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Medecins Sans Frontieres worried over malnutrition crisis in NW Nigeria

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Medecins Sans Frontieres (MSF)/ Doctors Without Borders, an international humanitarian medical non-governmental organization, on Tuesday expressed concern over the malnutrition crisis in northwest Nigeria.

   MSF teams have witnessed extraordinarily high numbers of children with malnutrition in MSF’s programs in five states across northwest Nigeria this year, said Simba Tirima, MSF country representative in Nigeria, in a statement Tuesday.

   Tirima said since January, MSF teams working in collaboration with the Nigerian health authorities have treated close to 100,000 children suffering from acute malnutrition in 34 outpatient facilities and admitted about 17,000 children requiring hospital care in 10 inpatient centers in northwest Nigeria most affected by ongoing violence and banditry.

   “With increasing insecurity, climate change and global inflation of food prices in a post-pandemic world, we can only imagine this crisis getting worse,” he said.

   Tirima said the Nigerian authorities need support to deal with a crisis of this magnitude. “This must include emergency humanitarian funding now for organizations able to respond and a commitment to include northwest Nigeria in the UN’s humanitarian response plan for 2023,” he said. 

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Nigeria central bank hikes monetary rate to 15.5%

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Nigeria’s central bank on Tuesday increased the Monetary Policy Rate (MPR), the benchmark interest rate, from 14 percent to 15.5 percent amid rising inflation.

   The Central Bank of Nigeria (CBN) raised the interest rate to combat rising inflation in the most populous African country, Godwin Emefiele, governor of the CBN, told reporters at the end of the bank’s Monetary Policy Committee (MPC) meeting in Abuja, the Nigerian capital.

   This is the third hike of the MPR, the benchmark interest rate for the country’s financial markets in 2022, said Emefiele.

   The MPC also raised the cash reserve ratio to 32.5 percent from 27.5 percent while holding other parameters constant, according to the governor.

   “The MPC noted with concern the continued aggressive movement in inflation, even after the rate hike at its meeting in May and July,” he said, adding the move is to restore price stability while providing the necessary support to strengthen the fragile recovery.

   Nigeria’s inflation rate reached a 17-year high of 20.52 percent in August. 

XINHUA

U.S. embassy in Moscow urges Americans to depart Russia to avoid being conscripted

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The U.S. embassy in Moscow has urged American nationals residing in Russia to depart the country immediately, citing what it claimed to be a possibility that Russia could conscript dual nationals for military service.

   “Russia may refuse to acknowledge dual nationals’ U.S. citizenship, deny their access to U.S. consular assistance, prevent their departure from Russia, and conscript dual nationals for military service,” read an alert posted on the embassy’s website Tuesday.

   “U.S. citizens should not travel to Russia and those residing or travelling in Russia should depart Russia immediately while limited commercial travel options remain,” it added.

   The advisory came roughly a week after Russia announced a partial mobilization amid the conflict with Ukraine.

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How African fintechs can achieve regulatory compliance

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Regulatory issues have recently plagued the tech ecosystem in Africa. Fintech, the biggest sector by funding, has been the most hit. To satisfy investors, fintechs have often had to blitz scale their services across the continent. These scaling efforts are mostly carried out without having the required licences to operate in these countries. 

In July, Flutterwave, Africa’s biggest startup, faced regulatory challenges in Kenya and Ghana. In response, the company issued a statement, where it claimed to have applied for a payment service provider licence in Kenya in 2019. “Like many other financial technology service providers in Kenya, our entry into the market was through partnerships with banks and mobile network operators licenced by the Central Bank of Kenya,” the company said in the statement

This has been the go-to strategy for most startups. To scale quickly in an ecosystem rife with confusing and suppressing regulations, many startups have had to form strategic relationships with existing players. While central banks previously allowed these fintechs to operate without licences, that has now changed. Fintechs like Chipper Cash and Dash have also seen the same fate as Flutterwave as more stringent regulatory requirements are established across the continent. 

At a webinar titled “Identity and KYC: How African fintechs can achieve regulatory compliance” on Friday, September 2, TechCabal sought to seek out solutions to this complicated conundrum from the perspective of industry experts. This was the 5th edition of Inside Identity (formerly called Digital Identity Matters) and was powered by VerifyMe Nigeria.

The conversation shed light on how regulators and operators can collaborate to build a robust framework of regulations in the fintech industry. Speaking at the event were Ebi Wanapere, head of operations, Bamboo; Daluchi Iweanya, head of compliance, Quidax; Esigie Aguele, co-founder/CEO, VerifyMe; and Michael Safo, a compliance and KYC expert based in Ghana. 

On how early-stage fintechs can navigate compliance

When asked how early-stage companies can successfully establish themselves as regulatory compliant, Wanapere advised founders to do extensive research in the sector they want to operate in. “The very first thing every fintech founder needs to do to be compliant is to research heavily and understand the regulations around the space you’re playing in.”

He added that in a scenario where there are no clear regulations, founders should “try to get as close as you possibly can”. He also advised that for fintechs that have intertwined services, to avoid being subject to many regulatory bodies, the phase where business ideas are developed should involve thinking about how the company wants to comply regulations-wise. 

On the relationship between fintechs and identity verification 

Aguele said that the biggest challenge most startups face with identity verification is documentation maturity for the masses, and he attributed the financial inclusion problem in Africa to this problem. 

He said that a lot of his customers, fintechs, face access problems to anti-money-laundering (AML) compliance digital identities and regulatory datasets. He also added that enforcing the regulation that strengthens the ecosystem so that operators like VerifyMe can get access and share that access in an open banking environment remains a roadblock. 

