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Going Cash-less: Hard Choices, Easy Life

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Yesterday, the CBN released a circular on the “Implementation of the Cash-less Policy”. Much of the social media dialogue diverted from Andela’s restructuring to the policy’s potential impact on the economy – especially for micro, small and medium enterprises (MSMEs). A lot of comments highlighted the perceived “ineptness” of this policy and conceived it as an attempt to further complicate things, frustrate small businesses and increase the number of businesses within the informal economy.

Do the facts agree with this position? No.

In this article, I argue that yesterday was calculated and is a step in the right direction.

A Short History Lesson

On 1 January 2012, there was an attempt by the government to curb excess cash in circulation by introducing the Cash-less Nigeria Policy. It was first introduced in Lagos and prescribed handling charges on cash in excess of N500,000 (individuals) and N3,000,000 (corporate bodies).

The policy was not put in place to remove cash from the equation but to reduce its volume. It also aimed to encourage more electronic based transaction systems e.g. POS terminals, short codes and the like. The policy was first rested in Lagos state with service charges taking effect from 30 March 2012.

Under the policy, effective from June 1, 2012 daily cumulative withdrawals and lodgment in banks by individual would be limited to a maximum of N150,000, while daily cumulative withdrawals and lodgments by corporate customers is pegged at N1million. However, individuals and corporate organizations wishing to withdraw above the fixed amount would have to pay special charges.

Essentially – this has happened before, it was always in the offing.

Why is Everyone Worked Up on Social Media?

To clarify the position in yesterday’s release, if you withdraw or deposit N500,100, the charge will be levied on the N100 and not the entire sum. After all, it’s little drops of water that makes an ocean. Dissenting opinions on the issue argue from two major standpoints and I have set them out in the following bullets.

Financial Inclusion

The first and most popular argument against the CBN’s cash-less move borders around financial inclusion. Proponents say Nigerians will be less interested in the banks and frequently conjure an illiterate Nigerian man who lives under a rock in some remote Nigerian village to prove their point. However, Nigeria’s current vector does not support the conclusions many commentators have reached.

Strong economies have equally strong banks; Nigeria’s banks are only beginning to get back on their feet. The informal economy valued at $240bn (IMF) presents an opportunity for the government to stabilize monetary policy and redefine banking in Nigeria. The pertinent question is, how does the government intend to do it?

Enter the CBN’s National Financial Inclusion Strategy (NFIS)

The long term move for the NFIS is to ensure that 80% of bankable adults in Nigeria have access to financial services. This is the reason why you have telecommunications companies offering Mobile Money nationwide, why there are more vending machines on the Island and why POS Terminals are available at barbershops in Modakeke (for a commission, you can withdraw and send money).

It has taken time but, it is working out – execution is key.

Ease of Doing Business

Another argument borders around ease of doing business, especially for MSMEs. Ask anyone who makes this argument a simple question: what is easier, physically depositing/withdrawing N3,000,000 or transferring N300,000,000 via internet banking?

This particular argument sees the entire situation as high risk because, if handled improperly, there is the possibility that businesses in the informal sector are crushed in the wake of yesterday’s announcement. Businesses and individuals alike have to pay N52 bank charges (plus VAT) on inter-bank transactions. Arguments from this quarters note that transferring money or using POS Terminals to make payments can reduce the incentive to have money in the bank in the first place.

I will use an illustration to explain how difficult it is to agree with the above position. A woman walks into Tejuosho market with N500,000 – she intends to buy 4 items from 4 different vendors. Which of the following options makes her life easier?

  1. Making those payments with *737# mobile transfer and paying N208 extra or
  2. Withdrawing N500,000 from her bank, taking it into Tejuosho market and making payments at 4 different shops.

Would you rather risk your personal safety because you intend to save N208? If we consider ripple effects in the illustration above, there seems to be an upside for companies involved in online payments, procurement and logistics. An upside any responsible government should leverage. If you do not want to use electronic payment channels, you would have to shoulder time costs, transport and think carefully about security.

Understanding the N500,000 Threshold

The statistics show that if 100 Nigerians read this article, only 2 will have over N500,000 in their bank accounts. Thus, there is at least a 20:1000 chance that this policy may never apply to you. On the off chance that it does, you most likely are in the 2% of Nigerians that own 90% of all bank deposits.

The aforestated shows that the Central Bank of Nigeria has by default safeguarded most Nigerians and inadvertently created an exception to the policy – the 98%. It is simple, the bulk of Nigeria’s individual and business demographic will never have to shell these fees. It shows that this policy was carefully thought out, all that’s left is effective implementation.

Government Considerations

Corruption has been touted as an existential threat to Nigeria. As a country, we hold multiple records on several corruption indexes. Through this policy it has become easier to monitor the movement of money and track illicit financial flows. Whether we grasp this or not, it is a big win for Nigeria.

Monetary inflation is becoming an increasing threat to efforts to stabilize the economy. Monetary inflation happens when there is a consistent rise in the amount of money available within a currency area/country. When this happens especially with the admixture of several other factors including the transmission mechanism, there is a tendency for prices of goods and services to cost substantially more. Essentially, with less cash in circulation – chances that the price of garri will go up become minimal (too much money makes garri expensive).

