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Covid-19 and Financial Inclusion in Nigeria: The Good, The Not-So-Ugly

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Onyeka Akpaida, Founder and Chief Impact Officer at Rendra Foundation

No one envisioned the world would be at a standstill for 6 weeks, much less experiencing a global pandemic; in an unprecedented manner, COVID-19 decided to show up regardless.

The economic disruption of this pandemic will largely come from ‘’aversion posture” taken by people to avoid contracting the virus. These include government-imposed lockdowns, business closures and reduction in activities by people which will inadvertently affect all sectors of the economy and translate into reduced income for suppliers, lower wages, unemployment and a lower standard of living.

Bringing it home, our 2020 fiscal budget revenue assumptions were made with a $57 per barrel benchmark; however, the crude oil price dipped as low as $20 this month.

This is worrisome to me as we have been unable to sufficiently set aside buffers against these daunting economic challenges. It is my hope that coming out of this pandemic, Nigeria is able to commence a dogged economic diversification drive.

The estimated number of financially excluded adult Nigerians as of 2018 was 36.6m and given the lockdown situation following the pandemic, many financial services providers are unable to implement planned projects in terms of onboarding customers. It is obvious that Nigeria will not be achieving her 2020 financial inclusion goal of reducing exclusion by 20% from 36.6m to 19.9m adult Nigerians.

Statistics from Global Findex also show that a lack of regular income is the major reason for financial exclusion and it is inevitable that the economic impact of the pandemic which includes loss of income particularly with adults that earn daily wages will not do us any favours in closing this gap.

This article will be addressing the impact of the pandemic on Nigeria’s financial inclusion drive and recommendations to stakeholders- fintech, social enterprisesand government on how best to mitigate and innovate in the short andmedium-term.

Although the effects of this pandemic are going to hit hard in the short and medium- term; there is ample opportunity to cushion the effects by getting the most vulnerable adult Nigerians financially included to give them access to the opportunities highlighted in the recommendation section of this article.

The Not-So-Ugly (Covid-19)

Remote Work: This is inevitable as many brick and mortar financial service providers have to swim against this tide that is in an uncharted territory. The banks are sequestered and so are the customers; financial service providers are leveraging on every office and communication tool to keep work going. You can find us in front of our computers with the webcam on having your ‘beloved’ Monday morning meeting with your line manager trying to explain why you have been unable to land that customer.

Loans & Lending: There will definitely be a surge in the requests for loan facilities to meet up to daily and expensive demand of staying at home; I can imagine most lending institutions and apps are inundated with loan requests given the ease of getting credit in less than 5 minutes. Loan default is guaranteed as some workers have been laid off, and those who earn daily wages in non-essential sectors will be unable to meet up with their repayments.

The good news is the Central Bank of Nigeria has directed that moratorium be given to credit facilities and most financial service providers have taken a consumer friendly position by providing up to 3 months moratorium to ease the burden on borrowers. The Central Bank of Nigeria has also directed that interest rates on all applicable intervention funds be reduced from 9% to 5% (be sure to check that your bank has done it.) It is also expected that lending institutions will reduce the credit limits of customers to mitigate default.

Mobile Money Usage: Following the lockdown measures and call for social distancing, most transactions will be conducted via mobile banking apps and agents to cater to under-served and peri- urban communities. According to EFINA Access to Finance 2018 Survey, Mobile money usage increased by 2.2% from 2016 and we expect these numbers to increase exponentially by the end of 2020 with the lockdown being a key catalyst.

Leveraging the use of USSD offline technology, it has become easier reaching the under-served with affordable banking services as it does not require internet usage. We expect to see growth in the Access to Finance 2020 survey statistics on mobile banking usage in the areas with previously high financial exclusion rates.

The Good (Recommendation):

Financial Inclusion Goal: The  Digital Nigeria report on financial inclusion as at January 2020 revealed that over 36 million of the 101.4 million adult Nigerians are financially excluded and if you are gender- focused like I am, it will interest you to know that about 20.5 million of the excluded population are women. There is a huge opportunity for new players in the financial inclusion space irrespective of your business location- Urban centres or rural communities and if you are passionate about under-served communities, there are over 28 million excluded people in this demography.

