back to the banks and perhaps provide a clearer view about how they will use the deposits, Ezun said.

“A lot of banks are not too excited about it (the dollar cash deposit) because it is not going to help their business. What it will only end up doing is that it will make the banks to just accumulate dollar cash in their vaults without any outlets for those dollar cash. So, at the end of the day, the banks are just keeping assets that are not earning any income for them,” he added.

The Head of Investment Research, Afrinvest West Africa Limited, Ayodeji Ebo, said, “It won’t be very effective because they also need to address the user end. What I mean by that is that people are not sure of the modality for withdrawal or usage. Most of the banks have not reversed the initial policy regarding the cap that has been placed on debit and credit cards as well as withdrawals.

“You can’t expect me to pay in $1,000 and you are telling me I can only use $300 in a day, or that I can’t use my card. So, we don’t feel that will be very effective because the CBN also needs to address the utilisation or the modality around the usage.”

Punch

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Finance

MTN Nigeria’s MoMo Formally Commences Operation

MoMo has commenced a full commercial Payment Service Bank operations, today, 19th May, 2022

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MTN

MTN Nigeria’s subsidiary company, MoMo has commenced a full commercial Payment Service Bank (PSB) operations, today, 19th May, 2022.

This comes after a successful trial that began on May 16, 2022, to commemorate the start of MTN’s GSM operations on May 16, 2001, and MTN’s listing on the Nigerian Exchange Limited on May 16, 2019.

Investors King had reported the CBN’s approval of this process some months back stating; “This is the first step in the process towards a final approval, subject to the fulfillment of certain conditions as stipulated by the CBN. The decision to issue a final approval is firmly within the regulatory purview of the CBN and we respect their right and judgment in that regard.

“MTN Nigeria affirms its commitment towards the financial inclusion agenda of the CBN and the Federal Republic of Nigeria and continues to explore means whereby it can contribute to its fulfillment…”

MoMo PSB is determined to enable millions of Nigerians to access a broad range of financial service products. With an expansive agent network of over 166,000 active agents and digitized partnership infrastructure, MoMo PSB will continue to expand its agent network in order to serve Nigerians across the country and eliminate friction from routine transactions by digitizing cash payments.

Customers can open a MoMo wallet, send money to any phone number in the country, and pay their bills by dialing *671# from any network.

Furthermore, MoMo wallets will allow Nigerians in the Diaspora to send money to any phone number in the country in the future, a crucial feature considering Nigeria’s position as the top recipient of remittances in Sub-Saharan Africa.

“We are grateful to the Central Bank of Nigeria (CBN) for their support and guidance through the process,” said Karl Toriola, CEO of MTN Nigeria. “This is an important milestone for MTN Nigeria in our mission to support the government’s drive towards financial inclusion in Nigeria.

Not just for those in urban centers and markets, but also people in the rural and remote areas of the country who remain excluded from the financial system,” he added.

MoMo PSB CEO, Usoro Usoro said: “Providing easy to use, accessible and affordable financial services to all Nigerians is essential to executing the CBN’s financial inclusion strategy and the digital inclusion agenda of the Minister of Communications and Digital Economy. We look forward to playing our part and are excited about the opportunities to partner with relevant institutions across various sectors to co-create and expand access nationwide.”

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CBN Issues Directive For Open Banking to Improve Financial Services

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Central Bank

In an effort to stimulate innovation and widen the range of financial products and services available to banks’ customers, the apex regulatory bank, the Central Bank of Nigeria (CBN), has established the legal framework for Open Banking in Nigeria.

This was revealed in a circular titled ‘Operational guidelines for open banking in Nigeria’ which was obtained by Investors King.

The Regulatory Framework for Open Banking in Nigeria, according to the CBN, establishes standards for data sharing across the banking and payments systems in order to stimulate innovation and expand the range of financial products and services available to bank customers.

According to the CBN, the financial sector data guideline would allow clients to access innovative financial products and services.

