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Despite Challenges, ATM Transactions Hit N3.5tr in Nine Months

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ATM machine
  • Despite Challenges, ATM Transactions Hit N3.5tr in Nine Months

Despite several challenges confronting financial transactions done in the country via the Automated Teller Machines (ATMs), N3.5 trillion deals took place through the 17, 253 ATMs spread across the country from January to September 2016.

An ATM is an electronic telecommunications device that enables customers of a financial institution to perform financial transactions, particularly cash withdrawal, without the need for a human cashier, clerk or bank teller.

The sum could have been higher but for many glitches associated with using ATMs in Nigeria, including network failures, frauds, and truncated transactions relating to the inability of the machines to dispense cash; and debiting without getting the funds.

Besides, the number of ATMs, according to market observers, is said to be grossly inadequate to serve an estimated 180 million people, as many areas are cut off from this quick teller machine services, leading to congestion at the available ATMs.

Aside from the massive investments that have gone into the deployment of ATMs across the country by the operators, the current challenges may as well be a dent on the Central Bank of Nigeria’s cash-less economy initiative, which kicked off in Nigeria in 2011.

The CBN’s motive was to reduce cash-based transactions in the country by as much as 90 percent, however, the series of challenges as mentioned earlier might as well be a limiting factor to ensuring the success of the project, for which enthusiasm has waned considerably well in the country in the last one and half years. In addition, these limiting factors have also been identified as impacting the various investments that had gone into the deployment of ATM terminals across the country.

An unconfirmed report claimed that the banks might have invested about N390 billion on the acquisitions of ATMs in the country in the last three years.

The report however, gathered that as at 2015, the cost of ATMs is determined by their functionalities, which include mono-functional, cashless and multi-functional ATMs.

A mono-functional ATM is the type mostly deployed by banks in the country, which dispenses cash as well as carrying out other transactions such as payment of utility bills and cost $20,000. This type of ATM is the one mostly deployed by banks in the country.

Multi-functional ATMs whose cost is between $50,000 and $100, 000 are those that, aside dispensing cash, also accept cash deposit as well as cheque. There are few of this type deployed in the country.

Besides, cash-less ATMs, as the name implies, does not accept or dispense cash are but rather carry out electronic payment transactions only and it costs some $3,000.

The two major brands of ATMs deployed by the banks are NCR and Wincor Nixdorf.

A spokesperson for Nigeria Inter-Bank Settlement System (NIBSS), Lilian Phido, said on the telephone that the challenges currently confronting the technology in the country were not insurmountable.

According to her, “If you look back like five to 10 years ago, you will see that we have come a long way.

“All the challenges you spoke about are not peculiar to Nigeria, even in the developed countries you still encounter some of these challenges. Ours is peculiar because of our infrastructure issues, but I can tell you that we will get there; it can only be better.”

She added that banks had been told to improve their services with regard to the operations of the ATMs, noting that only the banks could determine how many ATMs they could operate in a given location.

The statistics from the NIBSS showed that between January and September, there were 414 million transactions from the about 29 million active ATM cards in the country.

According to the ATM Industry Association (ATMIA) there are now close to three million cash machines installed worldwide.

Meanwhile, customers have called on banks to ensure their ATMs work efficiently and are loaded with cash in the New Year.

Most of the customers complained about their experiences during the Christmas period, which they described as very challenging.

A customer with UBA, who gave her name as Sidikat Sowole, lamented that she could not make any withdrawal with her ATM card at the bank branch located at 7 and 8 bus stop on Airport Road, Ikeja. “They should try and put their house in order this New Year holiday. Please, help me tell them.”

A customer with GTB located at Isolo, Malik Garba, said he no longer had confidence in the ATMs, adding “I now prefer to use my cheque book. Apart from the queues, the network is another issue. They should work on this. They shouldn’t allow their servers to go down this time around. The Christmas period was something else.”

While many banks are happy to do away with some workers in the categories of cashiers and tellers because of the ATMs, they have to improve their services in this regard or lose their customers who are frustrated. To encourage transactions through the ATMs, the CBN needs to be more efficient in ensuring that problems that arise over them are quickly resolved when customers complain.

Meanwhile, Point of Sales (PoS) services, according to NIBSS for the first three quarters of the year were worth N498 billion from 41.37 million transactions. While there are 140,281 registered PoS, those connected and active were 120, 042.

The PoS operators ride on technologies including Local Area Network (LAN), General Packet Radio Service (GPRS), Code Division Multiple Access (CDMA) and WIFI to connect the registered terminals for operations.

