Nigeria’s telecom industry faces bleak 2024 with FX shortage, diesel prices surge
Operators in Nigeria’s telecoms industry are bracing for a bleak year, with a scarcity of the greenback, rising diesel prices, and naira devaluation, putting pressure on operating margins. If the naira continues its downward spiral, many infrastructure projects, including 5G rollout across the country, will be stalled. Mafab Communications, which won one of the 5G licences in 2021, is currently pushing to launch its 5G network later this year. However, progress in deploying infrastructure from scratch has been stalled by the foreign exchange crisis in Nigeria. Telecom equipment is mostly imported into the country, hence they are subject to currency fluctuations. Although MTN and Airtel have already launched their 5G networks, experts say they still require massive investments in infrastructure to make the service go around the country and to provide quality service. The FX crisis has affected every operator, but smaller players are the most hit, said Tony Emoekpere, president of the Association of Telecommunications Companies of Nigeria (ATCON). MTN Nigeria, Airtel, and Globacom are the dominant players in the industry. Last week, Airtel’s financial report showed a 1.4% decline in revenue to $3.86 billion from $3.91 billion posted in the comparable period in 2023. 9Mobile, which is the fourth largest operator, has seen its data subscription revenue significantly depleted as subscribers continue to exit its network. The data subscription figures on 9Mobile stand at 3.81 million as of September 2023, representing a 127% decline from a peak of 17.1 million subscribers recorded in April 2016. The challenges will also impact the 70% broadband penetration target set by Bosun Tijani, Nigeria’s minister of communication, innovation, and digital economy. As of November 2023, broadband penetration stood at 41.87%, representing a 14.2% decline from March 2023, when the figures hit a peak of 48.28%. Aside from missing a 50% penetration target for 2023, the industry is about 28% adrift of the 70% target in 2025. The telecom industry has also struggled to raise capital and keep up with peak GDP contributions. In 2022, investments in telecoms declined by more than 50% from $753.04 million in 2021 to $399.9 million in 2022. The industry’s GDP contribution dropped by 17.3% to 13.5% in Q3 2023 from 16.06% in Q2 2023. “It is what it is, the telecom industry is bleeding. As things stand, investors are unwilling to put in money because the economics do not make sense,” said Gbenga Adebayo, president of the Association of Licensed Telecommunications Operators of Nigeria (ALTON). Why diesel price is rising in Nigeria? Diesel is very critical to the power consumption needs of operators in the telecom industry, especially the base stations. The price of diesel has fluctuated within the range of N900 to N1200 in recent times. However, TechCabal found that the price moved between N1200 and N1350 at Enyo and AP filling stations, respectively. The price movement happened between Saturday, February 3 and Monday, February 5. Mokolade Ashafa, a filling station manager, attributed the price increase to the difficulty marketers face accessing the product from the depot. Diesel prices rose from ₦288.09 per litre in January 2023 to ₦1,126.69 per litre in December 2023, data from the National Bureau of Statistics showed. Nevertheless, most of the power costs are not borne directly by telcos like MTN and Airtel. The base stations of most operators are outsourced to infrastructure companies such as IHS and American Tower Company (ATC). The infrastructure companies then shoulder the responsibility of providing 24/7 electricity to the base stations. These companies use a mix of diesel and renewable sources to power the base stations. A change in diesel prices automatically affects infrastructure companies’ costs. Costs are transferred to the telcos, who must then adjust consumer prices. Telecommunication companies spent about ₦429.43 billion on fueling base stations representing an increase of 34.57% from the ₦319.11 billion spent in 2022, as per a Punch report. However, telcos cannot increase prices independently without the Nigerian Communications Commission’s approval. The price of internet data was recently increased by 10% by telcos like MTN Nigeria. But telecom stakeholders say it has taken the regulator so long to approve an upward price review that is globally competitive and one which assures investors of return on investments. Beyond regulators, the telecom operators also contend with consumer advocacy groups. The industry was dragged to court by the National Association of Telecom Consumers of Nigeria (NATCON) over the 5% data and airtime tariff increase approved by Ali Isa Pantami, former minister of communications and digital economy. The case is still in court and restricts the operators from implementing the 5% data, airtime hike, said Adeolu Ogunbanjo, president of NATCON. Ogunbanjo said what the association is trying to avoid is a situation where subscribers are saddled with extra pressure on their income, hence the government needs to find a way to address issues like multiple taxation and wild disparity in Right of Way charges the operators are facing.