The Apex bank said: “Open banking recognises the ownership and control of data by customers of financial and non-financial services, and their right to grant authorisations to service providers to access innovative financial products and services. This is anticipated to drive competition and improve access to banking and payments services”.

The CBN also added that participants in open banking shall adhere strictly to security standards when accessing and storing data, and shall be subject to minimum privacy standards, operational standards, risk management standards and customer experience standards as prescribed by the Bank.

According to the CBN, any organization with customer data that may be transferred with other businesses in order to deliver innovative financial services within Nigeria is eligible to participate in the Open Banking ecosystem.

Open banking is a banking practice in which banks and non-bank financial organizations provide third-party financial service providers open access to customer banking, transaction, and other financial data via application programming interfaces (APIs).

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Finance

Partnerships for Financial Education

Education, specifically financial education, is a critical tool to enable both individuals and communities to prosper

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Manlan Carl

By Carl Manlan, Vice President, Social Impact, Visa CEMEA 

In April 2022, a media company leveraged key partners to make on-demand mobile-based learning accessible to millions of young Africans. The model bets on the success of the entertainment platform to attract young people to take an extra step in strengthening their entrepreneurial skills. This highlights the importance of multi-stakeholder partnerships in ensuring access to skills and educational messages for Africa’s youth. Moreover, the critical importance of experience-based learning and platforms in advancing socio-economic transformation.

Over the years in the fight against AIDS, tuberculosis, and malaria, we have learnt about the effectiveness of purpose-led partnerships. The ongoing COVID-19 pandemic provided us with a sense of urgency in supporting individuals and households to take full advantage of the digital economy. The continent’s response to health emergencies suggest that we have the tools to push forward in creating a more inclusive society particularly in the areas of education and capacity development.

Education, specifically financial education, is a critical tool to enable both individuals and communities to prosper. Entrepreneurship holds some of the answers in alleviating unemployment in Africa, but it needs to come with the right set of skills and opportunities. Trace Academia, has taken the lead in bringing partners to offer a range of skills to millions of young Africans through their media platform. This rich content has re-imagined Visa’s Practical Business Skills to allow young people to learn lifelong transferable skills.

Leveraging the power of technology, both platforms have been able to bring relevant financial education content that changes the way the youth interact with entrepreneurial concepts. Skills development is one step in the right direction as we continue to collaborate with others to create opportunities for young people. The real impact is in the continuous application of these skills, which will help us navigate some of the challenges that affect youth and employment on the continent.

The Covid-19 pandemic accelerated preference for digital commerce and highlighted the opportunity of key stakeholders to come together to collaborate at the intersection of commerce and skills. Research shows 80 million young people will benefit from the rise of digital commerce in Africa by 2030 but this can only be enabled by access to adequate skills and relevant platforms.

Financial education starts at home and the role of parents and guardians cannot be over emphasized. Practical Money Skills is an online resource which provides content for children and youth grades K to 12. The end in mind is the ability to take control of your finances as an individual or as a household. As such, the fundamental habit of careful management of available resources at home builds the framework for financial education and financial consumer protection which ultimately leads to more communities being included in the financial system. As in the health sector, behaviour change communication and prevention are key factors in curbing the spread of a disease. In our case, financial education and protection are key tenants in spreading expertise and leveraging skills required for individuals to sustain their livelihoods and for entrepreneurs to expand their trade from local to global value chains.

Access to healthcare and financial education may, at first, be unrelated but the pandemic has exposed the fragility of the current economic system when skills are lacking. There is evidence suggesting that debt and financial concerns have a serious impact on mental health

Partnerships for Financial Education

. As such, people living in financial hardship are at increased risk of mental health problems and poorer mental wellbeing. Financial wellness is important for individuals and communities to continue to make a sustainable contribution to the continent.

Most critical diseases affecting the continent over the past half-century have been managed through partnerships. Today, more than ever, we can take a cue from the health sector to make financial education accessible to all, it is a life skill that should be valued.

 

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