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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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Investment

ILLA, an African asset-light FMCG Logistics Company Raises $2M Investment Round

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ILLA Team (Image: Supplied)

Cairo-based FMCG Logistics company ILLA secures a $2M investment round to boost its growth in the market and diversify its offering to the FMCG value chain. The round was co-led by Watheeq Financial Services and Golden Palm Investments. The round saw participation from Loftyinc Capital Management, Kepple Africa Fund, Cubit Ventures, AUC Angels, Oqal Angel Network and FLat6Labs Cairo doubling down on its investment in ILLA for the third time

Founded in 2019 by Mahmoud Elzomor, Alaa Jarkas, Ahmed Sakr, and Hossam Saraya, and shortly joined by a well versed management team with Mohamed Emera as Director of Growth, Mohamed Kamal as CFO, and Khaled Elzomor as Commercial Director ILLA aims to optimize post-production supply chain activities for FMCG brands, starting with middle-mile delivery services, being the most fragmented part of the value chain.

By focusing exclusively on the FMCG market, ILLA was able to capture the business and trust of over 65 clients in its portfolio, with household names to the likes of Coca-Cola, P&G, Danone, Nestle, Juhayna, and Pepsico.

Since 2019, ILLA has been delivering on its core promise of moving goods with efficiency on behalf of FMCG brands, spanning over 5,000,000 KM and completing over 250,000
transactions, across 27 governorates in Egypt leveraging its tech platform to power delivery
operations

Before ILLA, FMCG brands had to rely on a variety of owned and outsourced assets to manage their delivery operations, and that adds to the pain of a fragmented logistics cycle, which gave way to the value offering of ILLA to those brands; a streamlined value chain with visibility, control and growth potential for each individual brand, with ILLA acting as an asset-light logistics  company, leveraging its tech platform and operational intelligence to deliver an unparalleled experience to FMCG brands.

“ILLA will use the funds to fuel its expansion and growth in Egypt and disrupt the traditional route to-market for FMCG companies and SMEs, while building more around its tech platform to deliver more value to its clients and drivers alike”, says Mahmoud ElZomor, Co-Founder and CEO of ILLA

“Mahmoud and the team are tailor-made for ILLA, bringing decades of diversified experience to help drive efficiency into the $15 trillion global FMCG market. With the onset of covid, the global supply chain management industry is suitable for modernization, and ILLA is uniquely positioned as an end-to-end execution platform. In addition, ILLA’s smart logistics solutions also play a crucial role in providing a full stack of operational solutions that will disrupt the sector, and will change the behavior for all stakeholders within the FMCG market,” said Khaled Zaidan of Watheeq Financial Services.

“Middle-mile logistics is one of the most underinvested segments of the global supply chain market. ILLA has identified this massive opportunity in MENA and is offering a full-stack B2B supply chain management platform enabling FMCG brands to reach retailers directly at the lowest cost per case. Mahmoud and team are utilizing the trucking logistics shared economy and tech automation to innovate within a large and fast-growing market.”AJ Okereke, Partner, Golden Palm

 

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Press Release

Africa’s CEOs to empower youth for the digital age at the All4Youth Regional Alliance flagship event

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All4Youth Regional Alliance Senior leaders (Image: All4Youth SSA)

We aim to support 1 million young people to find work and plan their transition to the digital economy between now and 2022 through a flagship event of All4Youth Regional Alliance, “CEO & Youth Connect”. A collaborative intervention led by various multinational companies dedicated to reduce youth unemployment across Sub-Saharan Africa. Senior leaders from the alliance will meet on November 8, 2021, to discuss skills of the future required in their organizations as well as share programs, training, and initiatives designed to prepare youth for the digital era. 

The COVID-19 pandemic has created an economic crisis, forcing tens of millions of people out of work. As economies continue with the reopening journey, some jobs may not come back, yet we continue to see a rise in the number of youth joining the job market. “We have therefore put the best of our resources to support this recovery, including using data to understand the most in-demand roles, supporting with skilling and reskilling needs for job seekers and job creators. Partnerships such as this will play a critical role and will support us to scale us to more youth and increase the impact across the African continent” noted Ghada Khalifa, Director for Microsoft Philanthropies for Middle East and Africa.

