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Banking Sector

McKinsey Reveals That Merchant Acquiring Offers Nigerian Banks and Fintechs an Opportunity to Dethrone Cash




Nigeria’s recent cash shortages exposed the vulnerability of the country’s alternative payment systems and have brought renewed momentum towards a cashless economy, fueling a surge in digital payments.

The cash crunch caused significant hardship for Nigerian citizens, who were unable to access their savings. It also disproportionately affected small- and medium-sized enterprises (SMEs), which account for more than 90 percent of businesses and are responsible for 80 to 90 percent of all customer-to-business (C2B) payments in Nigeria. This, however, also opened the door for merchant acquirers looking to take advantage of these tailwinds and make headway in this challenging market.

According to McKinsey’s new analysis, Acquiring the advantage in a fast-evolving industry, the outlook for merchant acquiring in Nigeria is optimistic, with several trends working in its favor: digital penetration and usage in the country are on the rise; the fintech industry is evolving quickly to cater to the demands of a young and digitally-savvy population; and financial and government institutions are collaborating to create a conducive environment that fosters financial inclusion.

“It is important for digital payment companies to ensure that the move to digital payments that happens, as a result of the recent events, doesn’t go to waste,” says Mayowa Kuyoro a partner in McKinsey’s Nigeria Office, and leader of the firm’s Payments Practice in Africa. “Companies that act now to leverage technology and relationships to offer SMEs hungry for digitalization more reliable and cost-effective payment solutions could attain a position of strength as Nigeria accelerated toward cashless transactions.”

As of 2021, the electronic payments sector generated an estimated $2.1 billion in revenue and $1.1 trillion in value, approximately 60 percent of which is accounted for by domestic payments, which amount to $1.2 billion in revenue. More significant growth in this space is expected over the next few years, with domestic payments revenue projected to grow by around 34 percent per annum by 2026, equating to $5 billion.

The domestic C2B market accounted for around $450 million in revenue from 2021, with merchant acquiring being the most attractive part of this value chain. Of this, C2B merchant payments account for $320 million in revenues. Combined, the acquiring bank, the terminal provider, and the Payment Terminal Service Provider (PTSP) capture around 65 percent of revenues, and total merchant acquiring revenue is estimated at around $200 million. By 2026, this revenue is expected to grow to around $900 million, driven primarily by card transactions.

McKinsey has done significant work with both merchants and merchant acquirers to uncover what may be needed to accelerate the transition to digital. While the culture of cash may be eroding, obstacles still remain on the path to digitalization. For instance, POS (point of sale) penetration in Nigeria is significantly below that of comparable African economies. And since alternative payment acceptance is still in its early days and merchant literacy levels are low, onboarding new merchants can be challenging and costly, requiring multiple touchpoints.

Traditionally, merchant acquiring in Nigeria has been led by banks that issued card-based POS to large corporates and was profitable only to those with scale. But the market is ripe for expansion. Traditional channels catered to only one form of payments—cards—but at just 0.6 per 100 adults, Nigeria has one of the lowest card penetrations in the world. These channels have also largely excluded SMEs.

While SMEs may be harder to acquire, they represent a significant opportunity for merchant acquirers in terms of both volume and value of transactions. Digital innovators that can offer SMEs hungry for digitization more reliable and cost-effective payment solutions are gaining an advantage and changing the face of merchant acquiring.

As digital penetration grows, electronic payment methods are also growing. Nigeria has more than 170 million mobile phones and internet penetration has been increasing. The number of POS terminals in the country grew significantly. Local fintechs are innovating rapidly, forging partnerships, and attracting international investment to enable Nigerian SMEs to participate in the digital global economy. And the hastened adoption of cashless payments and merchant acquiring, generated strong organic demand for digital payment solutions by merchants of varying sizes and scale.

“By leveraging technology and collaborating with stakeholders across the payment ecosystem, merchant acquiring companies could make significant inroads into this potentially valuable segment. At the same time, by providing SMEs with better payment services, merchant acquirers also have a key role play in driving financial inclusion and supporting the Nigerian economy. Most importantly, they can help to ensure that a lack of cash need never again be the reason that Nigerians experience hardship,” says Tola Sunmonu-Balogun, an associate partner in McKinsey’s Lagos office.


