Lagos, Nigeria: FSDH Merchant Bank in partnership with the International Finance Corporation (IFC) and WEAV Capital have unveiled 15 female-led Nigerian tech startups selected to participate in the first cohort of the Female Founders Growth Programme, an Investment Readiness Accelerator programme aimed at empowering female founders to accelerate growth in their companies by making them ready to secure investment capital and funding opportunities.
The selected startups will participate in a 7-week Investment readiness programme, from October to November 2023, that includes intensive workshops designed to enhance their business models and refine fundraising strategies. They will also receive comprehensive training covering financial management, cash flow optimization, and preparation for both equity and debt funding. Additionally, the startups will have access to one-on-one business coaching sessions with experts in their field, consultations with seasoned subject matter experts from renowned global institutions and will be given an exclusive opportunity to participate in an Investor Pitch Day event aimed at presenting their companies for potential investments and the chance to win a non-equity prize of $10,000.
The Female Founders Growth Programme is designed for female tech founders who have successfully developed a Minimum Viable Product and gained traction, offering solutions to critical challenges within a sector with significant growth potential in the local socio-economic context. This first cohort is set to benefit from the collective wisdom of accomplished industry experts and successful entrepreneurs, all with a proven track record of establishing and operating thriving tech startups.
Following a thorough and highly competitive selection process, the selected 15 female-led startups who represent an exceptional group of innovators with the potential to make remarkable strides in the tech industry, include:
A new administration means the introduction of twists and turns. Nigeria stands at a crucial juncture in its journey towards prosperity. With the macroeconomic outlook for Q3 2023, it is evident that the nation’s path to growth and stability is paved with both challenges and opportunities. We have put together this summary based on our research analysts’ report for Q3-2023.
In the second quarter of 2023, Nigeria’s real GDP registered a modest growth of 2.5%. This growth, while positive, remains fragile and was largely driven by the non-oil sector. In tandem with this, inflation rates have surged, soaring to 25.8% in August 2023, directly attributed to the fuel subsidy removal.
Why did this happen?
Since the removal of this subsidy, inflation has inched upwards by 3.4 percentage points, with food inflation accelerating even faster to reach 29.3% in August. The future outlook indicates that further increases in petrol and diesel prices, along with exchange rate fluctuations, are likely to exert additional upward pressure on inflation in the months to come.
Foreign Exchange Reforms: A Glimpse into the Future
Since President Tinubu’s assumption of office, the government has displayed a commendable commitment to implementing foreign exchange reforms. Several significant policy shifts have taken place:
Removal of FX Peg: The government replaced the static FX peg with a market-reflective rate for government transactions.
Willing Buyer, Willing Seller Framework: The Central Bank of Nigeria (CBN) reintroduced this framework while maintaining the rules of the Investors and Exporters (I&E) window.
Operational Guidelines for BDCs: On August 17, 2023, the CBN released operational guidelines for Bureau de Change (BDCs), fixing the spread on forex transactions.
Analyst Views on FX and Reserves
Despite these reforms, forex inflows into Nigeria are trailing, and the demand for foreign currency remains high, putting pressure on the exchange rate. Limited access to FX in the official market has incentivized transactions in the black market.
Nevertheless, the removal of the peg on the official exchange rate signals a commitment to exchange rate reforms. To win back investor confidence, the government must focus on curtailing oil theft and providing a clear roadmap to improve FX inflows and management.
Fiscal Policy and Its Impact
The removal of fuel subsidy and FX reforms have significantly bolstered government finances. Inflows into the Federation Account Allocation Committee (FAAC) account have surged, potentially improving fiscal deficit and debt sustainability ratios. However, a return of subsidies could raise concerns among private sector players and potential investors in the oil and gas industry.
The government’s effectiveness in utilizing these fiscal gains is critical. Prioritizing capital projects, education, and healthcare sectors in the budget, along with addressing the high cost of governance, will be crucial steps for Nigeria’s sustainable growth.
Key Initiatives and Policies
Since June 2023, the government has taken noteworthy initiatives, such as suspending excise taxes, removing fuel subsidies, and reducing the Cash Reserve Ratio (CRR) for merchant banks. These steps signify a concerted effort to boost the economy.
Charting a Course for Progress
Beyond FX reforms, Nigeria’s government must focus on rapid expansion of the private sector, improve efficiency, enhance institutional coordination, and implement social support measures. These actions will steer the nation toward a brighter economic future.
Conclusion
As Nigeria navigates through economic challenges, the road to prosperity lies in implementing thoughtful policies, fostering private sector growth, enhancing efficiency, and ensuring social inclusion. The path may be challenging, but with strategic planning and steadfast commitment, the future holds great promise for Nigeria’s economy. These strategies, meticulously implemented, promise a future where economic empowerment is synonymous with national progress.
For a comprehensive analysis of Q3 2023 and to explore the full report, click here.
Celebrating Women Empowerment and Growth at the FSDH-EDC Women Business Impact Programme 2023 Cohort Graduation.
FSDH Merchant Bank has yet again demonstrated its commitment to supporting entrepreneurship and empowering women-owned/led businesses.
