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Emerging market currencies pressured, but Naira stable

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by Hussein Sayed

The Naira has entered the trading week on a firm footing despite a stabilizing Dollar and global trade tensions pressuring emerging market currencies. There is a suspicion that the Naira’s stability could be based on continual intervention from the Central Bank of Nigeria. June was certainly a cruel trading month for emerging market currencies and this negativity could roll over into July if escalating trade tensions weigh on sentiment and erode risk appetite. It will be interesting to see if the Naira is able to maintain its stability at a time where trade war fears and prospects of higher US interest rates have triggered capital outflows from emerging markets.

Recession fears escalate as trade war heats up

It has been an interesting first half for2018. Economic fundamentals and politics took center stage as both fought for market influence. The Federal Reserve is in tightening mode as growth and inflation trended higher, while the trade war between the US and the rest of the world particularly with China and the EU intensified further. In parallel to these events the US administration provided massive stimulus to an economy that is already near full employment which led to further strengthening of the USDollar.

 

Looking at the big picture, strong economic growth in the US, despite signs of softening elsewhere, provided support for equities. However, geopolitical uncertainty and protectionism remained the key downside risk. We think that we’re in the late stage of the current economic cycle, but there are no signs of a recession yet. In such economic conditions equity investors should be more cautious when investing. A more selective approach is needed as valuations are likely to be further challenged in the months ahead as volatility is further elevated.

 

Given that inflation will be a key factor driving monetary policies in the second half of 2018, investors need to keep a close eye on Oil prices. The decision by OPEC and non-OPEC members to raise crude supplies by about one million barrels starting from 1 July was considered a negative factor for Oil prices. However, the rise in supply from some OPEC and non-OPEC members will be met by a decline from others; doing the math here will be complicated for investors betting on the direction of prices.

 

Iran currently faces the re-imposition of US sanctions on its Oil exports after the Trump administration’s withdrawal from the nuclear deal. Venezuela is also on investors’ radars as there are further signs that its Oil industry is entering a dangerous new phase. Meanwhile, Libyan Oil supply is also at risk with the current political mess. These three countries together may contribute to a fall of more than two million barrels a day by the end of 2018, which is likely to keep Oil prices elevated in the second half of 2018.

 

Investors and traders should also keep a close eye on the US Treasury yields. The gap between short- and long-term US bond yields fell to its narrowest levels since 2007, and as we get closer to the inversion, the probability of a recession becomes higher.

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E-Financial

Experts Urge Banks to Invest in Data Authentication to Boost Financial Inclusion

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Investing in data authentication and detection software by the banks and other financial institutions would lead to the expansion of loan database, improve services and boost financial inclusion.

Bade Adesemowo, Chief Technology Officer [CTO] of Social Lender,  said that the company’s platform has the capacity to authenticate loan applicants’ data based on social reputation before authorization by the banks and financial institutions.

“Our solution is trained to detect fake data in most cases. As such, utilising and optimizing our innovative service will boost financial inclusion and bring more development to the financial sector. Our system is actually training itself – machine learning – based on data we have acquired to improve performance of transactions on the system”, he said.

According to him, Social Lender provides customers of financial institutions access to microcredit based on their social reputation in their community. The unbanked and under-banked with little or no access to formal credit can also benefit. He said the company focuses on social reputation on mobile, online and social communities.

The fintech expert stated that the platform was designed in such a way to provide loan applicants’ data on the social community to banks and other financial institutions irrespective of locations.

He said that there is a need to “close the huge financial exclusion gap” and expand the options for financial institutions in data gathering for loan applicants before authorization.

He informed that established global financial institutions use credit history, credit bureau data and credit scores to arrive at lending decisions.

“This is a challenge in Nigeria, as less than 10% of the adults have viable credit bureau data and in Africa less than 50% have this required data. Even in America, 20% of the adult population lack access to formal credit.

“That is a significantly smaller market size, but a market gap all the same. This is where Social Lender comes in. There’s a need for an alternative measure of trust for the huge population. This alternative scoring solution is Social Lender’s Social Reputation Score”.

Speaking in a similar vein, Product Owner of Social Lender, Mudi Ogboru said financial technology is a viable tool that has the capacity to reach the unbanked individuals in the country.

“Banks today are serving about 40 million unique individuals in a country of about 200 million unique individuals. Fintech stakeholders can collaborate and build a strong network to deliver financial services to over 100 million Nigerians who the banks are not serving”, he said.