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

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Banking Sector

CRC Credit Bureau Celebrates 15 Years with Record 14% Credit Penetration in Nigeria



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CRC Credit Bureau Limited celebrated its 15th anniversary with a record 14% credit penetration rate.

The occasion was marked with the CRC Finance and Credit Conference 2024 held in Lagos, where key industry stakeholders gathered to reflect on the bureau’s journey and discuss future trends in credit risk management.

Founded in January 2010 and licensed by the Central Bank of Nigeria (CBN), CRC Credit Bureau has played a pivotal role in enhancing access to credit across Nigeria.

Dr. Tunde Popoola, the Group Managing Director/CEO of CRC Credit Bureau Limited, highlighted the bureau’s journey, noting that from its inception with a single product, CRC has expanded its offerings to 18 products covering all aspects of the lending value chain.

Speaking at the conference, Dr. Popoola underscored the bureau’s contribution to Nigeria’s financial sector, stating, “CRC Credit Bureau has been instrumental in transforming access to credit in Nigeria over the past 15 years. We started with a vision to simplify credit access through reliable data and have since grown to serve millions of Nigerians.”

The event focused on the theme “Sustainable Financing Options: Innovations in Credit Risk Management,” emphasizing the importance of sustainable finance amid economic challenges.

The conference provided a platform for stakeholders to discuss strategies for mitigating risks and enhancing the efficiency of credit operations in Nigeria.

Reflecting on the current state of credit penetration, Dr. Popoola noted that while Nigeria has made significant progress, the 14% penetration rate still falls below global benchmarks.

He highlighted that CRC Credit Bureau currently holds credit scores for 33 million Nigerians, facilitating over 29.4 million searches in 2023 alone, with an additional 10 million searches conducted in the first quarter of 2024.

Joel Owoade, Chairman of CRC’s Board of Directors, acknowledged the economic headwinds impacting businesses in Nigeria but stressed the importance of sustainable financing to mitigate risks associated with lending.

“As we navigate economic fluctuations, sustainable financing remains crucial to fostering economic stability and growth,” Owoade remarked.

The conference also featured insights from industry experts on leveraging artificial intelligence (AI) in credit risk management and regulatory frameworks to support AI-driven innovations.

Olaniyi Yusuf, Managing Partner of Verraki, highlighted the potential of AI to create jobs and enhance economic productivity, calling for supportive regulatory environments that balance innovation with risk management.

Representatives from the Central Bank of Nigeria (CBN) emphasized the regulator’s efforts to promote sustainable credit practices.

Dr. Adetona Adedeji, Acting Director of the Banking Supervision Department at CBN, outlined initiatives such as the National Collateral Registry and Global Standing Instruction aimed at enhancing credit access while minimizing risks.

As CRC Credit Bureau looks ahead, Dr. Popoola expressed optimism about the future, stating, “We remain committed to driving greater financial inclusion and expanding credit access in Nigeria. Our focus is on leveraging technology and strategic partnerships to deliver innovative solutions that meet the evolving needs of consumers and lenders.”

The celebration of CRC Credit Bureau’s 15th anniversary underscored its pivotal role in Nigeria’s financial sector, marking a milestone in the nation’s journey towards broader financial inclusion and sustainable economic growth.

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Banking Sector

Guaranty Trust Holding Plans N500 Billion Share Offering



Guaranty Trust Holding Company Plc (GTCOPLC) has announced plans to raise up to N500 billion through a new share offering, according to a preliminary prospectus filed with the Securities and Exchange Commission (SEC).

This move aims to support the company’s ambitious growth and expansion strategy.

GTCOPLC’s proposed offering will involve the subscription of ordinary shares of 50 kobo each, although the exact number of shares and the price range are yet to be determined.