NIBSS, which provides the infrastructure for automated processing, settlement of payments and fund transfer instructions between banks and card companies in Nigeria, is owned equally by all licensed banks in Nigeria, and the Central Bank of Nigeria (CBN).

According to it, as at September 2016, there were four million mobile money customers in the country. While mobile money operation has 10, 070 registered agents, the total volume of transactions was 33.6 million, which culminated in N527 billion. The sub-sector has 21 licensed operators.

A further analysis of the statistics showed that as at September, there are 59.19 million active bank customers from the about 93 million bank accounts.

NIBSS claimed that Nigeria has 63.68 million active bank accounts; 25.39 million current accounts; 65.44 million saving accounts.

The number of corporate accounts is 12.38 million, while 75.12 million accounts belonged to individuals.

NIBSS puts Bank Verification Number enrolments at 26.35 million.

Though Nigeria is pushing for a cashless economy, statistics showed increase in cheque transactions, which can be attributed to the challenges associated with the ATMs and PoS. For instance, within the period under review, the banks processed 8.74 million cheques worth N4.31 trillion. NIBSS puts average daily cheques at 31,899.

The total number of corporate cheques processed was 4.34 million, which was worth N2.70 trillion, while the number of individual cheques processed was two million and value was N0.70 trillion.

In terms of web payments, there were 8.91 million transactions with total worth of N88.73 billion.

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

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Company News

Dangote Group Expands Refinery Storage Capacity to 5.3 Billion Litres

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Dangote Refinery

The Dangote Group has announced a significant expansion of its refinery storage capacity.

The expansion, disclosed by Alhaji Aliko Dangote, President of the Dangote Group, during his address at the Afreximbank Annual Meetings and AfriCaribbean Trade & Investment Forum in Nassau, The Bahamas.

Currently boasting a storage capacity of 4.78 billion litres, the Dangote Petrochemical Refinery is set to increase this figure by an additional 600 million litres, bringing the total capacity to an impressive 5.3 billion litres.

This expansion underscores Dangote’s commitment to transforming Nigeria into a hub for refined petroleum products and solidifies the refinery’s role as a strategic reserve for the nation.

Addressing stakeholders at the forum, Dangote highlighted the refinery’s pivotal role in addressing longstanding challenges in Nigeria’s energy sector, particularly the absence of strategic reserves for petrol.

“The country doesn’t have strategic reserves in terms of petrol, which is very dangerous. But in our plant now, when you came, we had only 4.78 billion litres of various tankage capacity. But right now, we’re adding another 600 million,” Dangote affirmed.

The expansion comes amidst various operational challenges faced by the refinery, including attempts by international oil companies to hinder its operations.

Dangote asserted that these challenges, aimed at impeding the success of the refinery, were indicative of broader resistance to change within the oil industry.

“We borrowed the money based on our balance sheet. I think we borrowed just over $5.5bn. But we paid also a lot of interest as we went along, because the project was delayed because of a lack of land, also the sand-filling took a long time,” Dangote revealed, emphasizing the resilience required to overcome these obstacles.

Moreover, Dangote expressed optimism regarding the refinery’s capacity to influence regional fuel prices, citing the success story of diesel price reduction following the refinery’s market entry.

He indicated that while petrol pricing remains a complex issue governed by governmental policies, the refinery’s operations would strive to offer competitive pricing and supply stability.

The expansion of the Dangote Petrochemical Refinery not only marks a significant milestone in Nigeria’s industrial landscape but also positions the conglomerate as a key player in reshaping Africa’s energy dynamics.

As construction progresses towards completion, the refinery aims to further consolidate its role in meeting regional energy demands and fostering economic growth across West Africa.

With plans to commence sales of refined products in the coming months, Dangote’s refinery is poised to play a transformative role in Nigeria’s quest for energy independence and regional economic integration.

As stakeholders await the refinery’s operational debut, expectations are high for its potential to drive down fuel prices and enhance energy security across the region.

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Musk Secures Shareholder Support for Compensation and Texas Relocation

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Elon Musk

Tesla Inc. shareholders have voted in favor of Chief Executive Officer Elon Musk’s compensation package and the company’s state of incorporation change to Texas.

The results, announced at Tesla’s annual meeting in Austin on Thursday, reflect shareholder approval despite challenges such as declining sales and a significant drop in stock price.

Musk had hinted at the likely outcome the night before the meeting in a post on X, stating that both resolutions were “passing by wide margins.”

The electric car manufacturer did not disclose the detailed breakdown of the votes.