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🚀Entering Tech #57: Building a career moat
Building a career moat can up your value. 7 || February || 2024 View in Browser In partnership with Issue #57 Building a career moat Share this newsletter Greetings ET people Faith here. It’s my first time writing to you this year. I have read 5 articles, watched one YouTube video, and listened to one podcast to put this together for you. In today’s world of continued layoffs and AI job-taking, I present to you a way out of the dread—career moats. Faith Omoniyi & Timi Odueso Tech trivia Today’s question is a bit dreary. You’ll find the answer at the end of this newsletter. How many people have been laid off this year? What are career moats? In medieval times, moats were wet walls that kept attackers out, fire at bay, and fish on the menu. Similarly, career moats can keep you fed, and protect your value in the job market. Cedric Chin defines it as an “individual’s ability to maintain competitive advantages over your competition (say, in the job market) to protect your long-term prospects, your employability, and your ability to generate sufficient financial returns to support the life you want to live.” Career moats are nothing out of the ordinary. It’s a way to build competitive advantage through an extremely rare set of skills that set you apart from the crowd such that you can find jobs easily and if you are ever laid off, you may easily find another job. See career moats as having the skills that make you a “hot cake” in the job market. Image source: Zikoko Memes Putting this into perspective allows you to carefully plan your career moves ahead of time and think more strategically about your career. Cedric Chin says, “Job security is tied to your ability to get your next job, not keep your current one.” If you possess unique and extremely rare strengths and interests that are in high demand, you’ll never have to worry about layoffs because everyone will need you. How do you build career moats? While we have established that career moats requires having rare and valuable skills, you might be wondering “What does having rare and valuable skills look like?” Cedric thinks about it in three ways, but I would emphasise two: 1. A skillset can also be rare and valuable if the skillset is unattractive but valuable. Not many people want to become data scientists, for example, because it requires problem-solving, analytical and mathematical skills. However, there exists a shortage of data talents globally—data scientists, data engineers, data analysts, etc, because data powers all AI and AI-enabled systems, and we don’t need to say that AI is here to stay. Building data skills is one example of building a career moat. It’s not an attractive skill and it’s one of those jobs that can have slow days, but it’s a valuable skillset. 2. Next, a skillset can be rare and valuable if you specialise in it before it becomes clear that it is valuable. An example that comes to mind is Web3. When Web3 became popular in 2021, many people flocked to it like it was the best thing since sliced bread plantain. If only people those people had positioned themselves to offer specialised services in the space before the boom. I recently met with a Web3 influencer and marketer, Precious Josiah, who set up a digital agency to help Web3 startups tell their stories better and connect with their target audiences. That’s another example of what a career moat looks like. Precious, who had previously worked with other global Web3 agencies saw an untapped African market and decided to build her own agency. She figured that if Web3 startups are littered the place, somebody would need to tell their story and break down the jargon into easy-to-understand language to the audience they are trying to sell to. Another friend, Demilade Akin-Adeniyi, a UI/UX designer started positioning himself as a Web3 UI/UX designer. He chalked up his decision to the lucrativeness of the Web3 and crypto space. You too can find promising tech careers and determine what your career moat will look like. Simplify with Rowvar Simplify property investment with Rowvar. Start here. It’s all about the mix To bring this home, I’ll share thoughts from two brilliant people. In a short call with me, Fu’ad Lawal, team lead of Archivi.ng, contends that staying ahead of the curve through continuous learning—a process motivated by curiosity and unrelenting dissatisfaction—is the greatest approach to building a career moat. Furthermore, in his podcast, “How to Build a Personal Moat to Further Your Career”, Morning Brew CEO Alex Lieberman says that building a career moat isn’t just about accumulating knowledge or building skills. It’s all about finding a mixture that creates a massive unlock in your career. In practice, there might be a lot of critical thinkers or high EQ folks out there, but there exists such a slim group of people who excel at the three skills. What do these skills look like in your current profession? You should aim to be among the top 1% of those who excel at all these skills. I would like to know your thoughts on how you’re thinking about building career moats. Shoot me an email at faith.omoniyi@bigcabal.com. Ask a techie Q. What’s the difference between Data Entry and Data Analytics. I’ve done my research but I still can’t fathom the discrepancy between the two? Data Entry and Data Analytics are two distinct fields within the broader realm of data management and analysis: Data Entry involves the process of inputting, updating, and maintaining data into a database or information system. It typically requires attention to detail, accuracy, and the ability to work with various data entry tools and software. Data entry tasks can include transcribing information from physical forms into digital formats, updating databases, and verifying data accuracy. Data Analytics, on the other hand, revolves around analyzing data to derive insights, patterns, and trends that can inform decision-making and