Reduction in barriers to entry by regulators in the financial inclusion space such as high cost of fees will also encourage more players and ultimately bring us closer to Nigeria’s financial inclusion goal of achieving a 20% reduction in the excluded population by 2020.

Kenya’s largest Telco announced a fee waiver on M-Pesa, the country’s leading mobile money product for 90 days to reduce the physical exchange of currency in response to the COVID-19 outbreak following a directive from Kenya’s President Uhuru Kenyatta to explore ways of deepening mobile-money usage to reduce risk of spreading the virus through physical handling of cash. Implementation of such measures will use digital finance as a lever to influence social distancing, P2P transactions and financial inclusion in an infectious health crisis.

Fintech and Social Enterprises: There is an opportunity for fintech companies to innovate and go beyond payments and transactions. One of the many effects of the pandemic and lockdown measures is an increase in illnesses especially in rural and densely populated households or communities where social distancing is nothing but a pipe dream. This is the time to collaborate with health management and pension organisations to develop a product that caters to the vulnerable and under-served.

Micro & SME Businesses and Households: Nigeria with over 37 million micro, small and medium enterprises (MSMEs) account for over 84% of the jobs in the country; the Central Bank of Nigeria, taking the 48.5% contribution of the sector to our GDP, introduced the N50 billion Targeted Credit Facility (TCF) in March 2020 as a stimulus package to support households and MSMEs affected by the COVID-19 pandemic. This facility will be disbursed through the NIRSAL Microfinance Bank (NMFB) with a reviewed maximum amount for MSMEs now pegged at N2.5mm (formerly 15mm) and a moratorium period of up to 1 year.

To date 80,000+ number of applications have been received and you can access the guidelines and application via the NMFB. There is also a need for a membership or association system to be created for hawkers and road side sellers who fall under the category of micro-businesses to access to facilities such as the COVID relief for affected businesses. The association will be responsible for disbursement, monitoring and repayment of the facility.

Government Agencies

As it is, the government is fast losing the trust of its citizens as the stories from the implementation of social protection programmes are highly discouraging. Although we are in a too little too late situation, I will still recommend that the government makes financial inclusion and biometric registration an essential part of its social registration process. This will reduce the risk of paying “ghost beneficiaries”as each person registered will have the BVN as a unique identifier.

In the US where there is a stimulus package for citizens earning less than 75000 USD. Eligible citizens are now receiving $1200 monthly support. 7 eleven (a Walmart competitor) and Mastercard created a card with an account behind it to quickly capture the excluded and reduce their wait time to receive the stimulus by several weeks when compared to the post-delivery option.

Also Read: Women in Tech: Interview With Ellen Fischat, Founder Story Room and Inspiring Fifty SA Ambassador

Written by: Onyeka Akpaida is a financial service professional with 9+years of experience in financial inclusion, consumer-centric digital banking and public sector engagement in a top tier leading International Bank and the founder of Rendra Foundation where she works to promote financial inclusion for low- income and migrant women in northern Nigeria.

Rendra Foundation


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Hospitality & Tourism

Radisson Individuals makes its African debut with hotel signing in Ghana, to open its doors in October 2021

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Image Source: Radisson Hotel Group

Radisson Hotel Group is proud to announce its first Radisson Individuals property in Africa, with the signing of Earl Heights Suites Hotel, a member of Radisson Individuals, Accra, Ghana. Due to open by the end of 2021, this new addition places the Group firmly on track to achieving its objective of reaching 150 hotels in operation and under development by 2025.

Located in Dzorwulu, the property is currently undergoing a full renovation and is on schedule to open within this year. Just 5km from Kotoka International Airport (KIA), the main access point by air for domestic and international visitors, the serviced apartment property is conveniently located near shopping malls, restaurants, as well as the University of Ghana, situated north of the district. Also within reach, is the tranquil Legon Botanical Gardens, with its canopy walk, rope courses, canoeing and rich birdlife.

Due to its strategic geographical location, ease of access, and aviation facilities and connections, Accra has become a conference and aviation hub for West Africa. It is also dominated by local and international business activities, making the city one of the most attractive African cities to do business.

The 58-serviced apartments property will comprise of modern studios as well as spacious and elegant one- and two-bedroom suites. Creating a true destination for its guests, the property will offer culinary options in the restaurant, The Society, which will include outdoor seating as well as in the hotel bar. The property will also feature a spa, gym, pool, convenience store, and business centre, providing the perfect base for both business and leisure.