Also, it is impracticable for this government to pay interests on loans, fund the new minimum wage, protect the foreign reserves, subsidize petrol, cover federal salaries and continue projects under the current revenue streams. The government realizes this and is taking steps to create long term sustainability. More money from the 2% means that more projects are possible going forward.

Going Forward

There are obvious risks with the policy especially as there seemed to be no warning or a phasing stage. The Buhari led administration has brought this policy at a time when there is the ban on CBN forex for importation of certain goods, proposed increased in VAT to 7.5% and tons of other policies that we cannot seem to agree are in Nigeria’s best interests. However, we can all agree that the government is driving change with monetary policy.

For the Cash-less policy to work, proper execution is more important than a viral A4 printout/PDF with the CBN letterhead. The government must clarify exemptions to the rule, increase the ease of access to mobile money and better network coverage.

Also Read SMEs: Carefully Navigating The Loan Agreement

The Cash-less Policy, if properly executed, might put an end to tally numbers and long queues in banks, increase the amount of diversified small businesses (small businesses providing peripheral financial services) and increase the formal economy.

Irrespective of Nigeria’s lingering challenge with implementation, I am taking the road less travelled by saying, Nigeria is actually playing to her strengths – we will be fine.

Author: 

Samuel Korie is a graduate of Law from Obafemi Awolowo University (formerly University of Ife). He is passionate about policy, volunteering and the unchartered frontiers of the legal profession.

 

 

Press Release

Journey Wellness, an AI-Enabled, Personalised Healthcare Platform Launches in South Africa

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Journey Wellness Co-Founders, Dr. Jacques Ludik and Laura Wayburne (Image: Nomsa Mdhluli)

Journey Wellness, an AI-Enabled, Personalised Healthcare Platform set to Revolutionize Wellness & Healthcare in South Africa. The Platform will transform business employee benefits and medical schemes’ approach to offering wellness for employees and medical aid members.

A revolutionary new approach to offering Ultra-Personalised, Artificial Intelligence-Enabled Healthcare from tech-trendsetting company Cortex Logic is set to transform the way medical aid schemes, consumers and corporates offering employee benefits as part of their EAP (Employee Assistance Programmes) view their current healthcare offering.

The Journey Wellness platform is perfectly timed to coincide with the current global shift in Healthcare, as the focus moves from a disease-management model to one that encourages optimum health and disease-avoidance, targeting younger as well as existing members with a holistic, pro-active offering.

Corporates and medical schemes are realising that they need to offer their employees and members wellness and EAP benefits that move beyond expensive, reactive, chemical care to cost-effective, proactive preventative primary care.

“Globally, an ever-increasing portion of healthcare spend and focus is shifting to promote wellness and wellbeing, rather than responding to illness,” says Lara Wayburne, a respected Healthcare Actuary consulting to Cortex Logic and part of the development team of the Journey Wellness Platform.

“Healthcare analysts predict that over the coming decade the focus on wellness and wellbeing can reduce overall healthcare costs by as much as 30%.”

“Journey Wellness enables that future by empowering and engaging consumers to better understand the drivers that impact their health and therefore be more actively involved in managing their own health. By doing so, the Journey Wellness ecosystem encourages positive health seeking behaviour, promoting better physical and mental health,” says Wayburne.

The driving force behind Journey Wellness, Dr Jacques Ludik, Founder and CEO of Cortex Logic, who has also recently written a book called ‘Democratizing Artificial Intelligence to Benefit Everyone’, says that the Journey Wellness platform will provide more healthcare, to more people, faster.

“Essentially, Journey is a cost-effective, pro-active, personalised and engaged AI health companion that will improve health outcomes for everyone involved – the medical scheme provider, employers, employees, healthcare providers and ultimately the end-user consumer who will benefit from personalised, proactive healthcare with the added benefits of cost savings all-round,” says Dr Ludik.

Journey Wellness offers a number of benefits for Medical Schemes, Corporates and End-Users:

Employer Groups and Medical Scheme providers will benefit from the cost savings inherent in moving from expensive, reactive, chemical care to cost-effective, proactive preventative primary care for their members and employees. This will result in increased productivity, increased employee engagement, reduced absenteeism and cost-savings to all involved.

Healthcare Providers will benefit from having a 360-degree view of their patients that will improve wellness proactively without costly chemical intervention, usually at the reactive stage and will also empower patients with continuous self-care.

And, Consumers will benefit from a Holistic Wellness Solution and the reduced need for expensive healthcare options, improved wellbeing, rewards for engagement and ultimately having a personalised wellness coach on hand at all times to help them understand their health status and associated risks and better manage their health and improve quality of life.

“Overall, it’s a win-win scenario in which technology, data and analytics foster a collaborative and progressive healthcare environment, creating an ecosystem for improved wellbeing one step at a time that benefits everyone,” says Wayburne.