Read MoreVodacom to appeal ruling to pay $1 billion to ex-employee
Vodacom, South Africa’s largest mobile network operator by subscriber base, will appeal a Supreme Court of Appeal ruling mandating it to pay Kenneth Makate, a former employee, R20 billion (~$1 billion) for inventing the popular Please Call Me service. The judgment amount is 10% of Vodacom’s market capitalisation. The Supreme Court of Appeal ruling ordered Vodacom to pay Kenneth Makate between 5% and 7.5% of the total revenue generated by the Please Call Me service over 18 years plus interest. “Vodacom is surprised and disappointed with the judgment and will bring an application for leave to appeal before the Constitutional Court of South Africa, within the prescribed period,” the company said in a statement to the Johannesburg Stock Exchange this morning. Vodacom claimed only R47 million (~$2.5 million) was due to Makate for inventing the Please Call Me service. The service allows users to send a text message for free, requesting recipients to call them. Makate pitched the idea for the service to Vodacom in 2000 while he was still an employee and was promised compensation. The service was launched in 2001. In 2007, a few years after leaving Vodacom, Makate submitted a letter to Vodacom requesting compensation. Legal tussles eventually saw the case brought to the Constitutional Court, which ordered the two parties to negotiate a settlement in good faith. Makate rejected Vodacom’s initial offer of R47 million. With Vodacom intending to appeal the Supreme Court of Appeal’s judgment, the case, already one of the longest-running court cases in South Africa‘s legal history, will drag on. Vodacom did not specify a specific date for its appeal.
Read MoreGoogle and Oracle ramp up cloud in Africa to tap fast-growing e-Conomy
This article was contributed to TechCabal by Seth Onyango via bird story agency. Cloud-native startups in Africa are luring big tech firms to ramp up spending on cloud facilities as demand for cloud services that comply with data protection laws grows. McKinsey forecasts a global cloud value of $3 trillion in 2025, with $797 billion of this value sitting in Africa and Europe. In the same period, the International Finance Corporation (IFC) statistics forecast the continent’s e-Conomy to hit $180 billion, 5.2% of its GDP. Google’s Cloud director, Niral Patel cited the IFC figures, highlighting the burgeoning opportunities for cloud services in Africa. On Friday, February 2, Google Cloud announced that it has opened its first cloud region in Africa, located in Johannesburg, South Africa. The new region will offer its core cloud services, such as computing, storage, networking, and security, to customers across the continent. Meanwhile, Oracle revealed that it plans to establish a public cloud region in Kenya’s capital city of Nairobi to meet the growing demand for Oracle Cloud Infrastructure (OCI) services across Africa. It will be the firm’s second on the continent, with the first one opened in January 2022 in Johannesburg, South Africa. Both Oracle and Google are competing with other cloud providers, such as Microsoft Azure and Amazon Web Services, which have also established cloud regions in South Africa in recent years. McKinsey notes prevalent data residency laws in Africa like those in Algeria, Gabon, Niger, and Morocco have forced these firms to set up shop on the continent. The existing laws demand localised data, making it impossible for many firms to use the public cloud due to limited provider presence. Kenya, South Africa, Tunisia, and Uganda also impose restrictions on cross-border data transfer. A surge of cloud computing investments comes is also fuelled by factors like increased continental access to broadband internet. Africa does not have a large installed base of legacy IT systems and hardware that need to be replaced or integrated with cloud services. This allows businesses to leapfrog ahead and adopt cloud-native applications and platforms that are more agile, scalable, and cost-effective. According to some estimates, demand for cloud computing services in Africa is growing at between 25% and 30% annually Google and Oracle are, thus honing in on the pulse of innovation—the thriving community of cloud-native startups. These nimble enterprises, born and bred in the cloud, have become the focal point of attention for two tech giants eager to contribute to and benefit from Africa’s expanding tech ecosystem. In its last insights last month, McKinsey said African companies that “can make the leap stand to gain a sizeable prize. the consulting firm’s recent research projected a global cloud value of $3 trillion across what it categorized as the “Rejuvenate dimension (IT cost efficiencies) and the Innovate dimension (revenue uplifts and business operations savings).” In Africa, cloud adoption among respondents is consistent across African regions, with the highest levels, 70 to 77%, in East Africa, West Africa, and Southern Africa, according to the consulting firm. Investors in the cloud space like Oracle and Google are also keen to develop cloud skills and talent. Both companies have launched initiatives to train and certify African developers, students, and educators on cloud technologies and applications.
