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Banks In Nigeria Will No Longer Require Separate License To Operate Mobile Banking

July 16, 2019

Whether it is to reach for more financial inclusion or to open up the heavily regulated Nigerian banking sector, Nigeria’s apex bank is already facing the heat of global digital disruption in the financial services sector. From now on, banks in Nigeria would no longer be required to have a separate license to operate a mobile banking app.

Here Is Why This Change Is Significant

Before now, to operate a mobile money service in Nigeria, the operator shall, among other things be :
(a) Be licensed by the CBN on such terms and conditions as the Central Bank shall desire.

Such terms and conditions usually involve the presentation of evidence of the formation of the Consortium that will deploy the project (Certificate of Incorporation)
The Consortium’s profile and functional contact e-mails and telephone numbers
Securities features that will be put in place
3 years Financial projections for the company
Draft agreements with the following: a. Technical Partners b. Participating banks c. Switching company/(s) 24 d. Merchants e. Telcos f. Any other party
Tax Clearance Certificate for three (3) years of each party in the Consortium
Project Deployment Plan (time, location, operation, etc.)
Payment of non-refundable Application fee of N100,000.00 (One hundred thousand naira) made payable to the CBN
Evidence of Shareholders’ Fund of N2 billion before a license is issued
This document, and may be reviewed from time to time.
Be issued a unique Scheme Code by the NIBSS for managing interoperability.

But all that is about to change

Going forward, once the Central Bank of Nigeria is satisfied that your current license to provide financial services in Nigeria suffices, the need to procure an additional license for your business would be obviated.

“You do not need authorisation from the CBN to go into Wallet services or mobile money schemes. All you need is to notify the CBN your current license suffix,” CBN Department of Banking and Payment System said at the First Bank cross border seminar for Banking and Telecom Regulators from sub-Saharan Africa.

Banks Are Being Reluctant Investing In Mobile Money Because The Heavy Regulations Don’t Make Any Case For Profitability
Many institutions in Nigeria are using prepaid payment cards and the mobile phone as a means of providing financial services to the previously financially excluded.
While not a bank account in the traditional sense, mobile wallets, and prepaid card products provide individuals with a safe electronic store of value and electronically initiated and accepted payment transactions and funds transfers.
In 2015, the CBN published both a Regulatory Framework for Mobile Money Services in Nigeria and Guidelines on Mobile Money Services.
The Regulatory Framework makes provision for only two specific models, namely bank-led, or non-bank led (a corporate organization duly licensed by the CBN).
Mobile money was one of the major segments of the Nigeria e-payment ecosystem primed by the CBN to drive its financial inclusion vision, in which 80 percent of Nigerians will be established in the national banking system by 2020.
However, mobile money operators (MMOs) have had little success in supporting the country’s financial inclusion targets.
This is mostly due to a lack of proper understanding of the conditions of their licenses, limited funds, poor infrastructure in rural areas, and limited customer access due to limited agent network rollouts.
Most of the licensed Mobile Money Operators in Nigeria are believed to have remained inactive and many have yet to officially commence payment platform operations.
Consequently, the CBN took the decision to raise the capital requirements for licenses from N500 million to N1 billion at the end of December 2017 and now to N2 billion, with a caveat that any operator that fails to meet the 1 July 2018 deadline for the new capital requirements will have its licenses revoked, further reducing participation.
The implication of these for Nigerian banks is that from now on, they would no longer be required to have a separate license to operate a mobile banking app.
However, on the other hand, the situation of non-bank led organizations involved in mobile operation remain heavily uncertain, as they may be required to still apply for and obtain licenses.

Cold Feet On Digital Currencies

Expecting Nigeria’s apex bank to adopt cryptocurrencies? This still remains a dream.

The apex bank’s position on the adoption of digital currencies still remains that:

“We [CBN] have not made up our mind on what steps to take but I am not sure or believe that the CBN will ever go crypto.

“We know what they are doing in Sweden and China. We are not running on the same parameter and so based on financial inclusion, adopting digital currency will mean a number of our population will be excluded.”

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

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Prioritize Maintenance, Repair, and Operations (MRO) strategy to manage costs for your company

July 14, 2019

By Brian Andrew

It does not matter if times are good or bad – waste is never welcome at any proactive business. Business is primarily driven by profit and efficiency, and waste is an attack on both. But many businesses, particularly among manufacturers, overlook a major cost hidden among their operations: that of MRO (maintenance, repair, and operations) procurement.

MRO or indirect procurement concerns those many small parts needed to keep equipment running. It’s fundamentally a supply chain/procurement discipline, but not often considered as a cost centre. Individual MRO items – small parts in big machines such as light bulbs, safety switches, connectors, push buttons, power supplies, etc. – tend to be inexpensive and not attract much attention. Yet as a pool, MRO procurement can represent a significant purchase base for companies.

The days of MRO being overlooked are numbered. According to a survey conducted by RS Components and UK-based CIPS (the Chartered Institute of Procurement and Supply), the focus is on to reduce MRO spend. Over half cited pressure on operation budgets or reducing inventory costs, followed by asset performance (42%) and continuous improvement (38%) as motivations.

This message is less apparent in the South African market, but given the current tough economic conditions, it’s well worth discussing. What can local businesses do to curb their MRO spend?

Taming MRO

Many businesses underestimate the amount they spend on MRO products over the course of a year. They also rarely understand the significant hidden costs associated with MRO procurement. In reality, the overall process of procuring a part can be double that of the actual part. Our research shows that an organization spends £2 on the MRO procurement process for every £1 spent on the MRO product itself. Bigger footprints such as multiple locations amplify this effect. South African patterns are unlikely to buck the trend.

What causes such a poor ratio? It may be because too much time is being spent on finding the cheapest product, or using the wrong strategies, for example, category management and contracts negotiated on price alone to manage unplanned indirect spend. This may negate any actual savings made as extra processes and delays accrue costs.

Another reason is that MRO purchases often happen under the radar and tend to ignore official procurement channels. It may seem faster for an engineer on the floor to quickly acquire a spare part and get operations running again, using a convenient supplier. But amplify this over many instances and the purchases can compound into astounding inefficiencies.

Every company can meet this challenge with a good MRO strategy. It requires a new way of thinking and saving: a successful MRO strategy relies on all stakeholders involved in indirect procurement to collaborate. It must focus on improving the whole process of buying parts, involving stakeholders such as engineering, operations and finance functions, with buy-in at the c-suite level.

The strategy itself should aim for several objectives, which may include:

Reducing ‘maverick’ spend, where the user selects vendors outside the agreed supplier framework.

Consolidating suppliers so procurers can make quick decisions without having to consider the bigger MRO picture.

Procurement teams must communicate with users to understand what they need – this ensures suppliers with appropriate catalogues are chosen.

Deploying an integrated eProcurement system to streamline ordering processes, which in turn will help users change their own procurement habits.

Reducing items held in storage by only keeping critical spares and the items that will be used on a regular basis and then using suppliers that deliver on demand. This frees up working capital and space in your premises.

Without MRO, production can grind to a halt. A small part can stop everything for practical, health & safety, compliance or many other reasons. But sometimes the can-do attitude to keep lines going can result in inefficient MRO procurement choices.

Don’t disturb that spirit on the work floor that keeps your business moving. Instead, establish an MRO strategy that compliments proactive workforce attitudes while establishing a framework which pursues efficiency and significant cost savings. Partner with a supplier who can develop these solutions with you and support you on the journey of taming your MRO procurement.

By Brian Andrew, is Managing Director South and Sub-Saharan Africa at RS Components.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.