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Payment Cards’ Restriction Hurting Banks, Customers –Adeyinka

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  • Payment Cards’ Restriction Hurting Banks, Customers

The Chairman, Committee of e-Banking Industry Heads and Chief Digital Officer of Wema Bank Plc, Mr. Dele Adeyinka, talks about developments in the e-banking space and the need to increase the adoption of e-payment and alternate channels.

CAN you give an overview of the growth in the e-banking space over the years?

The Cashless Nigeria initiative started about four years ago. We are in 2016 and are still counting the dividends of that initiative; we are still working to grow the numbers. But if we want to appraise ourselves, we can say with a sense of responsibility that we are on the right track. The volume of cash in the economy is still on the very high side. But we can also say that between 2012 and now, the adoption of the e-channels and alternate payment options has grown significantly. Point of Sale adoption has also grown between then and now; card issuance and the adoption of all the card schemes that we drive in the country have also grown significantly. The usage of cheque has drastically reduced. The adoption of alternate e-payment platforms has grown tremendously.

The NIBSS Instant Payment and NEFT as alternate options to doing funds transfer (rather than cheque) have also grown significantly. And If you compare what we had in 2012 and 2106, we have seen some tremendous growth. I have some statistics that I can share. As of the end of 2015, the circulation of cheques in the industry had been reduced to about 2.8 per cent from eight per cent that it used to be , compared to all options of payment. Growth in cash adoption has grown by 15 per cent. Electronic funds transfer and alternate funds transfer channels (NIP, NEFT, AUTOPAY etc), on the general note in the industry, have recorded eight per cent adoption as compared to four per cent adoption that it used to be in 2012.

The deployment of the PoS terminals has also grown seriously. We have a whole of merchant locations, where the use of the PoS terminal has become so prevalent as an alternate point of payment rather than using cash. Of course the deployment of the ATMs in the industry has also grown tremendously. I will say we are on the right track even though we still have a lot to do; stakeholders and different players still have a lot to do. But we have done fairly well and we will continue on that path, encouraging our consumers and stakeholders to adopt these alternative channels of e-payment.

Commercial banks recently stopped their customers from making cash withdrawals (foreign currencies) from Automated Teller Machines abroad using the debit naira MasterCard. This has affected e-payments, especially transactions involving foreign exchange. Will banks reverse this decision soon?

My take on this is that it is a national challenge. It is a hurdle that we all need to clear together. Yes, currently, it is affecting the card space but we all know it is not only the card space. It affects virtually all sectors of the economy. If you go to supermarkets today, you will notice that it is not the type of products that they used to have one or two years ago that they have there now. This is because they are finding it difficult to source for the FX to bring in these products. If the leadership of the country is advising us to look inwards rather than look outside, it is just natural that all of us including those in this sector aligns our visions, thoughts and actions to this national directive; that as a nation, we must look inwards. The decision regarding this in our sector was taken at some meetings. It was not as if it is generally outlawed to use our cards abroad. It was just to say there has to be a limit to the funds our customers and consumers can use outside the country; it tells heavily on our external reserves as a nation because settlement must be done. Today, reports say we have one of the lowest FX reserves in the last decade as a country. And of course, we all know the beginning of this: The price per barrel in the global oil market went downwards, and again some of the countries that used to patronise our crude oil stopped doing that. All of these have affected our FX reserves. For cards, we also considered that if we allow our customers to continue to go outside the country to use these cards, it will naturally get to a state that will further reduce our FX position as a country.

This is because those other countries will need to be settled and they will not be settled in our national currency; they will be settled in foreign currencies (dollars or pounds). Of course, if anything is going to affect our country, it is in our interest as a country to put a hold on it. We are not stopping it outright, we are only saying let us put a limit to the number of what our consumers can use for transactions outside the country. So it is a temporary restrictive measure. It is hurting not just the consumers, it is hurting the practitioners – all of us, but it is a temporary pain we all have to bear now in the interest of our nation. Once we cross this hurdle, and have enough FX reserves to be able to settle our bills, the cards will continue to work.

Are you saying in the meantime, the customers should forget increase in the amount they can spend overseas?

I know that the President, Vice-President, the National Assembly and all of the leadership in the country are working round the clock to resolve this issue. I read in the newspapers how the President himself said he was looking for alternative options, seeking the NASS approval to get some loans to bring in some forex into this country. All the arms of government are working to ensure that we clear this hurdle. But am I going to advise and encourage that we continue to create more problems rather solving existing ones? No, my take will be for us to be solution-providers; and not adding to the problems of the nation. We need to align all of our products and offerings to solving the problems. It is just a temporary pain. Once we clear this hurdle jointly as a nation, it will be obvious to all. We can then increase the limit that our customers can use their cards to spend abroad.

As the CeBIH chairman, what are your visions for this industry?

There is a tag line that we have in CeBIH, it says we want to drive excellence and dynamism through collaboration. My major role and that of other members of the executive committee as we immediately took the leadership of CeBIH is to emphasise that aspect of our tag line that resonates collaboration. We want to use collaboration to achieve much more than ever before. As individual or member banks, we can achieve a lot but as an association or committee, we will achieve much more, if we collaborate. So we are bringing all players and stakeholders together, and we are using that force of collaboration to help us achieve much more. We are going round, and we are involving all stakeholders in what we do. By the way, on a monthly basis, we hold our meetings and we engage all stakeholders within the month. As much as possible, we ensure that all the gaps that we have identified are properly filled. We encourage ourselves to leverage our collective strength to see how we can achieve the Payment System Vision 2020 together. And ultimately, it will affect our businesses, our banks and consumers positively; because ultimately, they will be the beneficiaries.

This is because once our consumers adopt the usage of e-payment and alternate platforms, the business will grow and our individual banks will benefit from it; the revenue lines will increase; the industry and the nation as a whole will benefit.

Can you tell us more about CeBIH?

CeBIH means the Committee of e-Banking Industry Heads in Nigeria. It comprises of practitioners in all of the Deposit Money Banks in the industry.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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Crude Oil

Oil Prices Extend Gains to $64.32 Ahead of OPEC+ Meeting

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Oil Prices Rise to $64.32 Amid Expected Output Extension

Oil prices extended gains during the early hours of Thursday trading session amid the possibility that OPEC+ producers might not increase output at a key meeting scheduled for later in the day and the drop in U.S refining.

Brent crude oil, against which Nigeria oil is priced, gained 0.4 percent or 27 cents to $64.32 per barrel as at 7:32 am Nigerian time on Thursday. While the U.S West Texas Intermediate gained 19 cents or 0.3 percent to $61.47 a barrel.

“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi. “Perhaps more interesting is the lack of U.S. shale response to the higher crude oil prices, which is favourable for higher prices.”

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are looking to extend production cuts into April against expected output increase due to the fragile state of the global oil market.

Oil traders and businesses had been expecting the oil cartel to ease production by around 500,000 barrels per day since January 2021 but because of the coronavirus risk and rising global uncertainties, OPEC+ was forced to role-over production cuts until March. Experts now expect that this could be extended to April given the global situation.

“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report.

Meanwhile, U.S crude oil inventories rose by more than a record 21 million barrels last week as refining plunged to a record-low amid Texas weather that knocked out power from homes.

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