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From zero to N15 Trillion in transactions: Hydrogen’s plans for Nigeria’s bustling payments space
Imagine Africa’s payments industry as a car. There’s the flashy exterior, but it’s the engine that makes it all work. Hydrogen, a payments company launched by Access Corporation, the holding company of one of Nigeria’s biggest banks by assets, wants to be that engine. For two-year-old Hydrogen, the focus is on building a robust infrastructure that can power payments across different channels. “Our vision is to become Africa’s most powerful payment business network. The real play for Hydrogen is the infrastructure,” Kemi Okusanya, the company’s CEO, told TechCabal. Although Hydrogen was launched in 2022, Okusanya says 2023 was the company’s “real first year.” It has launched eight products and claims to have processed 12 to 15 trillion Naira transactions across its different channels in 2023. Like most payment companies, Hydrogen earns a fee per transaction on its platforms. “A time will come when one in every three transactions happening in Africa will have something to do with Hydrogen,” she said. Hydrogen’s license allows it to operate across the entire value chain, offering services like processing, switching, and super agency. Though Hydrogen says its play is infrastructure, it competes with fintechs such as GTCO’s Squad, Flutterwave, Moniepoint, and Paystack in the payments market. Squad, for instance, crossed N200 billion in monthly transactions in January 2023. Data shows that digital payments in Nigeria have been on the rise in the last half-decade. Image Source: Stephen Agwaibor/TC Insights. Hydrogen has two arms: the merchant business and the switch and card business. On the merchant side, Hydrogen caters to small and medium enterprises (SMEs) and large corporations with tailored solutions. According to the company’s head of merchant business, Zainab Abu, these solutions include POS terminals, Instant Pay, which provides real-time transaction visibility across multiple outlets, a payment gateway that allows merchants to receive payments via their website, and a payment link. Since launching the merchant business in April 2023, Hydrogen has onboarded 11,000 active merchants across every state in Nigeria. Its transaction volume grew to billions within the first two months of operations, and in January, the merchant business processed 40% of last year’s total volumes. Abu says Hydrogen POS’s competitive advantage is that it allows other payment types beyond cards, such as bank transfers. Hydrogen will also compete offline against other fintechs that offer POS devices. Last year, Paystack launched virtual terminals, a new product that allows merchants to accept payments with bank transfers for multi-person businesses. Hydrogen acts as a third-party processor for card transactions on the card and switch business. It offers interbank transfer, bulk payments, and 3D secure, a second-level authentication for card transactions, according to Fiyinfoluwa Olorunsola, head of cards and switches at Hydrogen. Hydrogen’s card and switch business is focused on the financial sector, especially traditional banks and fintechs. “We handle the processing side of things. We process transactions for about 50% of the FUGAZ banks and top fintechs.” Yet, Okusanya admits it’s still early days. “There is so much in payments. You think you know it, but you discover a new thing.”
