Fintech

West Africa Launches New Payments Digitization Agenda

Published

3 years ago

April 19, 2021

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In Senegal, 8 out of 10 workers are paid in cash. Most are temporary workers and excluded from health insurance. A survey revealed that 77% of temporary workers would be willing to receive their wages digitally if this gave them access to health insurance. These are some of the major findings of the publication that the Senegalese government has launched today, with support from the Better Than Cash Alliance (United Nations), the World Bank and the National Agency of Statistics and Demography of Senegal. Combining digital payments with health insurance benefits offers an excellent opportunity for social inclusion, formalization, and financial innovation.

Digital payments stimulate domestic production and consumption. If 50% of temporary workers in Senegal received payments digitally, 45 billion CFA francs would be added to GDP per year (around $80 million USD). Paying workers digitally, speeds up the financial inclusion for the population, boosts business competitiveness and increases financial system liquidity. To tap into this potential, the SME Development Agency (ADEPME) plans to bolster its SME support fund with $20 million USD (around 11 billion CFA francs) from the World Bank. This will be used to strengthen SME digitization initiatives and support digital payment projects for workers.

High-level leadership speaks out in support of digital payments for workers

Senegalese President Macky Sall and H.M. Queen Máxima of the Netherlands, who serves as UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), have launched an appeal to fellow leaders, the private sector and civil society, inviting them to: “use this report to ensure digital payments are at the center of a sustainable and fair economic recovery. We look forward to jointly providing leadership on this agenda to achieve an inclusive and digitally enabled recovery,” the two leaders added.

To set an example, the President of Burkina Faso, Roch Marc Christian Kaboré, also decreed, in late 2020, the digitization of payments for workers in the administration of Burkina Faso. When the COVID crisis emerged, the West African Economic and Monetary Union (WAEMU) and the Central Bank of West African States (BCEAO) took decisions aimed at reducing the circulation of cash in the 8 countries. These actions have had tangible impacts which are beginning to change the lives of workers and companies.

Digitizing payments and advancing universal health care coverage

While receiving a salary is often linked to health care contributions, globally at least 61% of workers operate in the informal sector without adequate coverage, according to the International Labour Organization (ILO). Indeed, in some countries, there is not always a legal obligation for employers to contribute to any kind of coverage for their informal/self-employed workers, which affects women more than men.

To meet this challenge of inclusion, the National Agency for Universal Health Coverage in Senegal has launched an ambitious digital payments platform. It has partnered with fintechs and private companies to link access to universal health coverage and digital payments – specifically targeting women. Flagship national enterprises such as the agricultural giant SODAGRI or SMEs such as QUALIOCEAN and Kossam SDE are setting an example by providing temporary workers with universal health coverage. More than 200,000 workers will now have access to quality, government-subsidized health care.

While 81% of national companies have fewer than 20 employees, on average hundreds or even thousands of temporary workers are employed in their supply chains. Employees are generally banked, but 93% of employees on temporary contracts are paid in cash. The latter are systematically excluded from the formal health system.

The successful transition towards digital payments

Three obstacles have limited the growth of payment digitization in Africa: the size of the informal sector, sometimes up to 90% of the economy; the historically low financial inclusion rate; and most importantly, 21% of African workers receive a wage keeping them below the poverty line.

This has all changed dramatically. Financial inclusion has surged since 2010 with the arrival of electronic money issuers and fintech.

The country’s largest employer, Compagnie Sucrière Sénégalaise, has successfully digitized payment for around 8,000 workers via a partnership with local fintech. “We wanted to digitize payments without using the banking system, which isn’t suited to some populations,” noted Claude Fizaine, the company’s Secretary General, in an interview with an African media outlet. “For employers, the benefits of digitizing payments include avoiding the constraints of managing large amounts of cash, and all the risks that distribution can involve. It also makes it possible to offer employees tools tailored to their financial and family situations, which can only have a positive impact on their personal and professional lives,” he added.

WAEMU’s innovations should continue to inspire the rest of Africa. Since 2012, it has been the continent’s engine for economic growth and stability. The examples of Senegal and its neighbours reinforce the ILO’s global agenda that could well make digital payments for workers a new global standard for promoting decent work.

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Samed Olukoya

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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Fintech

Flutterwave Celebrates Inclusion in CNBC’s Top 250 Global Fintechs

Published

1 week ago

July 18, 2024

Samed Olukoya

Flutterwave has been recognized as one of the Top 250 Fintech companies globally by CNBC and Statista.

Joining the ranks of industry giants like Ali Pay, Klarna, Piggyvest, and Mastercard, this accolade underscores Flutterwave’s impact on the financial technology sector.

This honor follows Flutterwave’s recent inclusion in Fast Company’s Most Innovative Companies list, highlighting the company’s pivotal role in transforming Africa’s payment landscape.

The recognition is a testament to Flutterwave’s dedication to innovation and excellence in providing seamless payment solutions across the continent.

Expressing gratitude, Flutterwave acknowledged its talented team, supportive board, reliable partners, and loyal customers for contributing to this success.

The company continues to drive progress in the fintech industry, reinforcing its commitment to enhancing financial accessibility and inclusion in Africa and beyond.

Flutterwave’s recognition on these prestigious lists marks a proud moment and a significant milestone in its journey, reflecting the company’s growing influence and leadership in the global fintech arena.

