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N200b Online Payment Revenue vista for MSMEs



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  • N200b Online Payment Revenue Vista for MSMEs

A fresh window of opportunity may have come the way of Nigeria’s estimated 37 million Micro, Small and Medium Enterprises (MSMEs). Small businesses and startups willing to adopt online payment solutions stand to benefit from a projected N200 billion online payment revenue this year. Assistant Editor OKWY IROEGBU-CHIKEZIE writes on how MSMEs can leverage online payment solutions to grow their businesses and create jobs.

Small businesses and startups are acknowledged globally as the life blood of any economy. This is because of their immense capacity to grow the Gross Domestic Product (GDP) and also create jobs. But in Nigeria and, indeed, other developing economies across the world, one of the major challenges of MSMEs is how to receive payments from their customers through cash and bank payments.

Although, Nigeria, according to experts, boasts an estimated 37 million MSMEs, electronic payment remains relatively a new phenomenon. Most transactions in the country are done with cash, which remains the preferred medium for payment in the country. Factors such as poor awareness of e-payment solutions, ignorance, poor banking culture, lack of trust, illiteracy and the love for the status quo have been identified as being responsible for the high volume of cash transactions in Nigeria.

However, the situation is changing. This was in the wake of the adoption of the “cashless” initiative by the monetary authorities in Nigeria, for instance. In 2016 alone, about N132 billion worth of goods and services were said to have been purchased via the Internet. This, according to financial experts, made online payment a veritable market for MSMEs to tap into to grow their businesses.

The thinking is that MSMEs are perhaps, the most viable sector to drive growth as well as engage the highest number of employees in any economy. Their capacity to do so, according to experts, put them on a vantage position to turn around the fortunes of its operators as well as the country’s. Besides, viable MSMEs drive industrialisation. And this must have been why operators and stakeholders in the sector believe that the adoption of online payment solution remained the way to go for MSMEs.

Already, PayU Nigeria, an online payment platform, appears poised to push an aggressive uptake of online payment solutions by MSMEs. Based on the firm’s findings, MSMEs stand to benefit from a projected N200 billion revenue that may accrue to the sector from online payments in the current year.

PayU Nigeria Country Manager, Ms Juliet Nwanguma, also said that by adopting online payment systems, small business owners can enjoy the associated benefits of credibility and reliability, especially as it has proven to be more secure and credible than receiving cash or cheque payments.

Nwanguma added that it also has the advantage of instant receipt of money with no risk of bounced cheques and the fees associated with it. She explained that businesses that have online payment platforms are considered more reliable and this encourages customers to do business with them, while for the consumer, it offers fraud protection, thereby securing their money.

The online payment expert therefore, urged MSMEs in the country to leverage on online payment as it will open up their businesses to more customers far beyond their locality, considering that a large population of people now rely on and use the Internet to purchase goods and services.

Nwanguma stated that setting up online payment is also quick and easy, as some of the payment platforms offer affordable plans with zero set-up fees and low transaction rates. She also revealed that MSMEs can use online platform to drive their export capabilities.

At moment, the MSME sector is said to account for a paltry seven per cent of the country’s total export, a figure considered low when compared to the over 37 million MSMEs operators in Nigeria.

To increase the capacity of MSMEs to contribute more to the country’s total export, Nwanguma told The Nation that her firm offers easy and instant online payment solutions for small businesses.

Giving more insight to the available solutions, she said the PayU Easy product, for instance, is a quick, easy and hassle free way to start selling online. According to her, the solution is flexible and ideal for businesses without an online merchant account.

She explained that PayU Easy comes with the assurance of her firm’s global expertise across 16 markets where they offer over 250 payment options.

“PayU Easy is designed for businesses with less than 500 transactions weekly. It offers the advantage of minimum documentation, weekly settlement, security of transactions (PCI DSS SSL and 3D secure), and zero set-fee,” she said.

That is not all. Nwanguma also said it offers the benefit of customised payment web page designed to ensure a consistent look and feel. “With PayU Easy, businesses can accept all major payments including Visa, MasterCard and bank transfers.

“The online market offers huge potential to start-ups and the 37 million SMEs in Nigeria to grow their sales. PayU Easy was designed to help them tap into this potential,” Nwanguma explained.

Explaining how it works, the PayU Nigeria boss said: “Customers simply click a link on their website and are transferred to a secure payments page where we handle the entire process. When they’re finished, we deliver them back to your site. The payment goes into an account with us, and we pay all the money owed to you at an agreed interval.”

She assured that customers do not need to worry about card security; all they need to do is sign up and get selling. “Customers simply complete their purchase and you get confirmation that a transaction has taken place. The money from the sale goes into an account at PayU.

“Usually every week, we add up your total, subtract our fees, and pay the balance into your account. You also get a statement. The whole process is automated, making it easy and effortless for you,” she explained.