Radisson Individuals is a conversion brand that offers independent hotels and local, regional chains the opportunity to be part of the global Radisson Hotel Group platform, benefit from the Group’s international awareness and experience, with the freedom to maintain their own uniqueness and identity.  Radisson Hotel Group plans to more than double its serviced apartments portfolio within the next 5 years across EMEA. Today, serviced apartments represent around 10% of the Group’s EMEA portfolio with 45 properties and more than 5,400 units in operation and under development.

Erwan Garnier, Senior Director, Development, Africa, Radisson Hotel Group, said: “We have identified Ghana as a key focus country in our five-year development plan and, Accra as a focus and primary city. The signing of the property, which compliments the Radisson Hotel & Apartments Accra announced last year and scheduled to open in 2023, is also aligned with our current conversion-focused growth strategy, which will remain a priority, especially post-pandemic. We are therefore proud the Radisson Individuals African debut, will be on Ghanaian soil, carving the path for the new brand to continue its expansion across the continent. In proud partnership with Earlbeam Group of Companies, we are thrilled to be contributing to the country’s tourism industry, a key pillar of the national economy.”

Alfred Danso Darkwah, CEO of the hotel’s owning company, Earlbeam Group of Companies, said: “The Earl Heights Suites Hotel partnership is an exciting opportunity – it brings together the union of Radisson Hotel Group and The Earlbeam Group Of Companies, two well-seasoned brands from the hospitality and real estate sector respectively. This will be the first branded apart hotel in Ghana, completely unique, providing each guest a boutique home-away-from home experience. In addition, it delivers partner confidence, guarantee of service standards, and assured safety and security, leaving a positive mark on Ghana’s hospitality sector. We believe this Radisson Individuals hotel will inject much-needed life within the local hospitality industry and pave the way for upcoming projects between Radisson Hotel Group and The Earlbeam Group of Companies.”

Image Source: Radisson Hotel Group

Herewith the link to the renders of the hotel, which is on track to open its doors in October this year Radisson Individuals

Radisson Hotel Group operates to high standards of performance and advocates socially and environmentally sustainable business practices. More than ever, Radisson Hotel Group’s highest priorities remain the health and safety of its guests and employees. The Group partnered with SGS, the world’s leading inspection and certification company, to implement the Radisson Hotels Safety Protocol, which ensures the highest hygiene standards and strengthens the Group’s existing rigorous sanitation guidelines. In the run-up to the opening of Earl Heights Suites Hotel, a member of Radisson Individuals the hotel will implement the Radisson Hotel Group brand standards including the Radisson Hotels Safety Protocol related to safety and security.

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Entertainment

TuneCore Launches Operations in Africa, Appoints Two Female Regional Executives

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TuneCore Jade Leaf and Chioma Onuchukwu

TuneCore, the leading digital music distribution and publishing administration company for independent artists, has launched operations in Africa. Jade Leaf has been hired as Head of TuneCore for Southern Africa and will share responsibility for key countries in East Africa with Chioma Onuchukwu, who has been hired as Head of TuneCore for West Africa. Both Leaf and Onuchukwu will report to Faryal Khan-Thompson, Vice President, International, TuneCore.

Onuchukwu will be based in Nigeria and oversee countries in West Africa including Nigeria, Ghana, Liberia, Sierra Leone and The Gambia. She will also look after Tanzania and Ethiopia in East Africa.  Leaf’s territory encompasses Southern Africa, including South Africa, where she will be based, as well as Namibia, Botswana, Zimbabwe, Zambia, Malawi and Lesotho. Leaf will also manage TuneCore operations in East African countries Kenya and Uganda.

Said Onuchukwu, “I am elated to be joining a renowned, independent music distribution powerhouse, especially in an incredible era for music creators in Africa at a time when we are gaining global recognition and increasing momentum. I look forward to collaborating with and supporting local artists.”

Before joining TuneCore, Onuchukwu was Marketing Manager at uduX Music, a music streaming platform in Nigeria. There she worked directly with popular African artists such as Davido, Yemi Alade, Patoranking, Kizz Daniel and more.