The approval of Musk’s pay package, although advisory, demonstrates continued investor support for his leadership.

The package had previously been nullified by a Delaware judge in January, but Tesla plans to appeal. Should the appeal fail, relocating Tesla’s legal home to Texas may provide the board an opportunity to reintroduce the compensation plan under potentially more favorable legal conditions.

Originally approved in 2018 with 73% of the vote, Musk’s compensation plan makes him eligible for up to $55.8 billion in stock options if Tesla achieves specific milestones.

Currently, the value of these options is approximately $48.4 billion, according to the Bloomberg Billionaires Index.

Musk’s leadership has been a topic of significant debate, particularly in light of his oversight of six companies and his tendency toward abrupt strategic changes.

Earlier this year, Musk orchestrated Tesla’s largest layoffs to date, only to rehire some of the affected workers weeks later.

In addition to the compensation package, shareholders voted to reelect James Murdoch and Kimbal Musk to Tesla’s board.

Murdoch, son of media mogul Rupert Murdoch, has served on the board since 2017, while Kimbal Musk, Elon’s younger brother, has been a member since 2004.

Tesla’s stock saw a modest increase of 0.3% in extended trading following the announcement, though the stock had fallen about 27% over the year compared to a 14% gain in the S&P 500 Index.

During the annual meeting, held at Tesla’s Austin headquarters, shareholders showed enthusiastic support as Musk took the stage in a black Cybertruck T-shirt.

He shared updates on the company’s progress, including the introduction of three new models, the expansion of the Supercharger network, and record production levels for Cybertrucks.

“A lot of people said Cybertruck was fake, never going to come out. Now we’re shipping a lot of Cybertrucks,” Musk stated.

In addressing his substantial pay package, Musk clarified that it is structured as options requiring him to hold Tesla stock for five years. “I can’t cut and run, nor would I want to,” he said.

The push for shareholder support involved a dedicated “Vote Tesla” website and advertising on X, with Tesla investors and executives vocalizing their backing for Musk.

Despite some opposition from significant investors like Norway’s sovereign wealth fund and the California Public Employees’ Retirement System, the measures passed.

The relocation to Texas has been formalized, with the certificate of conversion available on the Texas Secretary of State website.

However, any future compensation plan will need to be restructured to comply with Texas legal standards, should the Delaware appeal fail.

The recent shareholder vote may enhance Tesla’s position in the forthcoming appeal. Delaware Chancery Court Judge Kathaleen St. Jude McCormick’s January decision to void the compensation package cited conflicts of interest and inadequate disclosure.

The appeal’s outcome, expected later this year, will determine the next steps for Musk’s compensation plan.

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Merger and Acquisition

Exxon Mobil’s Sale to Seplat Progresses After NNPC Drops Legal Challenge

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exxonmobil

The Nigerian National Petroleum Corporation (NNPC) has withdrawn its legal challenge against Exxon Mobil Corp.’s sale of its oil and gas assets to Seplat Energy Plc.

This decision eliminates a major obstacle that had stalled the completion of the $1.3 billion deal.

The NNPC submitted an application to the high court in Abuja to discontinue the case, as confirmed by its legal firm, Afe Babalola, in an email on Thursday.

This move follows an agreement reached last month between NNPC and Exxon Mobil to finalize the transaction under undisclosed terms.

However, court documents reviewed by Bloomberg reveal that NNPC retains the right to resume its legal challenge if the settlement terms are not honored.

The sale, initially signed in February 2022, still requires approvals from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which has set an August deadline, and from Nigerian President Bola Tinubu.

The NNPC’s withdrawal significantly advances the deal but does not mark its final hurdle.

The addition of Exxon Mobil’s blocks will significantly enhance Seplat’s portfolio, almost quadrupling its output to over 130,000 barrels per day.

This acquisition is set to bolster Seplat’s status as one of the leading suppliers of domestic gas to Nigerian power plants, fortifying its influence in the region.

In a parallel development, Shell Plc’s divestment of its Nigerian onshore oil business to a consortium of local firms, valued at over $1.3 billion, also awaits regulatory approval after being announced in January.

Both deals highlight the ongoing restructuring and consolidation within Nigeria’s oil and gas industry, aimed at increasing efficiency and local participation.

As Nigeria navigates these substantial industry shifts, the successful completion of the Exxon Mobil-Seplat deal will be a critical indicator of the nation’s ability to manage large-scale energy transactions.

It will also set a precedent for future agreements and regulatory processes in the country’s vital oil and gas sector.

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