The CEO of Social Lender, Faith Adesemowo informed that the company has collaborated with several fintech firms to create healthy competition in the industry, saying that the company is focusing on expansion to other countries to propagate financial literacy and inclusion.

Social Lender is a lending solution based on social reputation on mobile, online and social communities. The company helps financial institutions offer microcredit based on social reputation to individuals who are under-banked or have little or no access to formal credit.

The solution is designed to bridge the gap of immediate fund access for people with limited access to formal credit. Social Lender uses its own proprietary algorithm to perform a social audit of the users’ online, on mobile, on social media and other related platforms and gives a Social Reputation Score to each user.

“Loans are guaranteed by the user’s social profile and network allowing users to then borrow from banks and other financial institutions based on their social reputation”, she said.

The company is improving access to financial services across Africa using social reputation.  Beyond lending, Social Lender has multiple use cases in various sectors including by not limited to the in other areas including but not limited to KYC, insurance and so on.

It is building a social network for trust, credit and much more. It has partnership agreement with three financial institutions in two countries through Sterling Bank (Nigeria), Absa / Barclays Bank (South Africa), and iTrust (Nigeria). It is considering similar initiative with four banks in two countries.

The CEO said the company is accessible on multiple channels which include SMS, USSD and Web. Recently, Social Lender launched a USSD only channel in Nigeria targeting low income communities.

Social lender is seeking to raise $1 million in equity or convertible note to expand staffing, implement and integrate more technology interfaces, expand its brand and marketing reach, and to expand into new markets and countries of operation.

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E-Financial

4 Men Hack into FCMB Database, Steal N1Bn

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Four suspected hackers were arraigned before an Igbosere Magistrate Court, Lagos for allegedly stealing the sum N1billion from accounts belonging to customers of First City Monumental Bank (FCMB).

 

The alleged hackers were identified as; Gideo Olatimeyin, 33, Osita Martyns, 37, Daramola Samuel Akanji, 23, and Abiodun Aina, 38.

 

The men, who all pleaded not guilty, were arraigned on a four-count charge brought against them by the Special Fraud Unit (SFU) of the Police.

 

The police alleged that the accused persons conspired, stole and effected an unauthorised modification of bank’s computer data by increasing the transaction limit.

 

However, the offence committed is punishable under section 287(9)(c), 390,411 and 388 of the Criminal Law of Lagos State,2015.

 

According to the charge, the accused persons and “others at large on March 10, 2018 did conspire amongst yourself did steal the sum of N900,775,757.47 property of various customers of the bank by transferring the funds from their FCMB accounts to various different accounts outside the bank via POS and ATM”.

The police also alleged that the defendants gained access links to the debit card platform and profile of FCMB bank through the profile of a contact centre staff and effected unauthorised modification of the bank’s computer data by increasing the transaction withdrawal limit.

 

However, Magistrate Folashade Botoku, therefore, granted them bail in the sum N20 million each and two sureties in like sum.

 

She ordered that one of the surety must be a traditional ruler.

 

The magistrate thereafter ordered that the defendants be remanded in Kirikiri prison custody the pending perfection of their bail condition.

 

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E-Financial

How 13,000 people save N7bn through Wema Bank’ ALAT Goal

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Wema Bank has stated that its first fully digital bank ALAT Goals launched a year ago has helped 13,267 people save over N7 billion with an average monthly savings of N1 billion

 

The bank noted that with the App, over 280,000 ALAT accounts have been opened since May 2017 with more than N2.2 billion in deposits realized.

 

In a statement announcing the outcome of a survey on saving in Nigeria carried out by ALAT, the bank said it discovered that the greatest drawback to effective saving was not insufficient income, but that many do not know how to save, while others lacked discipline.

 

The statement read in part: “Understanding this, ALAT unveiled a feature called Goals, a bouquet of savings options that help instill discipline while rewarding you for reaching your savings milestones. There are three categories of savings goals.

 

The Fixed Goal which serves those seeking a strict savings plan; Flexi Goal for those in need of a not-too-rigid plan; and Stash which caters to those seeking a rewarding short-term savings option.

 

Groups of friends or members of families can pull funds together and save towards a single goal using the Group Target Savings or the Rotating Group Savings popularly known as Esusu, earning a 10 per cent annual interest – three times the standard bank rate. “Since Goals on ALAT was launched a year ago, the digital bank has helped 13,267 people save over N7 billion, with an average monthly savings of N1 billion today.”

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