On the significance of PayU Nigeria to small businesses, Nwanguma stated that while MSMEs in Nigeria may have to wait for government’s intervention to address the various challenges confronting them including lack of access to low cost funds and poor infrastructure, they do not necessarily have to wait for such intervention to overcome the challenge of limited access to market.

She stated that with the fast and easy online payment products offered by PayU Nigeria, MSMEs have the immediate opportunity to sell to more people in and around Nigeria, reduce the cost and risk of accepting payments, and as a result boost revenue and their contributions to the nation’s GDP.

While noting that migrating business online might pose some challenges to some MSMEs regarding some accounting and inventory functions, she assured that her organisation has taken this into consideration and has taken it upon itself to automate online without the need for additional business intelligence tools.

Operators’ reactions

For the Managing Director of Black & Empress, an upscale clothing line on Broad Street, Lagos, Mrs. Evelyn Egboka, the adoption of online payment methods by MSMEs has become imperative. She noted that online payments aid faster sales, expand and increase patronage opportunities.

“Customers can pay for goods and services from the comfort of their homes or wherever they are located. Currently, we accept payment easily and directly into our accounts, thus saving the time and resources for collecting and banking money collected via cash or cheque,” Egboka said.

The budding entrepreneur admitted that for many operators in her line of business, this has greatly reduced the vulnerability of MSMEs to risk of cash theft and associated vices.

Egboka, however, cautioned that the choice of the channel or online payment gateway a business decides on determines how cost effective it will be in the long run. She said she has watched her business grow beyond sending and receiving payments.

Also reacting to the issue of safety of online payment, an Information Technology (IT) Manager with Crystal Park Integrated Solutions, Mr. Stephen Oluwasegun, said that for any payment system to be able to replace cash or at least compete with it, it must win the trust of its users in the economy.

He said: “For this to happen there must be a way for merchants to verify the validity of the purchase. The payment solution must also be easily convertible to cash or as good as cash. Since most merchants in Nigeria are in business on subsistence basis, there must be a way to use the money they made for the day-to-buy what they need for the day or for the following day.”

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

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Banking Sector

Fidelity Bank Doles Out N39 Million to 15 Lucky Customers



Fidelity Bank Promo - Investors King

In yet another show of its commitment to reward loyal customers for maintaining a savings habit, leading financial institution, Fidelity Bank PLC has presented cash gifts worth N39million to lucky customers at the closing ceremony of the Fidelity Bank’s Get Alert in Millions (GAIM) Promo.

Held at Fidelity Bank’s head office in Lagos on Thursday, 29 July 2021, the well-attended event was conducted in the presence of relevant regulatory bodies including the National Lottery Regulatory Commission (NLRC), Lagos State Lotteries Board (LSLB), and Federal Competition and Consumer Protection Commission (FCCPC).

Speaking at the event, the Managing Director/Chief Executive Officer of Fidelity Bank, Mrs. Nneka Onyeali-Ikpe, ably represented by the bank’s Executive Director -Lagos and SouthWest, Dr. Ken Opara, reiterated the bank’s devotion to supporting initiatives that enrich the lives of its loyal customers even in times of economic uncertainties. She said “Encouraging savings and financially empowering our loyal customers have been a long-standing heritage at Fidelity Bank. We are elated at yet another opportunity to dole out up to N39Million to 15 Nigerians even in this time of economic uncertainty”. She further stressed the bank’s intentional drive towards enhancing CBN’s financial inclusion goal. “As a bank, we continuously position ourselves as key drivers for financial inclusion. Beyond encouraging savings, we believe that our GAIM campaign is a suitable initiative to attract the unbanked to the banking side of life”, Nneka added.

At the event, the duo of Mr. Sunday Okechukwu and Mr. Justine Nwaozor, who won the star prize of N10 million each were credited with their winnings. 13 other winners were credited with N3 million, N2 million, and N1 million accordingly; while 18 lucky customers walked home with consolation prizes including TV sets, refrigerators and generators.

Expressing his delight, a star prize winner, Mr. Sunday Okechukwu said, “I am grateful for this reward and most especially, the initiative. It’s common knowledge that having a healthy savings culture is good for one’s financial wellbeing, however, staying true to savings is sometimes difficult given the times we are in. However, with initiatives like this, savings become easier as we stand a chance to win big. I am glad to have won big, so big enough to turn my life and business around. Truly, Fidelity Bank keeps their word”.

Launched in 2019, Fidelity Bank’s GAIM Season 4 promo is a savings initiative of the bank specifically aimed at promoting a savings culture among Nigerians. Through this campaign, a total of N120 million has been seeded to several Fidelity Bank customers.

As a bank, we are pleased with the outcome of this initiative so far. Having wound up the fourth season of this campaign, it is exciting to see the number of people whose fortunes have changed. Although GAIM Season 4 is over, we will continue to drive initiatives that will, directly and indirectly impact the lives of our customers and Nigerians at large”, disclosed the Head of Savings and Sales, Fidelity Bank Plc, Mr. Ukpai Ibe.