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👨🏿🚀TechCabal Daily – Mastering MoMo
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Good morning If you’ve read our State of Tech in Africa report, can you take two minutes to share your thoughts with us? In today’s edition Mastercard acquires minority stake in MoMo Glo settles $1.4 million bill with MTN Kenya introduces draft Bill to regulate virtual assets service providers 2G and 3G networks in South Africa get a two-year reprieve South Africa’s Competition Commission appeals case dismissal against 23 banks The World Wide Web3 Opportunities Mobile money Mastercard acquires minority stake in MoMo Mastercard, the global payment giant, is investing R3.8 billion ($200 million) in the MTN’s mobile money service. With the investment, Mastercard is acquiring a 3.8% minority stake in the telecom’s fintech arm. The move follows MTN’s recent partnership with Sweden-based telecommunications company, Ericsson to allow MTN’s Mobile Money (MoMo) service on the Ericsson wallet. MTN group had earlier announced the intention to sell a 30% stake in the fintech firm. When Mastercard makes the cash injection, MTN MoMo will be worth R99 billion ($5.2 billion). Why it matters: On the upside, the deal grants Mastercard access to MTN’s massive network across 17 African countries, expanding its reach and solidifying its digital payments dominance. Mastercard’s investment will fuel MTN Mobile Money’s growth, potentially leading to wider service offerings, and expansion into new markets. The collaboration could also birth innovative financial products, like virtual cards linked to mobile wallets, boosting online payments and international remittances. However, concerns on whether the strategic partnership truly promotes financial inclusion, or helps consolidate power within existing players and stifle competition among smaller players. Zoom out: The latest development comes as MTN is taking big bets on its mobile money platform. The telecom reported that the fintech had seen increased traction in the market, recording a 21.7% year-on-year increase in revenue. MTN attributes this growth to the expansion of its wallet, payment and e-commerce, and remittance services. Access payments with Moniepoint Moniepoint has made it simple for your business to access payments while providing access to credit and other business tools. Open an account today here. Telecom Glo settles $1.4 million interconnection fee debt The only constant in life is change, and Glo’s debt to MTN. Nigeria’s leading telecom, MTN, has agreed to accept Globacom’s ₦2 billion ($1.4 million) interest payment on its interconnect fees—an amount charged by telecom for calls terminating on their network. Glo’s original debt to MTN in 2012 was about 1.6 billion ($1.1 million) but due to Glo’s tardy repayments, the debt accumulated interest over the years. Yesterday, the telecom reached an agreement to pay the ₦2 billion ($1.4 million) accrued interest on the debts. ICYMI: The Nigerian Communication Commission (NCC), on January 8, served a disconnection notice to Glo, which permitted MTN to disconnect Glo subscribers over years of unpaid interconnect fees. However, Glo was granted a 21-day extension to reach an agreement with MTN one day before the planned disconnection. A bromance built on borrowed funds: Glo’s debts to MTN date back 15 years, with the first reports of Glo falling behind on interconnect fees emerging in 2012. In 2016, MTN reportedly threatened to disconnect Glo over the unpaid fees. In 2019, the telecom disconnected Glo from its network for five days, forcing Glo to pay around ₦2.6 billion ($1.8 million) in owed interconnect fees out of a total ₦4.4 billion it owed at the time. Airtel also threatened to disconnect Glo during the same period. Glo’s interconnect debt grew over the years because it often made smaller debt repayments when compared with the amounts it owed. However, the NCC appears to be tightening its leash on Glo and other telecom operators in the country. Per local media, the regulator is ensuring that Glo and other telecom operators comply with the market rules and pay their debts. Secure payment gateway for your business Fincra’s payment gateway enables you to easily collect Naira payments as a business; you can collect payments in minutes through bank transfers, cards, virtual accounts and mobile money. Create a free account and start collecting NGN payments with Fincra. Crypto Kenya introduces draft Bill to regulate virtual assets service providers The Blockchain Association of Kenya (BAK) has introduced its first-ever Virtual Assets Service Provider (VASP) draft Bill. The draft bill proposes a comprehensive framework encompassing licensing, consumer