On Friday 18th of August 2023, 25 women graduated from the first cohort of the Women Business Impact Programme, an initiative of the Women Banking desk of the FSDH Merchant Bank. This programme was put together in partnership with the Enterprise Development Centre of the Lagos Business School, for female entrepreneurs. The programme featured 6 weeks of intensive training on different aspects of entrepreneurship and business management from the world-class faculty at the Enterprise Development Centre (EDC). From operations to marketing, human resources to business leadership, the programme provided the participants with a holistic understanding of what it takes to thrive in today’s dynamic business environment.
The training went beyond the theoretical; it delved into practical applications with hands-on exercises, case studies, and interactive sessions that encouraged active participation and peer learning. To smoothen the application of the principles learnt, the programme facilitated one-on-one business advisory sessions, tailored to address the unique challenges and opportunities faced by each participant in their businesses.
The graduation ceremony was graced by Bukola Smith, MD/CEO FSDH, and Stella-Marie Omogbai, Executive Director, Corporate Banking at FSDH Merchant Bank. They highlighted the institution’s resolute commitment to empowering women and propelling their businesses to new heights.
In their comments, the MD and ED both reiterated FSDH’s enduring dedication to women-owned businesses. Their statements emphasized FSDH’s commitment to fostering gender equality, championing diversity, and supporting the growth of women-led enterprises. They also announced that this programme will become an annual fixture, ensuring a consistent platform for women entrepreneurs to access knowledge, empowerment, and networking opportunities.
The General Manager, Enterprise Development Centre, Olawale Anifosowe, also present at the graduation, expressed heartfelt gratitude to FSDH Merchant Bank for their unwavering commitment to empowering women in business. He eagerly anticipates the continued partnership, echoing his anticipation for the next cohort as well as other initiatives such as this.
The FSDH-EDC Women Business Impact Programme was more than just a series of classes; it was a journey of empowerment, resilience, and breaking barriers. Through dedicated effort and a spirit of collaboration, the graduates demonstrated their readiness to face challenges head-on, seize opportunities, and create a positive impact in their industries.
As these women step into the next phase of their entrepreneurial journeys, they carry not only the insights gained but also a profound sense of empowerment. Armed with knowledge, connections, and renewed confidence, these women are poised to be catalysts for change, shattering barriers, driving innovation, and contributing to economic growth.
FSDH Merchant Bank remains committed to fostering gender equality, diversity, and the growth of women-owned businesses. As we celebrate the achievements of these remarkable women, we look forward to witnessing the incredible journeys they are about to embark upon. Their stories of success will serve as inspiration for many more to come, and their contributions will continue to enrich the business landscape.
For updates on programmes like this, follow us on social media.
In time past, the world of Science, Technology, Engineering and Mathematics (STEM) was largely stereotyped in favour of the male gender. However, as we have experienced recently, times are changing, as diverse bodies – government and non-government alike – have taken on the responsibility to bridge this gap. Now, more females show interests, taking on roles in these areas. But to ensure that this gap is effectively bridged, more work still needs to be done, especially regarding access to funding, education and opportunities, for women to be able to explore these areas. FSDH Merchant Bank recently contributed its quota to bridging this gap.
Showing our commitment to enriching the lives of our community and upholding one of our core CSR pillars-empowerment of women and girls, we contributed to the impactful work being done by the Danne Institute through the TechPower Initiative, empowering young girls in STEM through the TechPower Innovators Challenge.
The TechPower Innovators Challenge held on Friday, 21st of July 2023 at the prestigous Pan Atlantic University. The event showcased the immense potential of JSS1 female students from Iwerekun Community Junior Secondary School, Lakowe, in STEM.
By being part of this initiative, we contributed to giving an early exposure to the young girls of Iwerekun Community Secondary School to the world of Science and Technology, in the hope of positively influencing their career choices in the future.
During the event, the participants had the opportunity to experiment with electronics, coding, and 3D printing. They were grouped into four, with each team tasked to work on a unique project. The winner, Group 2, created a traffic light with sensor to detect children at a zebra crossing. These hands-on experiences allowed the girls to explore their creativity and problem-solving skills, fostering a deeper understanding of how technology can be harnessed to shape the world around them. By exposing the students to various aspects of STEM, the challenge sought to ignite a passion for these fields at an early age. Through interactive and engaging activities, the girls were encouraged to think critically, embrace curiosity, and develop a love for learning.
The challenge also focused on nurturing skills such as creative thinking and collaboration. The participants worked together in teams, learning the value of teamwork and how collective efforts can lead to groundbreaking solutions.
The event was a resounding success, leaving a lasting impact on all participants and attendees. Witnessing the enthusiasm, ingenuity, and determination displayed by the young innovators was truly inspiring and we were honoured to have been a part of it.
Through the TechPower event, and more like this, we are contributing to challenging societal norms and stereotypes, inspiring a new generation of female innovators and pioneers. We take pride in playing a role in nurturing these bright minds and supporting their journey towards a future that embraces diversity and equal opportunities in the realm of technology and innovation. We understand the significance of empowering young girls in STEM, and through sponsorship of initiatives like this, we are not just investing in their dreams and aspirations, we are not just shaping individual lives but contributing to the progress and prosperity of society as a whole. Together, we will continue to contribute to fostering diversity and inclusivity in the tech world, paving the way for a brighter and more equitable future.
Until January of 2012, it appeared as though many Nigerians hadn’t heard the word subsidy.
Subsidi, subsideen, susidee… all these and more were mispronunciations for the word – subsidy in 2012, a time when the word became very common in Nigeria. Even the average local trader had an idea of what this “big English word” meant.