Over the years, the leading tier two Bank has continued to intensify its efforts and innovate ways towards ensuring customer and stakeholder satisfaction. Through this promo, Fidelity Bank has promoted financial inclusion through digital channels and enriched the lives of its customers.

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Banking Sector

FCMB Group Posts 22.1 Percent Decline in Profit in H1 2021



FCMB - Investors King

FCMB Group Plc, a leading financial institution in Nigeria, recorded a 22.1 percent decline in profit after tax in the first half (H1) of 2021 despite zero COVID-19 restrictions.

The lender gross earnings dipped by 4.02 percent from N98.179 billion achieved in the first half of 2020 to N94.228 billion in the period under review, the bank disclosed in its unaudited financial statements seen by Investors King.

Net interest income also moderated by 5.25 percent from N45.379 billion reported in H1 2020 to N42.998 billion in H1 2021. While net fee and commission income increased to N12.934 billion in the period under review, representing an increase of 33.51 percent from N9.688 billion achieved in the same period of 2020.

Net trading income drop from N3.925 billion in H1 2020 to N2.639 billion in H1 2021, this represents a decline of 32.78 percent.

Other revenue sheds 39.7 percent from N7.555 billion in H1 2020 to N4.552 billion in H1 2021. Profit before minimum tax and income tax decreased by 24.2 percent to N8.911 billion in H1 2021, down from N11.071 billion recorded in H1 2020.

The bank paid N450 million as minimum tax and income tax of N903.797 million to push profit after tax down by 22.1 percent from N9.701 billion in H1 2020 to N7.557 billion in H1 2021.

The lender realised N974.744 million from foreign currency translation differences for foreign operations. This brings the total comprehensive income for the period N8.545 billion.

Earnings per share dipped from N0.49 H1 2020 to N0.38 in H1 2021.

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Banking Sector

Ecobank Grows Profit After Tax by 29 Percent to N62.6 Billion in H1 2021



Ecobank - Investors King

Ecobank Transnational Incorporated, a leading lender in Nigeria and across Africa, grew gross earnings by 13 percent to N442.9 billion in the first six months ended June 30, 2021.

The bank disclosed in its unaudited financial statements released through the Nigerian Exchange Limited and seen by Investors King on Monday.

Revenue expanded by 15 percent to N334.9 billion in the period under review while operating profit before impairment charges rose by 33 percent to N138.3 billion.

The bank grew profit before tax to N85.3 billion in the first half of 2021, up by 33 percent when compared to N64.133 billion recorded in the same period of 2020.

Profit after tax increased by 29 percent to N62.6 billion, up from N48.535 billion recorded in the corresponding period of 2020. Total assets expanded by 6 percent to N11.022 trillion with loans and advances rising by 7 percent to N7.861 trillion.

However, total equity was down by 1 percent to N803.2 billion.

Speaking on the bank’s performance, Ade Ayeyemi, Ecobank Group CEO, said: “We saw continued and sustained resilience in our performance, which is indicative of the success of our ‘execution momentum’ drive. As a result, we generated a return on tangible equity of 16.1% versus 15.2% a year ago and increased diluted EPS and tangible book value per share by 19% and 6%, respectively. In addition, profit before tax increased 23% to $210 million.”

“Group revenues rose 7% to $825 million, despite the challenging operating environment with the third wave of coronavirus infections threatening economic recovery. Our diversified pan-African business model continued to rise to the challenge. Revenues grew 13% and 6% in our Commercial and Consumer businesses, while our focus on growing the trade business led to increased trade assets.

The slowly increasing business and spend activity drove a 20% rise in our Payments business’s revenue to $90 million. Deposits growth was strong, with total deposits now over $19 billion, an increase of $1.0 billion in the second quarter and $2.4 billion in a year, driven by our omnichannel strategy. Though loan growth remained
flat, we are focused on providing support to MSMEs for growth,” Ayeyemi added.

“I am proud of the team’s hard work in driving efficiency, which continues to reflect in our cost-to-income ratio of 58.7% ahead of guidance and progressing well toward our medium-term goal of approximately 55%. In addition, credit quality continued to be exceptionally strong. As a result, our NPL ratio of 7.4% is a substantial improvement from the prior year’s 9.8%, as we also build reserves to insulate the balance sheet with an NPL coverage ratio of 86.7% and pushing towards our nearterm target of 90%,” Ayeyemi continued.

“We successfully raised $350 million Tier 2 Sustainability Notes in June, the first-ever by a financial institution in sub-Saharan Africa and first to have a Basel III-compliant 10-year non-call 5 structure outside South Africa in 144A/RegS format. The Bond was 3.6 times oversubscribed, demonstrating strong confidence in the Ecobank Group and our commitment to the sustainability of our communities and their social needs. I am deeply grateful to all stakeholders and must thank our clients for continuing to put their trust in Ecobank for their diverse banking needs.” Ayeyemi concluded.

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