On the relationship between expansion and regulation 

Iweanya advised fintechs that are in their expansion phase to proactively engage with regulators in foreign countries. She added that because the regulation that pertains to fintechs is still evolving, regulators often have to play catch up, and the best way to enable them to catch up is to collaborate with the regulators. 

She also advised fintechs to partner with existing players in the country where they are expanding. She added that by collaborating with other fintechs, the possibility of encountering blindsides will be drastically reduced. 

On how fintechs can fortify themselves against fraud and other crimes

Wanapere advised all fintechs to, first of all, take the know-your-customer (KYC) phase very seriously. He said that although it might be a painstaking process, the stage of knowing your customers will help mitigate the occurrence of fraud. He added that fintechs should spare no expense in getting AML check services. The process of verifying might make fintechs lose customers, but according to Wanapere, this is a small price to pay. 

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Mobile getting more popular than cards as preferred payment option in Africa

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Amidst a backdrop of global economic challenges stemming from the pandemic and the war in Ukraine, payments are expected to increase by 7%, according to a recent McKinsey & Company report. In Africa revenue growth is expected to be almost three times faster, with financial inclusion quickly expanding, primarily driven by the adoption of mobile money and several innovative payment solutions introduced by banks, telcos, and Fintech firms. While cash remains king and its reign is expected to continue for years to come, the rapid growth in electronic payments is challenging that notion.

The opportunities in the payments ecosystem on the continent are promising. For example, Sub-Saharan Africa dominates the mobile money market, responsible for 70% of the $1 trillion mobile money transactions processed globally last year. The ubiquity of mobile devices has naturally led to the proliferation of mobile payment applications, and the channel is fast becoming a leading payment form. However, mobile payments are not without challenges—the essential being interoperability. Consumers can use a mobile banking application to transfer funds to any other bank account domestically. However, this is not always the case for transfers between mobile money wallets, where this interchange is still in the early stages of development.

Cards are easy to use and offer advantages to consumers and the payments ecosystem. With regulatory pricing pressures in select markets and supply chain challenges, could mobile-based payments surpass cards as a leading electronic payment channel?

Offline and In-Store Payments

Cards are convenient for in-store payments because one can obtain a paper receipt from the POS terminal to make reconciliation easy, which is usually integrated into the cash register. Most large and medium-sized merchants are accustomed to accepting card payments. However, a POS terminal or card reader is not affordable for micro and small merchants as most struggle with merchant service charges. Additionally, with payment settlement typically completed a day later, micro and small merchants are constrained by daily funding needs for inventory.

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Mobile payments are becoming more attractive for consumers and merchants. For digital natives, using a phone as a payment instrument is quite natural. Payments are generally instant, and merchants do not have to get a POS or pay fees to collect funds. Given that these are push payments (initiated by a consumer), the risk of rejection is low. However, some merchants still struggle with payment confirmation and reconciliation. In Nigeria, Fintechs such as Traction Apps and Collect Africa are closing the gap by offering transaction confirmation, settlement, and reconciliation services. By leveraging telco infrastructure and local switches, mobile payments can avoid expensive rails, a key advantage for scale.

Online Payments and E-Commerce

E-commerce is booming across the world, accelerated by the COVID-19 pandemic. In Africa, e-commerce revenues were $28 billion in 2021 and are expected to rise to over $46 billion by 2025. Today, a merchant in Nairobi, Kenya, can easily accept card payments with seamless payment validation and settlement services offered via payment gateways. There are established processes to handle issues such as chargebacks and dispute resolution. Cards are also convenient for recurring charges such as subscriptions, which have become popular with streaming giants like Apple Music, Spotify, and Netflix rolling out their services across Africa. On the other hand, the risk of repudiation is higher for online transactions. This is included in online merchant acquiring fees, which can become prohibitive for merchants and consumers.

Most online merchants do not accept mobile payments yet. However, this is gradually changing as large mobile money operators, such as Safaricom’s MPESA, are now available on streaming and other e-commerce websites. Given the much lower risk of repudiation with mobile push payments such as Quick Response (QR) codes and bank transfers, costs are much lower than cards. However, the lack of interoperability and international acceptance limit mobile payments for eCommerce.

Cross-Border Payments

A significant advantage international cards have is acceptance across the globe. With rails that reach virtually every country, cross-border payments are more manageable with cards where local regulation is supportive. A young lady in Dakar paying for an evening gown on a French couture website with an international card has a frictionless experience. Several Fintechs provide online merchant payments services to African merchants who want to accept cross-border payments.

Acceptance of mobile money or account-to-account payments via a mobile channel for cross-border payments is still nascent. Payments and settlements can be instant. For example, Ecobank’s pan-African switch enables instant cross-border payments across its 33-country network on the continent. The emergence of the Pan African Payments and Settlement System (PAPSS), which seeks to remove the burden of a third currency in African trade, has great potential to accelerate intra-African payments via mobile channels. While multi-currency settlement and interoperability between mobile payments remain a challenge, resolution is on the horizon. Blockchain technology promises to significantly impact cross-border mobile payments by reducing transaction costs and improving security.

Conclusion

African consumers are rapidly relying on their mobile devices for payments. The growth in digital wallets has led to the issuance of cards linked to mobile wallets. Legacy payment infrastructure developed by international card schemes enables seamless transactions, creating significant value for the ecosystem.

In June 2022, pan African mobile money hub MFS Africa announced the acquisition of Global Technology Partners, a prepaid card processor. Mobile money operators and card schemes will continue collaborating to offer customers a frictionless payment experience. Blockchain and other emerging technology could radically change the state of play. Cards will remain relevant in payments in Africa; however, mobile payments are undeniably on the fastest rise.

Osahon Akpata (’11) is Group Head, Consumer Payments for Ecobank, a pan African bank with operations across 33 African countries.