protection, anti-money laundering, and a regulatory sandbox. The bill’s introduction follows a series of policy-focused community engagements initiated by BAK. In June 2023, Kenya signed into law the Finance Act 2023. The Act, which had a 3% gross tax on digital assets, was actively challenged by the BAK. They submitted their concerns, petitioned the High Court, and held industry workshops. Ultimately, lawmakers recognised the need for dedicated regulations and tasked BAK with crafting a billto govern the cryptocurrency industry in Kenya. But it’s not a solo mission: Until February 7, stakeholders worldwide can review the draft and contribute their voices. This approach ensures the final Bill reflects the needs of everyone involved. After that, BAK will revise and incorporate feedback into the next iteration of the Bill and deliver it to the National Assembly’s Departmental Committee on Finance and National Planning by February 14, the same committee that tasked the association to develop the draft bill. If passed, this bill will attract international investments and talent, positioning Kenya as a leader in Africa’s crypto space. BAK also aims to attract $1 billion in Foreign Direct Investment (FDI) by 2027, supporting Kenya’s economic recovery. Zoom out: Other African countries like Nigeria are also taking steps to regulate their cryptocurrency industry. After initially banning crypto in 2021, Nigeria’s Central Bank has lifted its ban in December 2023, and now aims to regulate “virtual asset providers.” Banks can now serve crypto providers, but only those licensed by the Securities and Exchange Commission (SEC). Internet 2G and 3G networks in South Africa get a two-year reprieve South Africa has hit the breaks on its planned shutdown of 2G
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Exclusive: Ghanaian talent startup Remoteli raises £250,000 from footballer Jeremie Frimpong
Remoteli, a Ghana-based tech talent startup that connects African tech talents with remote workplace services, has raised £250,000 pre-seed funding ($314,824) to scale operations and expand across Africa. The funding round was led by Jeremie Frimpong, a Ghanaian-Dutch professional footballer who plays as a right wing-back for Bundesliga club Bayern Leverkusen. Frimpong’s investment follows a trend of football stars backing tech startups. In 2023, French football players, Aurelien Tchouameni, Jules Kounde, and Mike Maignan participated in a $3 million funding round for StarNews Mobile, an African mobile video network. Exclusive: MTN, Globacom strike deal to settle ₦2 billion interconnection fee debt Samuel Brooksworth, Remoteli’s founder, told TechCabal that he began the company after discovering the gap that existed between talented young graduates who could not find employment and decision-makers from various organisations that struggled to grow their business during the COVID-19 pandemic. “The primary goal of our partnership with Jeremie Frimpong is to propel Remoteli towards our ambitious target of facilitating employment for 1 million people by 2030,” Brooksworth told TechCabal. Part of that partnership with Frimpong involves the Pathways project that will tackle the challenge of guiding young footballers whose careers didn’t pan out. Pathways project offers new opportunities, and with Remoteli’s support in training and upskilling, these athletes can unlock potential careers off the pitch. Frimpong shares Brooksworth’s optimism and believes in adding value to more people’s lives. “I invested because I believe in what Remoteli is trying to do. I care a lot about developing people and places that don’t have a lot of opportunities because that is the background I come from. When Samuel pitched the idea to me, I bought in immediately,” the footballer told TechCabal in an interview. Remoteli’s founder, Samuel Brooksworth, and footballer, Jeremie Frimpong. Credit: Remoteli Remoteli says it has strategically focused on bootstrapping and minimal fundraising to maximize organic growth. The startup boasts of AI-powered software that matches organizations with qualified tech talent. It is also developing a suite of tools and resources designed to empower companies worldwide by connecting them with talented and ambitious African professionals. These include project management tools, seamless communication channels, time tracking, invoicing solutions, and customizable features tailored to each organisation’s needs. The startup claims to have hired over 100 individuals directly and supported over 100 dedicated clients. It recently expanded to Kigali, Rwanda, and plans to extend operations to several other African countries in 2024. Remoteli has its eyes on a Series A round later this year.