In the early hours of January 1, 2012, Pres. Goodluck Jonathan announced the removal of subsidy from PMS, which sold for N65 a litre – with subsidy – would go for N141. The declaration was met with staunch opposition from aggrieved Nigerians who took to the streets, protesting. Under the banner of #OccupyNigeria, they protested against massive corruption, the protesters led by Civil society group, Enough is Enough Nigeria had one ask: What will be the fate of the average Nigerian if the pump price of fuel skyrocketed, and the corresponding cost of governance remained high with extreme corrupt practices. Eleven years and two presidents later, we are right back to the topic of subsidy removal.
Before we go on, let’s briefly explain how fuel subsidy works.
Although the largest oil producing nation in Africa, Nigeria still must import refined fuel from Europe. The landing cost of imported fuel includes the cost of purchasing the product, freight charges, insurance, and other associated expenses. The cost of PMS can fluctuate due to global oil prices, exchange rates, and shipping costs. Considering the heavy cost incurred on getting the product to Nigerians, the cost of PMS should sell at a price higher than the previous N187/litre. Without the subsidy, the cost of living would have been high – food, transport, housing and general cost of living would have been astronomical.
In a bid to lighten this burden, the federal government of Nigeria chose to bear the bulk of this financial burden by subsidizing the cost of fuel. This step was taken by the Olusegun Obasanjo tenure. However, years down the line, the fuel subsidy system in Nigeria has faced challenges such as corruption, mismanagement, and lack of transparency. These issues have resulted in controversies, calls for reforms, and debates about the sustainability of the subsidy program.
The Effects of the Fuel Subsidy Removal
President Bola Ahmed Tinubu, in his inaugural speech on May 29th, 2023, announced that his administration will no longer support the fuel subsidy regime. Although, this was supposed to take effect from July 1st, 2023, Nigerians rushed into a frenzy by the morning after, and were met with hike in cost of transportation, closed filling stations and longer queues at filling stations that chose to sell petrol.
Although, the immediate impact of the subsidy removal is already unfolding, this does not rule out the upside to the no-subsidy regime. We have highlighted both positive and negative impacts of the no-subsidy regime below.
The Positives
Government Expenditure: According to experts, the Nigerian government spends more than ₦10billion on fuel subsidy on an annual basis for the last three years. In theory, the removal of the fuel subsidy implies that Nigeria now has savings of about ₦3trillion to reallocate same to social welfare programmes that will cushion the effects of the subsidy removal on the more vulnerable groups affected by the high inflation that can be attributed to the removal of the subsidy. However, the removal of the fuel subsidy will not lead to additional resources for other developmental activities. One of the reasons why it became imperative to remove the fuel subsidy was that Nigeria has gotten to such high level of debt that it is simply unsustainable.
Reduction of Corruption and Mismanagement: Fuel subsidies have been marred by corruption and mismanagement in Nigeria. The removal of subsidies can help mitigate these issues by reducing opportunities for corrupt practices and creating an environment of greater transparency. It can encourage reforms and better governance practices within the petroleum sector.
Investment in Domestic Refining Capacity: With subsidy removal, there is an incentive to invest in domestic refining capacity. Nigeria, as an oil-producing country, has traditionally relied on imported refined petroleum products due to insufficient refining capacity. Removing subsidies can encourage investments in refineries and the development of a robust domestic refining sector, leading to increased self-sufficiency in meeting the country’s fuel demand. With the newly commissioned Dangote refinery and other investments in the petroleum sector, the government can achieve this.
Negative Impacts
Public Backlash and Protests: Historically, the removal of fuel subsidies in Nigeria has been met with public resistance, as seen in the protests that followed the attempted removal in 2012. The removal of subsidies can be seen as a burden on the population, particularly if alternative measures are not implemented to mitigate the impact on vulnerable groups.
Increased Fuel Prices: The immediate impact of subsidy removal is a significant increase in fuel prices. Without the government subsidizing the cost, the retail price of fuel would likely rise to reflect the actual market price. This increase can lead to higher transportation costs, which is already the case in the past days. This will have a cascading effect on the prices of goods and services across various sectors.
Inflationary Pressure: As fuel prices rise, transportation costs increase, impacting the overall cost of production and distribution. This can lead to inflationary pressure in the economy, causing the prices of goods and services to rise. Inflation can erode purchasing power and affect the living standards of the general population.
Impact on Cost of Living: Higher fuel prices can directly affect the cost of living for individuals and households. Transportation costs, including commuting expenses and the prices of goods that require transportation, are likely to increase. This can disproportionately impact lower-income households who spend a larger portion of their income on basic necessities.
What Should Government Do?
Over 60 million litres of fuel are consumed daily by Nigerians. What this means is that there are businesses and livelihoods tied to the usage of fuel and if not properly managed, this single decision to remove subsidy could be chaotic for Nigeria in the short term. To minimize the potential negative impact of the fuel subsidy removal on its citizens, the Nigerian government can take the following measures:
For Individuals
Arguably, the worst hit stakeholders here are Nigerians – their businesses and day-to-day life. It is important that government engage in effective communication with the public, clearly explaining the reasons behind subsidy removal and the steps being taken to mitigate its impact. This can help manage expectations, build trust, and foster understanding among the populace.