Journey Wellness has also made an exciting announcement around making the Platform’s Mental Health Module available for free to users from 1 September 2021.

“We realise that the current state of affairs globally, and in South Africa in particular, with pandemic lockdowns and economic uncertainty foremost on our minds, places an enormous amount of pressure on people. So, we’re offering free access to our Mental Health Module to users, where they can access an AI-enabled mental health companion 24/7,” says Dr Ludik.

The Journey Wellness Demo Platform for Corporate Employers and Medical Schemes is available at www.journeywellness.co.za, and for Consumers, the User App is available as a free download for Android and iOS devices at Google Play and App Store. Medical schemes and Employers looking to offer Journey Wellness to their members can interact directly with Journey Wellness by requesting a demo via the website.

 

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Investment

Chaka secures $1.5M pre-seed round to power digital investments and wealth management opportunities across Africa

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Chaka CEO, Tosin Osibodu at a press briefing (Image & Press Release: Chaka)

Chaka is thrilled to announce its $1.5M pre-seed funding round led by Breyer Capital, a global venture firm focused on catalyzing growth in high-impact companies like Spotify, Facebook, and now, Chaka. Other participants in the round are 4DX Ventures, Golden Palm Investments, Future Africa, Seedstars, and Musha Ventures.

Chaka is a technology solutions company on a mission to enable every business and person in Africa to access borderless digital investment and wealth management opportunities. The team combines investment expertise and best-in-class technology to provide reliable digital Investing, trading and wealth management solutions that are easy-to-use and easy-to-integrate.

Their mission is to enable digital border-less investing for African businesses and individuals. They’re powering the digital investment landscape in Africa through partnerships with asset managers, financial technology firms, and regulators with whom we have a shared mission. We achieve this by providing trading solutions that are easy to use and easy to integrate.

With this capital, they will focus on the goals to build a roster of formidable partners and accelerate expansion to other markets within West Africa. This investment also enables them to hire top talent and integrate more advanced functionalities into our investment and wealth management solutions.

Jim Breyer, CEO of Breyer Capital, shared his view on this investment and it illustrates their shared vision: “We are proud to align ourselves with a company that is leveling the investment playing field for Nigerians (and Africans at large). We’re confident in the value Chaka provides through its digital tools, and we look forward to playing our part in supporting Tosin, Bo, Olaolu, and the Chaka team.”

This is a significant milestone for Chaka and could not have come this far without their users, partners, early investors, and a talented, achieving team of Champions.

They see digital investments as a means to boost economic transformation in Africa, and we’re very keen to bring this vision to life.

 

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Manufacturing

Emmanuel Penneh set to lead the Ghanaian team that will re-assemble the first Nissan Navara made in Ghana

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Emmanuel Penneh (Image: Lusawovana Pius- edelman) 

Emmanuel Penneh arrived back in Accra this week, ready to start the next phase of a journey that’s taken three years so far and still has an intensive eight months to run. On Thursday 3 June 2021, the married 44-year-old father of three graduated with his team of 11 Ghanaians from an intense eight-week course at Nissan South Africa’s Rosslyn manufacturing plant outside Pretoria. That was just the first step for them. Now the hard work begins, getting Ghana’s brand-new Nissan assembly plant in Tema, outside Accra, ready to begin re-assembling the first ever Nissan Navaras to be built in Africa early in the New Year.

The graduation is a critical milestone in a process that began back in 2018 with the signing of the landmark Memorandum of Understanding between Nissan and the Government of Ghana, followed by the drafting and promulgation of Ghana’s automotive development policy the following year and then the appointment of Japan Motors Trading Company (JMTC), as Nissan’s preferred partner last year to ensure that the new facility will be 100% Ghana owned and run.

Penneh is up for the challenge. Speaking at the special graduation ceremony held at the Rosslyn, SKD plant, he said he and his team were proud and honoured, excited and delighted. “This is a historic evolution for Nissan Ghana, Nissan South Africa and Nissan worldwide. This is the plant where the Nissan Navara is being made for the first time in Africa, by Africans for Africa, now we are going home to re-assemble the first Navara made in Ghana for Ghana by Ghanaians!”

Penneh will be the plant manager. It’s a feather in the cap for the 10-year JMTC veteran. Before being approached to lead the team, Penneh was service co-ordinator for the group’s aftersales operations, overseeing five workshops across Ghana. He’s been in the automotive industry for 14 years, with four years at Man Truck Ghana before he joined JMTC.

“It’s exciting,” he says, “it gives a new dimension to my career. After concentrating on the after sales aspect, I’m now coming into the industry that actually builds the vehicles.”

The eight-week training that the team underwent in South Africa had been gruelling, he said, they had no idea what to expect. “It was challenging coming fresh into this industry and discovering so many processes and rules and mastering them, but it’s been exciting.”

He’s exceptionally proud of the team he led to South Africa and the way they’ve conducted themselves. “This (the creation of a Nissan assembly plant in Ghana) is going to be a game changer for ourselves, but also for our country, creating jobs, upskilling people and creating opportunities for local brand ownership.”

 

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