Commented Leaf, “I am incredibly excited to join the team in a time where the global conversation is around independence and ownership. TuneCore opens up a world of potential for independent artists at every level of their careers. Africa is home to a diverse range of artists who are seeking a reliable distribution service who understands their local needs and can ultimately give them the opportunity to turn their art into commercial success.”

Previously, Leaf worked at Africa’s largest Pay TV operator, Multichoice as the Marketing Manager for Youth & Music Channels, where she led brand re-imaging and marketing efforts for Music TV giant Channel O. Before that, she worked at Sony Music Entertainment Africa, focusing on African artists and content, as well as numerous marketing campaigns & projects for local and international artists.

There has been a meteoric rise in the uptake of streaming services in Africa, the growth has been attributed to several factors such as an increase in internet penetration via smartphones, the entrance of international and local streaming platforms in key territories and its youth population – More than 60% of African’s are under the age of 25.

In 2020, TuneCore saw an increase in music releases globally, with many African artists opting to use the DIY Distributor – DJ Spinall and Small Doctor in Nigeria, Spoegwolf in South Africa, Mpho Sebina in Botswana and Fena Gitu in Kenya to name a few.

Stated Khan-Thompson, “Africa is an extremely exciting music market with a lot of potential for growth. By hiring Jade and Chioma to lead our efforts, TuneCore is well positioned to maximize opportunities for independent artists across the continent. Both Chioma and Jade bring a wealth of experience and genuine interest in helping artists make their dreams come true. I couldn’t be more thrilled to have two incredible women representing the TuneCore brand in the continent”

TuneCore

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IFC Invest in Liquid Telecom Bond to Support Broadband Connectivity in Africa

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IFC, a member of the World Bank Group, invested in Thursday’s bond issued by a subsidiary of Liquid Telecommunications Holdings Ltd., which will allow the telecoms and technology solutions company to expand access to broadband Internet and digital and cloud services across Africa, further facilitating the growth of the continent’s digital economy.

Proceeds from the bond issued by Liquid Telecommunications Financing PLC, a wholly-owned subsidiary of Liquid Telecommunications Holdings Ltd, will enable the company to refinance existing debt and free up funds to expand its digital infrastructure network across Africa, including in markets with low broadband penetration.

By developing digital infrastructure, Liquid Telecommunications, Africa’s largest independent fiber, data center and cloud technology provider, aims to increase digital connectivity and inclusion in Africa and support the region’s growing digital ecosystem.

IFC played an anchor role and subscribed to 16 percent of the bond, equivalent to $100 million, which was listed on Euronext Dublin, Ireland’s main stock exchange, on February 25, 2021. The issuance raised $620 million.

Internet access in Africa relies largely on mobile networks, many of which are enabled by wholesale connectivity providers such as Liquid Telecommunications. Broadband penetration is low across the continent, with a mobile broadband penetration rate of 34 percent and fixed broadband penetration of less than five percent in most countries across sub-Saharan Africa, excluding South Africa.

“We are delighted that IFC has taken a significant anchor position in our new bond. In the countries in which we operate there are great opportunities to address under developed telecommunications and Internet access, as well as to accelerate the adoption of digital and Cloud-based services. Our refinance enables us to continue to invest in the African digital eco-system including driving penetration of digital and Cloud-based services to businesses who may not previously have had the resources to benefit from them, helping to bridge the connectivity divide, which is more crucial than ever in our current circumstances,” said Nic Rudnick, Liquid Telecom Group Chief Executive Officer.

“Our best chance at ensuring much-needed internet access for everyone in Africa, from large corporates and small businesses to individuals, is to invest in digital infrastructure. Our investment in the Liquid Telecom bond will help the company free up capital to further expand broadband access across Africa, laying a solid foundation for a faster, more resilient recovery,” said Stephanie von Friedeburg, Interim Managing Director and Executive Vice President, and Chief Operating Officer of IFC.

To support Africa’s digital economy, which could be worth $180 billion by 2025, IFC provides financing to mobile network operators, independent tower operators, data centers and broadband connectivity providers. IFC also provides capital to help entrepreneurs and innovative businesses grow and works with financial institutions and telecommunications companies to speed the adoption of digital payments and lending to expand financial inclusion.

Source IFC

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