Also, government should increase investment in public transportation infrastructure and services to provide affordable and efficient alternatives to private vehicles. This can be in form of alternative transport services – railways, waterways etc., without having to overly rely on motor vehicles and current road networks. This will help reduce congestion on roads, mitigate the impact of higher fuel prices on transportation costs and reduce congestion on roads, and manage inflationary pressure on cost of goods.
Furthermore, government should consider a gradual phasing-out approach for subsidy removal rather than an abrupt removal. This allows for a smoother transition, giving individuals time to adjust to the new pricing structure and explore alternative energy options.
For Businesses
Government can provide targeted support programs and incentives for small and medium-sized businesses that may be disproportionately affected by the removal of fuel subsidy. This can include access to affordable credit, tax incentives, and capacity-building programs to enhance their competitiveness and resilience.
Second is that government should promote energy efficiency practices among businesses to manage fuel consumption and lower operational costs. Additionally, government can also incentivize the adoption of renewable energy sources by providing financial support, tax breaks, or favourable policies for businesses investing in renewable energy technologies.
Also, government should identify sectors that are particularly vulnerable to the removal of fuel subsidy and design targeted support measures for them. This can include industries heavily reliant on transportation, such as logistics, agriculture, manufacturing, and retail. Support may involve tax incentives, grants, or sector-specific subsidies to help businesses cope with increased operating costs.
Finally, consultation and stakeholder engagement. It is important for government to engage in a consultative process with business associations, chambers of commerce, and industry representatives to understand the specific challenges and concerns of businesses. This collaboration can inform policy decisions, ensure effective implementation, and foster a supportive business environment.
These are steps that can be adopted by the Nigerian government to ensure a smooth transitioning and an engaging populace.
The jury is still out on the matter – Is the fuel subsidy removal indeed renewed hope for Nigerians? Time will tell.
One thing we’re sure of is that the removal of fuel subsidy is indeed an important move that the Nigerian government has taken first, to tackle the corrupt practices associated with the subsidy regime and second, to make the best use of its budget. The second will give room for government to channel the money that would have been spent on fuel subsidy to other key areas such as healthcare, agriculture, transportation, etc. However, to mitigate against potential negative impacts and ensure a smoother transition, the government should consider careful planning, effective communication, and targeted interventions.
Are you thinking of moving out of rented accommodation to your own home?
Are you worried about how much money you will likely spend getting a home?
Do you know that you can get a decent home without the fear of becoming broke?
Recent research shows that Nigeria’s homeownership rate (25%) is low when compared to countries like Brazil (74 percent), Kenya (75 percent), South Africa (70 percent), and Indonesia (84 percent). Several factors account for this, chief amongst them is the high cost of buying one.Â
In addressing this, federal and state governments of Nigeria are providing interventions for low-cost housing in Nigeria. Over the years, different schemes have been put in place to assist individuals looking to become homeowners to achieve their dreams without breaking the bank. Some of these schemes include the Federal Mortgage Bank, LBIC (Lagos Building Investment Company), and LSDPC (Lagos State Development and Property Corporation) amongst several other initiatives. Â
Also, for working professionals, there is also the option of purchasing a home using your retirement savings fund (RSA). Mortgage financing through your pension contribution can provide a viable option for you if you’re a retiree or an individual with a fixed income and want to own a home. This is what this piece will focus on.
Today, many Nigerians are unaware that they can get a mortgage using 25% of their Pension Funds Account balance. The 2014 Pension Reform Act provides for holders of Retirement Savings Accounts to be able to purchase a house with their retirement funds. As one of the government-backed mortgage programs, this is expressed in the National Pension Commission (PENCOM) approved guidelines on accessing Retirement Savings Account (RSA) balance for payment of equity contributions for residential mortgages by RSA holders. Â
The big question then is, “How do I get started?”
We’ve simplified the process to help you get a home without having to break the bank.
Step 1: Reach out to your Pension Fund Administrator (PFA) to confirm if you’re eligible. If eligible, you will be given a checklist to guide you and your chosen mortgage lender (usually a financial institution or company that provides loans to individuals or businesses for the purpose of purchasing or refinancing real estate properties).
Also, remember to request for your Retirement Savings Account statement when you reach out to your PFA.
Step 2: Identify your choice of home and obtain an offer letter showing that you can purchase the home.
Step 3: Reach out to a qualified mortgage lender with the endorsed copy of your RSA statement and proceed to apply for a mortgage.
Step 4: Your mortgage lender approves your application and forwards a mortgage offer letter and other documents to your PFA.
Step 5: Send an application to your PFA requesting to use a maximum of 25% of your RSA balance as equity contribution to the mortgage. After this, your PFA forwards your application to PENCOM for approval.
Step 6: Once approved, your PFA notifies the mortgage lender and finalizes the documentation required to remit the approved equity contribution.Â
Step 7: When this is finalized, your PFA will instruct its Pension Fund Custodian to remit the approved amount to your account with the Mortgage Lender within two working days.
By using your pension fund contribution to secure a mortgage, you can have access to the financial resources you need to purchase a home without having to deplete your savings. However, it is important to carefully consider the terms and conditions of the mortgage and ensure that the repayment schedule is manageable within your budget. Working with a financial advisor, and a reputable mortgage lender can help you navigate the process and make informed decisions. With careful planning and responsible financial management, mortgage financing through pension can help you achieve your dream of homeownership without breaking the bank.