Fintech

Nigeria Sees 31% Increase in POS Fraud Amid Rising Terminal Adoption

Published

2 weeks ago

July 12, 2024

Samed Olukoya

The prevalence of fraud and forgery in Nigeria’s payment system has shown a significant shift in the first quarter of 2024, with Point-of-Sale (POS) transactions experiencing the highest increase in fraudulent activities.

According to the “Fraud and Forgeries Report in Nigerian Banks” for Q1 2024 by the Financial Institutions Training Centre (FITC), POS fraud cases surged by 31.12%.

In Q4 2023, there were 2,683 reported cases of fraud associated with POS terminals. However, this number escalated to 3,518 cases by Q1 2024.

POS fraud cases made up 30.67% of the total fraud cases (11,472) recorded in the quarter under review.

Financial Impact of POS Fraud

While there was a rise in fraud cases, the amount of money involved in POS fraud declined. In Q4 2023, the total amount involved in POS fraud was NGN604.91 million.

This amount decreased by 37.74% to NGN376.59 million by Q1 2024.

Also, the amount of money lost to POS fraud saw a significant decline, falling from NGN14.62 million by 68.34% to NGN4.63 million on a quarterly basis.

The decrease in financial losses may indicate improved detection and prevention measures, but the overall rise in fraud cases highlights the need for continued vigilance.

Adoption of POS Terminals

The rise in POS fraud cases is attributed to the widespread adoption of these terminals by merchants and consumers alike.

As a cash-driven Nigerian economy, the convenience and efficiency of POS transactions have made them a popular choice.

However, this widespread adoption has also made them a target for fraudsters seeking to exploit vulnerabilities in the system.

In Q1 2023, the number of registered POS terminals increased by 218,475, from 2,318,947 in January 2023 to 2,537,422 by March 2023.

By the same quarter in 2024, the number of registered POS terminals had increased by 289,154, from 3,441,287 in January 2024 to 3,730,441 by March 2024.

Overall, between the end of Q1 2023 and Q1 2024, Nigeria witnessed an additional 1,193,019 POS terminals, marking a 47.02% increase.

Despite this increase in the number of registered POS terminals, the first quarter of 2024 saw POS transaction volumes reach 314 million, which is a significant drop of 73.81 million, or 19.03%, from the 387.81 million transactions recorded in the first quarter of 2023.

Regulatory Measures and Industry Response

The Corporate Affairs Commission (CAC) recently stated that POS agents of major fintechs in Nigeria, including OPay, Palmpay, and Moniepoint, among others, must have registered their businesses by July 7, 2024.

However, it extended the deadline by 60 days, giving operators until September 5, 2024. The CAC said the registration is aimed at safeguarding the businesses of fintechs and customers, as well as strengthening the economy.

Meanwhile, the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) condemned the mandated registration, describing it as an attempt to tax more Nigerians to generate revenue for the government.

Fintech

PalmPay Issues July 7 Deadline for POS Operators to Submit CAC Certificates

Published

3 weeks ago

July 5, 2024

Samed Olukoya

PalmPay has announced a firm deadline of July 7, 2024, for all Point of Sale (POS) operators using its platform to register with the Corporate Affairs Commission (CAC) or submit their CAC certificates.

This mandate aims to ensure compliance with Section 863 (1) of the Companies and Allied Matters Act 2020 and the 2013 Central Bank of Nigeria (CBN) guidelines on Agent Banking.

In a statement released on Thursday, PalmPay emphasized the importance of adhering to these legal requirements.

“Following CAC’s directive for POS operators to register and submit their CAC details on or before July 7, 2024, PalmPay is encouraging its business users who have not yet complied with the directive to do so promptly,” the statement read.

This initiative comes in the wake of a two-month registration deadline issued by the Federal Government through the CAC, mandating POS companies to register their agents, merchants, and individuals.

The directive is part of broader efforts to bring regulatory compliance and transparency to Nigeria’s burgeoning fintech sector.

To facilitate the registration process, PalmPay has integrated the CAC registration portal into its Business App.

This integration allows operators to seamlessly register their businesses and submit the required documents, ensuring a smoother compliance process.

Umuteme Enakeno, Head of Marketing and Communication at PalmPay, reiterated the company’s support for the CAC directive.

“PalmPay fully supports the CAC’s directive. We provide 24/7 customer support and conduct weekly meetings to guide operators through the process,” Enakeno stated.

He also highlighted that operators can seek assistance through PalmPay’s customer support channels, including phone, email, or in-person visits to any of the 36 state offices across Nigeria.

PalmPay has urged all its business customers to submit or register their CAC details before the deadline.

“Register your business via the PalmPay Business App: Ensure that all necessary documents and information are provided accurately before submitting your application. Update your PalmPay account once you get the certificate to reflect your new corporate status,” Enakeno advised.

Failure to comply with the CAC registration requirement will result in the freezing of PalmPay accounts, the company warned.

This stringent measure underscores PalmPay’s commitment to aligning with national regulatory standards and fostering a compliant fintech ecosystem.

Meanwhile, the Association of Mobile Money and Bank Agents in Nigeria, representing POS operators, has indicated plans to challenge the mandatory CAC registration in court, questioning its legality and potential impact on their operations.