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Issue 64
Jul 13 - Jul 19, 2020

Hi there,

The year is 2020 and everything is cake, including payments.

Stay safe and remember to wear a mask.  

Tochukwu Ironsi
Product Specialist, Paystack
NigeriaThe Central Bank of Nigeria issues GSI guidelines for lenders. Nigeria's apex bank issued new guidelines on Global Standing Instruction (GSI), a feature that grants eligible financial institutions access to all the bank accounts of a defaulting borrower to recover outstanding loans. The GSI was first approved by the banker's committee in February and the released guidelines is expected to take effect from August 1, 2020. Business Day

This could potentially improve loan recovery efforts for all lenders as they are no longer limited to one customer account for loan recovery. However, it is not clear who will eventually have access to this service. According to the guidelines, the service will be available to Participating Financial Institutions (PFIs) who have access to NIP. This would include the banks, payment service providers, and some electronic wallets. It would be interesting to see if this service will be extended to other players in the unsecured digital lending space like FairMoney and Carbon as well.
KenyaCentral Bank of Kenya set to double down on digital lending regulation. The proposed amendments to the Central Bank of Kenya Act will require digital lenders to seek approval from the apex bank before changing interest rates and launching new products. This follows earlier directives by the CBK that blocked lenders from blacklisting non-performing loans below Ksh1000 and also banning some unregulated lenders from the Credit Reference Bureau. Kenyan Wall Street

The drafted amendments seem like a welcome deterrent targeted at predatory lenders that have historically exploited the high demand for consumer credit to offer loans with deceptive terms and absurdly high interest rates. However, it must be noted that digital lending platforms have had historically high interest rates to adjust for the high credit risk that comes with unsecured consumer lending. A risk that is set to rise as COVID-19 has led to job cuts and a decline in per capita income.
NigeriaNIBSS recorded 20% decrease in number of NIP transactions in April. According to data from the Nigeria Inter-Bank Settlement System (NIBSS), the volume of online transactions processed via NIP, NIBSS instant payments service, dropped by 20% from 135 million in March to 107 million during the lockdown in April 2020. The value of transactions also dropped by ₦3.9 trillion (~$10 billion) from ₦10.9 trillion ($28 billion) to ₦7 trillion ($18 billion) in the same period. Techpoint Africa

Despite the dip in numbers, it is important to note that year-on-year comparisons tell a much more positive story. There were 615 million transactions valued at ₦48.6 trillion (~$125 billion) processed via NIP in the first 5 months of 2020. This represents 17% and 45% increase in value and volume respectively compared to last year. This would suggest that there was actually increased online financial activity in a period that has been riddled with great economic uncertainty. Here is a link to the NIP monthly data from NIBSS
GhanaAirtelTigo launches RetireRite in partnership with People Pension's Trust. AirtelTigo has partnered with PPT to launch RetireRite, a pension and savings product. AirtelTigo customers can now register for the RetireRite product on their mobile wallet and have access to both retirement and savings accounts. Contributions are split equally between both accounts and the customers can access money in the savings account 6 months after the initial deposit.  Tech Nova

This seems like a potentially beneficial partnership for both parties. People Pension Trust will leverage AirtelTigo's distribution for customer acquisition especially among the underserved un-banked customers. In return, AirtelTigo get to lock-in customers with more financial services and capture more of the customer's spend.
TwitterThere is still a large opportunity in the global payments market. Marcello Schermer (@marcelloscherme) refers to Visa investment thesis to underscore how much of the global payments market remains untapped in this Twitter thread. According to the report, Visa estimates that a total addressable market of $120 trillion in global B2B payments remains untapped. Marcello Schermer on Twitter
Twitter...and it's more than just payments. Patrick MacKenzie (@patio11) of Stripe highlights in this Twitter thread, the often understated role of risk management and consumer protection that intermediating financial institutions play in facilitating payments. This follows the recent Twitter hack and news that Coinbase prevented their customers from sending bitcoin to the hackers' wallets.  Twitter
Banking & Finance
NigeriaNigerian Banks limit Dollar spending on debit cards amidst FX scarcity. Nigerian banks have moved to set limits on consumer dollar spending via debit cards. GTB Bank reduced international spending limits on its Naira-denominated cards to $1,500 from $3,000 last week, while Zenith Bank Plc. reduced the limit to $1,000 from $3,000. Business Day

A combination of market forces and COVID-19 have led to a steep decline in oil prices. The sale of crude oil is one of Nigeria's major sources of foreign exchange. The reduced revenues further translate to reduced dollar inflow into the country. Due to this FX scarcity, banks have limited access to dollars and consequently have to limit any form of consumer spending that will reduce their precious reserves even further. This has happened before. In 2016, a similar decline in oil prices eventually led to consumer dollar spending limits and ended in an almost 50% devaluation of the Naira. History, therefore, suggests that we should expect more adverse changes as the COVID-led economic downturn continues.
AfricaAirtel Africa partners with WorldRemit on mobile money remittance service. Airtel Africa has partnered with WorldRemit to offer cross border transfers across Africa through Airtel Money, the telco's mobile money service available in many African countries and the Middle East. This service is currently available in countries like DRC and Uganda and will allow Airtel Money customers receive money from across the globe via WorldRemit. Techmoran
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