Read MoreExclusive: MTN, Globacom strike deal to settle ₦2 billion interconnection fee debt
MTN Nigeria and Globacom (Glo), two of Nigeria’s leading telcos, have ended a 15-year-long dispute over interconnection fees after MTN agreed to accept ₦2 billion to settle the interest payment instead of the ₦3 billion initially demanded, one person familiar with the negotiations told TechCabal. The interconnection debt on which those interests accrued was settled earlier, the same person said. The agreement follows efforts initiated by the Nigerian Communications Commission (NCC) at the behest of Glo. In January, Glo faced the threat of disconnection by MTN Nigeria and was given 21 days by the NCC to settle its debt or risk seeing its 61.5 million subscribers blocked from calling MTN lines. Exclusive: CBN targets six months for recertification of PoS terminals to fight fraud Glo’s interconnection fees debt grew over the year because it often paid substantially less than the bill it racked up. There have been multiple threats from MTN and Airtel Nigeria to disconnect Glo over the years, with MTN disconnecting Glo for five days in 2019. The recent disconnection process began in November 2022 due to an accumulated debt owed to MTN Nigeria by Glo, and MTN sought NCC’s approval for a disconnection, eventually receiving it in December 2023. A source at NCC said the new executive vice chairman plans to do things differently by ensuring all telecom operators comply with the market rules. *This is a developing story
Read MoreExclusive: CBN targets six months for recertification of PoS terminals to fight fraud
The Central Bank of Nigeria (CBN) plans to recertify all active POS terminals across the country, two sources familiar with the conversation told TechCabal. Part of that process will include an update to issuing terminal identification numbers (TID) — a unique eight-digit identifier — and collecting information such as BVN and tax identification numbers from POS agents. “This means you must request TID for each merchant with their details and wait for NIBSS to generate it before they can assign a terminal to that merchant,” one person familiar with the CBN’s plans said. Before now, mobile money operators like Opay or Palmpay typically requested TIDs in bulk to assign terminals quickly, but recertification will mean acquirers (banks and mobile money operators) have to register each TID separately. Registration requires the provision of an address, BVN or Tax Identification Number (TIN), business name, and F1 Code of the acquiring bank. The validation of a POS terminal delivered to a particular location would be handled by licenced Payment Terminal Service Providers (PTSPs) like Interswitch, ETOP, or CitiServe. “Banks will typically select and map each terminal registration with a particular PTSP that sets it up, deploys, and continues to support the merchant. PTSPs are also the bridge to terminal procurement from the OEM as banks/acquirers were not allowed to engage directly with OEM for procurement,” a product manager at a fintech startup said. While there is no timeline given by the CBN for the commencement of the recertification exercise, TechCabal learned that the Nigerian Interbank Settlement System (NIBSS) was mandated by the CBN to come up with a geofencing plan that ensures that terminals are not used outside the locations where they are registered. The terminals, once certified, can only be used in the location where it is deployed. If the POS terminal is used outside the address or location, NIBSS will disable it. While the timeline of recertification is unclear, mobile money agents will be asked to provide additional information as part of their KYC to enable them to operate Tier-3 accounts. A Tier-3 account allows transactions of up to ₦1 million, and customers can hold up to ₦1 billion in deposits. Before now, agents were allowed to operate any level of tiered accounts provided that proper KYC was done and necessary documentation was achieved. Tier-1 accounts are the most popular among agents because they require minimal documentation to open and operate. The recertification is likely to push agents towards operating more Tier-3 accounts. The plan also mandates the audit of agents and review of their processes by acquirer banks, Super Agents, and MMOs to align with the proposed recertification program and beyond. Mobile money operators who spoke to TechCabal on condition of anonymity said they are still trying to get clarification on some of the features of the certification exercise for POS terminals.