The offering includes a concurrent filing of a preliminary universal shelf registration statement, allowing the company to issue various types of securities, potentially raising up to $750 million in multiple currencies.

Purpose of the Offering

The funds raised from this offering will primarily be allocated towards:

  1. Business Growth and Expansion: GTCOPLC plans to invest significantly in technology infrastructure to enhance its current operations. Additionally, the company intends to establish new subsidiaries and make selective acquisitions of non-banking businesses.
  2. Recapitalization of Guaranty Trust Bank Limited: Part of the proceeds will be used to strengthen the capital base of its banking subsidiary.

Target Investors and Structure

The offering is structured to attract both institutional and retail investors. It will be divided into two main tranches:

  • Nigerian Tranche: An institutional and retail offering aimed at eligible investors within Nigeria.
  • International Tranche: A private placement targeting qualified institutional buyers outside Nigeria.

Listing and Trading

GTCOPLC has also filed an application with the Nigerian Exchange Limited (NGX) to list and admit the new ordinary shares for trading on the NGX Official List.

The company anticipates opening the offering by July 2024.

Financial Strategy

The universal shelf registration will enable GTCOPLC to issue a variety of securities over time, with a total value of up to $750 million (or its equivalent in Nigerian Naira).

This approach provides the company with flexibility to raise capital in different markets during the programme’s validity period. The current proposed offering will be the first issuance under this new programme.

Regulatory Compliance

GTCOPLC emphasized that this notice does not constitute an offer of securities for sale in the United States or to U.S. persons, as defined under Regulation S of the U.S. Securities Act of 1933.

The offered shares have not been, and will not be, registered under the U.S. Securities Act or any state securities laws, and cannot be sold in the United States without proper registration or an applicable exemption.

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Banking Sector

Fidelity Bank Launches N127.1bn Public Offer and Rights Issue on June 20



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Fidelity Bank Plc, Nigeria’s sixth-largest bank, is set to open its public offer and rights issue to investors on Thursday, June 20, 2024.

In preparation for this significant financial event, Fidelity Bank will host a “Facts Behind the Offer” presentation at the Nigerian Exchange Group (NGX) on the same day.

This presentation is expected to provide detailed insights into the bank’s strategy and the opportunities presented by the public offer and rights issue.

Under the rights issue, Fidelity Bank will offer 3.2 billion ordinary shares of 50 kobo each at N9.25 per share. These shares will be available to existing shareholders in the proportion of 1 new ordinary share for every 10 ordinary shares held as of January 5, 2024.

In addition to the rights issue, the bank will also offer 10 billion ordinary shares of 50 kobo each to the general investing public at N9.75 per share. This dual approach is part of the bank’s comprehensive strategy to raise a total of up to N127.1 billion.

The acceptance and application period for the rights issue and public offer will commence on Thursday, June 20, and close on Monday, July 29, 2024.

This timeline provides investors ample opportunity to participate in the bank’s capital expansion.

Fidelity Bank has engaged Stanbic IBTC Capital as the lead issuing house for the combined offer. The joint issuing houses include Iron Global Markets Limited, Cowry Asset Management Limited, Afrinvest Capital Limited, FSL Securities Limited, Futureview Financial Services Limited, Iroko Capital Market Advisory Limited, Kairos Capital Limited, and Planet Capital Limited.

These firms will play a crucial role in managing the offer and ensuring its success.

The bank’s initiative to raise N127.1 billion is seen as a strategic move to bolster its capital base and ensure compliance with the CBN’s revised capital requirements, which were introduced on March 28, 2024.

This capital raise is expected to enhance the bank’s capacity to support its growing customer base and expand its operations across Nigeria and beyond.

In recent years, Fidelity Bank has demonstrated robust financial performance and growth, positioning itself as a key player in Nigeria’s banking sector.

The successful completion of this public offer and rights issue will further solidify its standing and enable it to pursue new opportunities in the competitive financial landscape.

Investors and stakeholders are keenly anticipating the outcome of this capital-raising exercise, which is poised to mark a significant milestone in Fidelity Bank’s journey toward sustained growth and stability.

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