Open banking is a system that allows banks and financial institutions to share financial information securely with each other through technology. This sharing of information can help improve financial services and products available to customers. Open banking allows third-party access to financial information by utilizing application programming interfaces (APIs). The game-changer preceding this is the collection and centralization of customer data through the BVN – Bank verification number introduced in February 2014, enabling all financial data and biometrics details for each customer to be domiciled and updated in a CBN-managed data infrastructure. As the saying goes, ‘Data is the new oil’, with the potential access to data within regulatory controls, Open banking is projected to significantly transform the way Nigerian businesses manage their finances, providing them with greater choice, flexibility, and control over their financial data.
Overview of Open Banking in Nigeria
Open Banking was adopted in Nigeria in 2017, making Nigeria the first African country to do this. However, on the 7th of March 2023, the Central Bank of Nigeria approved the operational guidelines to open banking in Nigeria ushering in an open banking regime in Nigeria. The operational guidelines provide a framework of procedures that dictate the ways in which banks and other financial institutions can access and handle customer data.
Since it was introduced, open banking has increased collaboration in the finance industry. The adoption of open banking amongst other factors accounts for the rise of fintechs in Nigeria, and as at today, there are over 200 fintech companies in Nigeria, focusing on different aspects of financial services across payments, collections, lending, digital banking amongst others. This number is bound to increase year on year, as the number of ‘bank-able’ Nigerians increase.
Also, open banking has improved financial inclusion in Nigeria, making financial services more accessible to people who were previously excluded from traditional banking services. With open banking, experts believe that the security of banking and financial institutions will be more optimal as the Central Bank of Nigeria (CBN) now requires banks and fintech companies to use secure APIs (application programming interfaces) to share customer data. This can help prevent data breaches and fraud.
As we usher in the Open Banking era, here are a few benefits:
Conclusion
With the introduction of the guidelines for open banking, financial institutions and all stakeholders now have a framework that guides collaboration, innovation, and provision of more value to customers. By embracing the principles of transparency, security, and data privacy, open banking can foster a more competitive and customer-centric banking landscape. As we move towards a more connected and digital world, the guidelines for open banking will continue to evolve and shape the future of finance in Nigeria.
Nigeria stands at yet another pivotal moment in its history as on the 29th of May 2023, a new administration was officially handed the wheels to steer this ship – Nigeria to success. We dare say, the new administration laid out an ambitious roadmap for the nation’s future. Bola Ahmed Tinubu will effectively become Nigeria’s fifth president since Nigeria regained democracy in 1999. His inauguration has been met with mixed feelings because over two terms, his predecessor, President Muhammadu Buhari failed in his core agenda to tackle corruption, and the administration was highlighted by insecurity and slow-paced economic growth, severe economic crunch, FX instability, inflation, and social challenges.
It is the hope of Nigerians at home and abroad, and all other well-wishers in the international community that the Tinubu/Shettima administration sticks to its agenda for the nation. These plans, carefully crafted to address key sectors of the economy, aim to propel Nigeria towards sustained economic growth, job creation, poverty reduction, and social development.
In this piece, we will be sharing our experts’ view on the most critical areas of priority for the economy viz-a-viz the administration’s proposed economic development strategies.
The Tinubu/Shettima’s Plans for Nigeria
The new administration’s plans for Nigeria span four objectives viz:
At the heart of the administration’s plans lies the objective of achieving a remarkable average real GDP growth rate of 10%. By implementing comprehensive economic reforms, attracting foreign investments, and fostering an enabling business environment, the administration aims to unleash the full potential of Nigeria’s economy. Nigeria’s new leaders believe that this will ignite the engine of prosperity for the country and contribute gradually to achieving its planned GDP growth rate of 10%.
Recognizing the urgent need to tackle unemployment, the administration aims to drive down the number of unemployed individuals from 21.5 million in 2022 to 11.9 million in 2026. By investing in key sectors such as agriculture, manufacturing, and infrastructure, and promoting entrepreneurship and skill development programs, the administration intends to create a conducive environment for job growth and economic empowerment.
To ensure a stronger and stable Naira, the administration plans to review the current exchange rate regime. This step is crucial for attracting foreign direct investment, encouraging export competitiveness, and maintaining price stability in the economy. Through a careful assessment of monetary policies and collaboration with the Central Bank of Nigeria (CBN), the the new administration aims to establish a favourable exchange rate system which will contribute to building confidence in the Naira.
To realize its economic goals, the administration recognizes the importance of attracting substantial investments into key sectors of the economy. By providing incentives for both local and international investors, implementing robust regulatory frameworks, and improving infrastructure, Nigeria will become an attractive investment destination. This influx of foreign-direct investment and better utilization of local capital will stimulate growth, create jobs, and foster technological advancement.
To alleviate poverty and strengthen social protection, the administration plans to expand the current National Social Investment Programme. Also, by increasing access to affordable housing, improving healthcare services, and enhancing social welfare programs, the government aims to uplift the lives of the most vulnerable Nigerians and promote inclusive development.
To achieve the objectives, the administration has outlined several key policies across various sectors to achieve the above-stated objectives. Here are some highlights:
1. Agriculture Policy: This administration intends to establish grain reserves, commodity boards to regulate crop prices, and expand access to finance for farmers. These initiatives will boost food security, enhance agricultural productivity, and support the growth of agribusinesses.