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Next Wave: The case for local car manufacturing in asset financing
Cet article est aussi disponible en français <!– In partnership with –> <!–TopBanner Join us for TechCabal Battlefield, Moonshot’s startup competition where you can showcase your startup idea to a global audience and an esteemed panel of judges and stand a chance to win up to 2.5 million naira in funding for your business! Click to register for TC Battlefield First Published 04 Febuary, 2024 Asset financing was meant to help the mobility sector progress, but it has encountered a few problems. Could local manufacturing re-balance the model? Owning a car should never have to be a luxury, especially if you hope to venture into the ride hailing business. But in Nigeria, car ownership is slowly getting out of reach. There are several factors responsible for this. Nigeria, with an estimated population of 200 million, does not produce cars. Per data from the nation’s statistics office, the country boasts over 12 million registered vehicles, of which almost 90% are imported, representing a motorisation rate of just 0.06 vehicles per person. Vehicle importation is denominated in dollars, a currency that Nigeria’s naira has weakened against in the last few months ever since President Bola Tinubu’s reforms. The naira is currently the worst performing currency in the world as it exchanges somewhere around ₦1,400–₦1,500 to the greenback. But that is not the only factor that makes owning a vehicle out of reach. Anyone hoping to import cars has to contend with cumbersome clearing processes at the ports and import duties placed on used and new vehicles. Vehicle importation may yet again suffer another hike after the Nigerian Customs Service adjusted the foreign exchange for tariffs and duties upwards by 42.5% to 1,356 per dollar, making importation another headache for prospective car owners. The direct impact of these policies are borne by ride hailing drivers who are quite unfortunate to be working in the automotive industry where a lot of their expenses— fuel and spare parts—are determined by whatever the value of the naira trades in comparison to the dollar. These drivers seem to be losing a battle even before they begin to put their cars on the road. Prior to now, drivers naturally opted for the hire purchase option which allows them to make a downpayment, and then, at their own pace, settle overtime. Most of these hire purchase moves occur in Nigeria amongst friends and family. For drivers unable to make any significant downpayment due to the fact that they have no capital, the asset financing model came in as a quick fix. Vehicle-financing firms like Moove and LagRide, the Lagos state ride hailing platform, set up a rent to own model to help drivers. The value of imported vehicles into Nigeria. Chart by Mobolaji Adebayo, TC Insights Moove partnered with ride hailing startups like Uber to offer Suzuki Alto or S-Presso to drivers. Although the Suzuki vehicles used in the Uber Go category typically sell for $13,500 (₦12.1 million) in Ghana and are sold for $21,500 (₦19.2 million) in Nigeria by Suzuki, Moove rents them out to the drivers for $25,450 (₦22.8 million). At a daily remittance rate of ₦9,400 ($10.43), it would take a driver 41 months (three years and five months) to complete their payments. LagRide offers a similar model which allows drivers to make a downpayment of ₦700,000 ($776.49) for brand-new GAC vehicles (SUV and Sedan options). Drivers spread the rest of the payments across four years by making daily payments of ₦8,900 ($9.87). However, the asset financing scheme hasn’t had a smooth run. Asides from safety reasons where the Suzuki S-Presso model reportedly fared poorly in at least one crash safety test, drivers have also claimed the offered cars were overpriced and came with a difficult payment structure. In 2023, some of the complaints were reported in local media, and some of them are referenced here and here. To be clear, the asset financing model is not an exceptionally flawed model. People take car loans or loans to fund some purchases like phones, mortgages or vehicles in other parts of the world. Besides, the asset financing model is offering new car models instead of second-hand cars that local hire purchase models usually parade. Drivers disagree with this model, as they worry that the car’s value (albeit newly purchased) may depreciate at the end of a long repayment period which is usually 3–4 years on average. Nigerians are not really used to buying things on credit; they’d rather save to own. This author argues that Nigeria runs a largely cash-driven system where people are expected to have cash for every transaction as credit is unavailable. A source at M-Kopa told me Kenyans are different, as they tend to favour installmental payments more. This article here lends credence to that fact. 2023 was a watershed year for African technology startups. It was the year Instadeep got acquired by BioNTech for $682 million in Africa’s largest-ever acquisition deal. It was the year tech startups in Africa shed more than 1,500 jobs in industry-wide layoffs as 15 startups which raised $214 million in funding shut down. It was the year African startups raised $2.748 billion across 500 deals. And more! It will be remembered as the year that reset the trajectory (hopefully) for the better. Download the full report from our research team at TC Insights to learn more. Can local car manufacturing companies help? Can local manufacturing sort the asset financing problem? My colleague Abraham Augustine states that building the case for local manufacturing is not easy. To be fair, cars are only assembled in Nigeria by some local players like Innoson and Ford. However there are few newly assembled Nigerian car brands that could lower the long repayment plan offered by vehicle financing firms. An Innoson sedan car known as Innoson Carris is quite affordable, between ₦4.5 million to 6 million, lower in price than Suzuki and GAC alternatives. Three years ago, Innoson offered its IVM Caris, IVM Smart, IVM Kenga, and IVM Connect at a starting
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