Bruno Olierhoek, Chairman and Managing Director at Nestlé East and Southern Africa Region emphasized the importance of senior leaders taking keen interests in the development and ultimate successes of the youth.  “We are driven by our inspiring purpose that is so relevant in our East and Southern Africa Region (ESAR) and we want to do good by addressing societal challenges such as climate change, sustainability and youth unemployment. To help contribute to these major challenges, we realize the need to work in an ecosystem which is entrenched around long-term thinking, with immediate actions. Through our involvement in different programmes supporting the youth in Employment & Employability, Entrepreneurship and Agri-preneurship we are committed to continuously define projects that are fully integrated in our value chain for them to be viable over the long term and be able to make a real meaningful impact for the community and us.”

“The youth of today are the builders and leaders of tomorrow. As Adcorp we know that enabling agility, focus and skill in the youth of today is the key to unlocking their potential for tomorrow ‘’ highlighted Dr John Wentzel, Chief Executive Officer, Adcorp Group. 

In the last two years, alliance partners have reached over 150,000 young people, empowered over 3000 young people through employability and mentorship programmes.  Giving high potential young talent access to a network of high performing industry professionals that accelerate opportunities, career and personal development goals.

We encourage young people to register for the upcoming event to click here and learn more about in-demand skills, insights to future of work and opportunities alliance partners have available for youth. 

 

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Investment

Fawry Invest in Sudanese Classifieds and Marketplace Platform alsoug, Marking First Overseas Venture

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 Fawry CEO Eng. Ashraf Sabry (Image: Supplied)

Fawry establishes strategic partnership with Sudanese consumer platform with an eye to scaling up technology platform beyond Egypt.

Fawry (the “Company”, FWRY.CA on the Egyptian Exchange), Egypt’s leading provider of e- payments solutions and digital banking services, announced today that it has finalized an investment in alsoug.com, Sudan’s largest online classifieds platform and marketplace, to help build out alsoug’s new fintech platform, Cashi. Fawry has acquired a strategic minority stake in the alsoug.com/Cashi holding company, marking the Company’s first venture capital investment outside of its Egyptian home market. The investment comes as part of Sudan’s first announced venture capital funding round.

Fawry played a leading role in ensuring the success of the USD 5m round, with the Company’s presence catalyzing involvement from other strategic Western VC players. As a strategic investor in alsoug, Fawry intends to leverage its long track record with white label technology solutions to help the platform expand in scale, enhancing the platform’s merchant acquisition operation, refining its go-to-market approach, and providing valuable insights that inform high-level strategy across all segments of the business.

Founded in 2016 by a world-class team of technology entrepreneurs, alsoug is now Sudan’s leading consumer internet platform and its largest digital marketplace. Alsoug is one of Sudan’s most downloaded apps on the Google Play app store with two million downloads and is a platform where sellers can list everything from real estate and cars to services and commodities.

Despite the political and economic headwinds experienced by Sudan as it goes through a transformative political transition, the platform has grown rapidly since 2016, reflecting alsoug’s highly skilled team of in-house developers, comprehensive coverage by its on-the-ground teams, as well as Sudan’s promising economic fundamentals. Moving forward, and building on the strategic partnership with Fawry, alsoug will significantly expand its service offering by building a new payments network capable of serving customers across Sudan, one of the largest countries on the African continent.

“We’re delighted to be kicking off our partnership with alsoug, one of Sudan’s most exciting prospects and a Sudanese leader in tech innovation. This is our first investment foray outside of Egypt in our thirteen years of operation, and we’re confident that our story with alsoug and Cashi will be a special one. Fawry’s investment in alsoug delivers on our plans to venture into underserved international markets by leveraging our technology and teaming up with strong local players. This investment will provide us the opportunity to strategically expand our footprint into Africa and transfer the experience we’ve gained in the dynamic Egyptian market to neighboring Sudan, an economy with major potential across several sectors and with a significant pool of entrepreneurial talent. Meanwhile, Fawry’s strategic partnership with alsoug leaves it ideally placed to help guide the platform’s rollout of a countrywide payments system, a feat which Fawry has already managed through a scalable, robust, and best-in-class technology platform.” said: Fawry CEO Eng. Ashraf Sabry

“This investment marks a significant milestone not just for alsoug, but for the nascent tech space in Sudan as a whole, which has until today been essentially shut out of the global capital markets. I hope this investment is the first of many and that the huge potential of the tech sector in Sudan is fully realized in the coming years. We are looking forward to working with Fawry, and our new strategic shareholders, to continue our expansion from the classifieds and marketplace space into payments. We will build a payments platform that will deliver financial inclusion to all Sudanese.” said Alsoug co-founder and CEO Tarneem (Nina) Saeed

 

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