2. Education Policy: The administration will invest in education infrastructure, develop accreditation standards for institutions, and introduce a student loan regime. These measures will improve the quality of education and increase access to learning opportunities for all Nigerians.
3. Power Industry: Expanding generation and transmission capacities, implementing a renewable energy plan, and channeling gas resources to power generation are key steps toward achieving reliable and sustainable power supply.
4. Oil & Gas Industry: Measures such as protecting oil infrastructure, incentivizing indigenous participation, implementing the Nigeria Gas Master Plan, and phasing out fuel subsidies will help optimize the potential of Nigeria’s hydrocarbon sector while ensuring socio-economic benefits for its citizens.
5. Transportation: The administration aims to develop a nationwide highway system, review railway legislation, utilize multiple seaports, and enhance waterway transportation. These initiatives will improve connectivity, facilitate trade, and boost economic growth.
6. Security: By adopting an intelligence-driven security approach, redefining military doctrine, and establishing an integrated identity database, the administration seeks to enhance national security and maintain peace and stability.
Our Experts’ Position on the Economic Plans of the New Administration
Considering the state of the Nigerian economy, and our antecedent as a nation, experts have highlighted four key priority areas that the new administration should focus on.
To read more on our experts’ position and projection for the first year of the Tinubu/Shettima administration, see here.
For us, we believe that these economic priorities are the blueprint, for the next four or more years, of the economic administration of Nigeria, and these early wins will play a major role in ensuring the sustained success of the nation’s economy. The Tinubu/Shettima’s Administration has presented a vision of economic prosperity, social development, and inclusive growth. With strong focus and particular attention to some critical sectors such as agriculture, education, power, transportation, and security, the administration aims to unlock Nigeria’s vast potential and create a brighter future for its citizens. However, the success of the administration’s plans lies in the effective implementation of their strategies and the collaboration of all stakeholders, including the government, private sector, civil society, the Nigerian people, and even international forces.
May Nigeria succeed!
Artificial Intelligence (AI) has emerged as a transformative force, switching up the operations and services of financial institutions worldwide, tremendously. Recently, the visit of the OpenAI CEO – Sam Altman to Nigeria further buttresses the impact of AI in driving innovation and its adoption, particularly in our climes. This impact is also felt in Nigeria’s financial sector as AI is playing a great role in promoting efficiency, expanding access to financial services, and driving innovation. Â
With the increased use and high adoption of ChatGPT, and other AI-powered chatbots that interact in a conversational way, it sets the premise of industry-wise use across many fields as we have seen adopted in design, architecture, software development, and investment management, amongst several others. Â
In this piece, we explore the different areas AI has exacted transformative influence on finance with a major view on Nigeria’s financial institutions. Artificial Intelligence has contributed greatly to the Nigerian financial sector in the following ways:
With the evolution of digital finance in Nigeria, championed majorly by fintech startups, the rural population have more access to financial services which were formerly unavailable or sparsely available to them. A key innovation in Nigeria’s digital finance is the adoption of AI technologies which have played a significant role in expanding financial inclusion and improving access to services for the underserved population.
Mobile payment platforms like Paga, utilize AI algorithms to analyse transaction data and assess creditworthiness, enabling them to offer micro-loans to individuals without traditional credit histories. This is a critical technological boost that aids access to credit and the growth of micro-businesses, especially to those in the underserved areas of the country.
The adoption of AI-powered solutions has strengthened fraud detection and risk management capabilities in Nigerian financial institutions, safeguarding customer interests and preserving financial stability. As mandated by the Central Bank of Nigeria all financial institutions are required to put in place effective risk management systems to identify and mitigate potential risks, in order to contribute to the stability of their institutions and the financial sector at large. In the light of this, the use of AI in credit risk management and fraud detection is gaining more popularity, especially in the fintech and the digital banking market.Â
AI is leveraged to assess the creditworthiness of borrowers by utilizing data to forecast the likelihood of default, thereby enhancing the precision of credit evaluations. Consequently, the industry is shifting towards lending guided by data-driven insights instead of relying solely on expert judgment. This approach optimizes the identification and rejection of high-risk customers, while minimizing the rejection of creditworthy customers, leading to a reduction in credit losses experienced by financial institutions.
AI enables Nigerian financial institutions to deliver personalized services tailored to individual customer needs, enhancing customer experiences and satisfaction. According to McKinsey, companies who excel at demonstrating customer intimacy generate faster rates of revenue growth than their peers. And the closer organizations get to the consumer, the bigger the gains.
Customer relationship management is an important factor for banks. Banks are now providing more personalized 24/7 services to individual customers such as providing facial recognition and voice command features to log in to financial apps.Â
Banks are also leveraging AI to analyze customer behavioral patterns and automatically perform customer segmentation which allows for targeted marketing and improved customer experience and interaction.Â
AI-powered automation has improved operational efficiency and reduced manual effort within Nigerian financial institutions. The adoption of AI in document processing and data entry is contributing to reducing processing time in Nigerian financial institutions. The effect of this is that it enables employees to focus on higher-value tasks. An example of this can be gleaned from the use of AI-based chatbots to automate customer support and enhance response times. This results in increased efficiency and improved customer service.
As far back as early 2018, commercial banks in Nigeria have leveraged AI to enable customers to make use of their social media accounts to carry out key banking transactions and reach them for complaints and inquiries. These are deployed in the form of chatbots and have since evolved to become custom-fitted, personalized virtual bankers to several bank customers across Nigeria. UBA’s AI-powered chatbot– Leo is a good example, and other Nigerian banks utilizing AI include Zenith Bank with Ziva; Fidelity Bank’s Ivy; FCMB’s Temi; amongst others.Â
Current Challenges
The adoption of AI is not all roses, it comes with its own downsides as well. Security and online safety risks, lack of transparency, security risks, habitual overreliance, and ethical concerns are chief reasons that might cause institutions to raise eyebrows regarding AI. To tackle these issues and the negative impact it could likely have on financial institutions in Nigeria, it is important that financial institutions invest in developing methods to detect and address biases in AI algorithms, ensure AI systems are transparent and understandable, strengthen cybersecurity and safeguard the privacy of customers. On the part of the Nigerian government, it is crucial that ethical guidelines and regulations be established to guide the development and use of AI. This action would promote responsible and accountable AI practices in Nigeria.
What then would the future look like?
The future of AI in the Nigerian financial sector holds immense potential for innovation, growth, and enhanced customer experiences. However, it is important to note that while the future of AI in Nigeria’s financial sector is promising, its successful implementation will require putting in place strict measures to address challenges such as data privacy, cybersecurity, talent acquisition, and regulatory frameworks. By addressing these challenges and embracing AI technologies responsibly, Nigeria’s financial sector can unlock the full potential of AI and drive significant advancements in the industry.
As much as we still have a long way to go, the AI transformation in Nigeria’s financial institutions so far is impressive – driving innovation, improving efficiency, and enhancing customer experiences. From expanding access to financial services and improving fraud detection to delivering personalized offerings and automating processes, AI’s impact is gradually reshaping the financial landscape in Nigeria, and we are yet to even scratch the surface. As technology continues to get simpler and more applicable through AI, it presents exciting opportunities for Nigerian financial institutions to further innovate and thrive in an increasingly digital and competitive environment.
In the first quarter of 2023, Nigeria’s macroeconomic environment was characterized by a cash crunch that was largely attributed to the transition to a cashless economy and the forthcoming election. The scarcity of cash led to a decline in economic activity as businesses struggled to access credit and pay their bills. Economic activity was subdued, with businesses and investors adopting a wait-and-see approach due to the uncertainties surrounding the election outcome.
Nigeria started 2023 with an expectation of lower GDP growth relative to 2022. Real GDP growth was slow, and inflation remained elevated due to supply chain disruptions and a low base effect. Before the presidential election in February 2023, four notable occurrences were prevalent in the Nigerian economy.
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On October 26, 2022, the Central Bank of Nigeria (CBN) announced that the N200, N500 and N1,000 notes will be redesigned and introduced into the economy from December 15, 2022, while commercial banks were directed to return existing denominations to the CBN.
The policy was driven with the goal to deepen the drive towards a cashless economy, make monetary policy more efficacious and minimize incidents of terrorism and kidnapping.
Although, the policy was for a good cause, it had adverse effects on the different spheres of the economy. The policy created undue pressure on banks and citizens due to the short conversion window. This short notice heightened uncertainty in the economy. It also created immense pressure on banks’ IT infrastructure, mobile money agents and payment platforms, leading to increased downtime and disruptions.
The withdrawal of the select old Naira notes from circulation and the limited supply of the new notes led to a cash crunch, where majority of citizens and businesses do not have adequate access to the legal tender. Worst still, the confusion on whether the old Naira notes remained as legal tender following the pronouncement of the Supreme Court created further complications. Overall, the cash crunch had severe impacts on households, businesses, and even on the authority of the CBN itself.
However, despite the many negative impacts of the cash crunch, there was a significant increase in electronic transactions in January and February 2023. Records show that volume of online fund transfers increased from 349 million and 356 million in January and February 2022 respectively, to 542 million and 788 million in the respective months in 2023.
There was a month-on-month inflation rate at 1.71%. Miscellaneous goods and services, education, health, and transport recorded the highest increases in prices in February 2023. High inflation reduced purchasing power of the average Nigerian. The key drivers of inflation in the period were exchange rate depreciation, higher fuel costs, supply chain constraints, and low agricultural productivity. Other factors such as high government spending, insecurity, inadequate infrastructure, poor power supply and charges from non-state actors are significant in driving inflation.
An opaque subsidy regime and high import costs resulted in fuel scarcity across the country. In the fourth quarter of 2022 up to the first quarter of 2023, Nigerians experienced scarcity of petrol and diesel, leading to long queues at petrol stations. Fuel shortages emerged as a result of several factors including high import costs, FX scarcity, under-investment in the downstream sector, an opaque subsidy regime and an inefficient distribution network, where the Nigerian National Petroleum Company Limited serves as the sole petrol importer.
4. Exchange rate volatility intensifies, slightly motivated by the scarcity of cash
The Naira redesign policy and associated cash scarcity aided depreciation of the Naira as Nigerians looked for a safe haven for their funds.
The Elections and Its Aftermath
The general elections in Nigeria have been concluded. Although grievances were raised by some voters and members of the opposition parties, there has not been any major post-election violence. This is the first stage in the democratic transition process which Nigeria has, at least, scaled through for now. This reinforces investor confidence in the Nigerian political system and reduce the risk of political instability that can negatively affect the economy.
Additionally, upon assumption to office of the new administration, there is expectation of the introduction and implementation of policies that support economic growth and development for Nigeria’s economy. This could include measures to promote private sector investment, encourage job creation, and improve the business climate. Ultimately, the economic outcome of the 2023 Nigerian elections will depend on a variety of factors, including the policies of the new government and external factors such as global economic conditions and commodity prices.
In all, the macroeconomic outlook of Nigeria in Q1 2023 saw different twists and turns. However, the swearing in of a new government and the subsequent policy direction that will be introduced by the administration will be crucial in determining the country’s macroeconomic outlook in the near to medium term.
To know more about how Nigeria’s financial market reacted to the outcomes of the elections, you can see here for a full report.Â
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We have launched an innovative capacity development programme for women in business. The FSDH-EDC Women Business Impact Programme is designed to help female entrepreneurs bridge their business skills and knowledge gap and increase the success rate of women in business. It is a brainchild of FSDH Women in Business Initiative (WIBI), the bank’s gender desk in partnership with the prestigious Enterprise Development Centre (EDC) of the Pan Atlantic University.
The Women Business Impact Programme offers participants an opportunity to learn from a seasoned faculty, business leaders and mentors who have a wealth of experience and expertise in various fields. During the programme, participants get access to a robust curriculum and practical learning, one-on-one business advisory, business support services, access to finance, and a community of women entrepreneurs.
Commenting on the programme, Managing Director, FSDH Merchant Bank, Bukola Smith, said “The FSDH-EDC Women Impact Programme is not just another capacity development programme. It is a movement to equip and empower women with the right skills and business knowledge required to run their business excellently and consequently contribute to the growth and development of the female economy.’’ She further reiterated FSDH’s commitment to supporting women-owned and women-led businesses. ‘’Empowering women-led businesses is an important part of this programme and a critical step towards achieving our goals for the FSDH Women in Business Initiative. We have seen that women constitute a large percentage of medium-scale businesses and by supporting them, we can create a more stable, prosperous, and sustainable future for the female economy and the wealth of Nigeria at large”.
In her comments, the Gender Desk Lead, Enterprise Development Centre, Nneka Okekearu said ‘’In the last two decades, EDC has led the way in creating programs that empower women and enhance their skills. We believe that helping women entrepreneurs grow their abilities and raise their voices contributes to nation building and community development.
The Head, Women in Business Banking, FSDH Merchant Bank; Gold Nwoke, also shared her excitement towards the launch of the Women Business Impact Programme. According to her, “The programme offers women in business an opportunity to learn, connect with other like-minded professionals and grow their businesses. This year, we have lined up a number of initiatives to help women in business achieve their goals. We believe that through the Business Impact programme and with a reputable partner like the EDC, our participants will get the required knowledge to grow their businesses.”
The programme offers a robust curriculum and practical learning ranging across entrepreneurship finance, business planning, operations management, marketing management, sales strategies, business leadership essentials, legal and tax, etc delivered in physical and virtual classes and an excellent learning environment.
This initiative is open to women in business across different sectors who are interested in growing their businesses. The Women Business Impact Programme will run for a total of three months beginning from May 2023. Interested participants can apply via the link here. (www.fsdhgroup.com/fsdh-edc)
This programme is sponsored by FSDH Merchant Bank and executed in partnership with Enterprise Development Centre (EDC). With the launch of the FSDH-EDC Women Business Impact Programme, the group is poised to make significant contributions to the female economy by reducing the knowledge gap and empowering women entrepreneurs with modern business skills required for business growth. Please visit www.fsdhgroup.com/fsdh-edc to register and participate in the FSDH-EDC Women Impact programme.
If one woman wins, we all win.
Together, we achieve more!
Financial literacy is a crucial life skill that every individual needs to have in order to make informed decisions about their finances. It is particularly important for young people to learn about financial management as they grow and start making financial decisions. In partnership with the good people of Junior Achievement Nigeria (JAN), we commemorated this year’s Financial Literacy Day. Focusing on young people, we visited Lagos City College, Yaba, Lagos and First Baptist College, Port Harcourt on March 24th, 2023.
The event was well-attended by students, teachers, and other members of the school communities. Our team gave presentations on various financial topics, such as budgeting, saving, investing, and managing debt. They used relatable examples to illustrate the importance of financial literacy and encouraged the students to ask questions.
During the presentation, we used real-life examples to illustrate the importance of savings, investments and overall financial literacy. We also gave tips on how to avoid financial pitfalls and make smart financial decisions. The students were engaged and asked many questions, which were answered in detail. They learned how to make a budget, set financial goals, and manage their finances effectively.
After the presentations, there were some fun activities to help reinforce the financial concepts that were discussed. Winners from each activity were given prizes, which added to the excitement of the day.
The financial literacy day celebration was a huge success, and the students gained valuable knowledge on financial management. They learned how to make smart financial decisions, set goals, and plan for their future. We left a lasting impact on the students, no doubt, they are now better equipped to manage their finances in the future.
Financial literacy is a crucial skill that every individual needs to have, and it is important to promote financial education among young people. The global Financial Literacy Day celebration is a great way to raise awareness about financial literacy, and it was a fun and engaging experience for the students. With the growing economic gap and the ease of access to technology, more young people have the potential to earn, save and invest more to live better, FSDH will be here to partner with them through that journey.
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