E-Financial
Collaboration and Investment Key to Strengthening Africa’s Digital Payments Cybersecurity
By Omotayo Ogunlade, Chief Technology Officer at Onafriq
As the digital payments landscape in Africa expands, the need for robust cybersecurity measures becomes increasingly urgent. Trust and security are foundational to financial services, and as cybercriminals continue to become more aggressive and sophisticated, addressing any vulnerabilities is key to safeguarding the integrity of Africa’s digital financial ecosystem. In fact, Africa experienced the highest average number of cyberattacks per week per organisation in 2023 with a 23% increase compared to the previous year.
Omotayo Ogunlade, Chief Technology Officer at Onafriq
Africa’s digital financial ecosystem is still maturing, and as digital payments become more integrated across countries, regions, and more interoperable across payment platforms, this increasingly complex environment can introduce new cybersecurity vulnerabilities.
And, as in an interconnected landscape a single weak link can jeopardise the entire network, it is critical that the continent’s financial institutions, governments and decision-makers come together to collectively work towards establishing and maintaining baseline security standards across the industry. This requires building meaningful partnerships with relevant stakeholders, substantial investment and greater harmonisation of regulations and policies across the continent.
The imperative for investment and standardised regulations
Several challenges hinder the attainment of robust cybersecurity in Africa. One of the primary issues is the lag in regulatory frameworks, while a lack of significant investment in security would lead to vulnerabilities within the continent’s financial sector being exploited.
Fortunately, investment in cybersecurity has seen a notable increase over the past five years, reflecting a growing recognition of its importance. The rise of artificial intelligence (AI) and sophisticated cyber threats has driven firms to allocate more resources towards cybersecurity. And digital payment networks like Onafriq have strengthened their security posture by investing in intelligent tools that predict and proactively address potential threats.
Despite these advancements, there remains a disparity in investment levels across the continent. Ensuring that all financial institutions can meet necessary security standards requires coordinated efforts and substantial capital. This includes investing in state-of-the-art technology and continuous monitoring systems to detect and prevent malicious activities.
Additionally, regulators play a crucial role in setting and enforcing security standards. And yet the pace of regulatory development often falls behind the speed of innovation in the fintech space. Harmonising regulations across different African countries is essential to create a consistent and secure environment for digital payments by adopting best practices and global standards. This is necessary to avoid fragmentation of the digital payments landscape while effective enforcement of these standards is vital to maintaining a secure financial ecosystem.
A need for cybersecurity skills and a security first culture
A truly secure payments environment requires buy-in from every part of the ecosystem’s value chain, including the end user. Not only must financial institutions adopt a security-first approach, embedding robust security measures into every aspect of their operations, but educating users about security practices is just as crucial.
As digital payments become more prevalent, financial institutions must design products with built-in security features and continuously educate users on safe practices. This includes secure PIN usage, recognizing phishing attempts, and safeguarding personal information.
For example, Onafriq exemplifies this approach by ensuring that security is a priority from the design stage. By securing networks, protecting sensitive data, and conducting regular third-party audits, we have been able to maintain a strong security record. This proactive stance is essential for preventing breaches and ensuring customer trust.
More than this, there is a growing need to build the cybersecurity capacity needed to sustain the digital payments landscape. Africa faces a shortage of skilled cybersecurity professionals, which hampers the ability to address emerging threats effectively. In fact, a cybersecurity assessment conducted by the African Union Commission and the United Nations Development Programme found that African countries had a cybersecurity competence of 0.21 out of 1 with more than 70% of African nations requiring additional cybersecurity infrastructure.
Financial institutions and governments must invest in training programs, internships, and continuous education to develop a skilled workforce capable of managing cybersecurity challenges. But, retaining talent within Africa also remains a significant issue. Many trained professionals seek opportunities abroad, exacerbating the skills gap. Addressing this requires creating conducive environments that offer competitive opportunities and career growth within the continent.
Cybersecurity is a cornerstone of Africa’s digital payments landscape. To achieve a secure and resilient financial sector, Africa must invest in robust cybersecurity infrastructure, foster regulatory harmonisation, and prioritise collaborative efforts among financial institutions. By addressing these challenges, Africa can build a secure digital payments ecosystem that supports economic growth and instils trust among users.
Dr. Emonotimi Agama, director-general, Securities Exchange Commission (SEC), has disclosed that 50 cryptocurrency exchanges have applied for operational licences in the country.
Agama who spoke during a fireside chat at the BusinessDay Blockchain Conference in Lagos recently, said the commission received “50 applications and has accepted seven firms into its programmes”.
“Our work at the SEC is to protect investors and foster market development,” he said.
“The commission is open to innovation. Businesses must meet regulatory and compliance requirements to ensure the growth of a stable and sustainable digital economy.”
According to him, the government is receptive to crypto and blockchain because it has seen the country’s youths adopt the technology.
Agama added that the pace of acceptance of digital assets may vary across different sectors but will eventually happen.
“For innovators, we encourage you to seize the opportunity to develop blockchain solutions tailored to Africa’s unique needs,” he said.
“Focus on solving real-world problems, such as financial exclusion, inefficient supply chains, and lack of transparency in governance.”
Recall that SEC had on August 29, granted Busha Digital Limited and Quidax Technologies Limited “approval-in-principle” to commence operation under the accelerated regulatory incubation programme (ARIP).
The ARIP was introduced by the SEC to onboard firms that had already begun operations before the release of the rules on virtual asset service providers in May 2022
The commission equally introduced the regulatory incubation programme (RIP) designed to evaluate the business models of digital asset firms and allow them to test their products, services, and technology in a real-world market environment under the regulator’s close supervision.
The commission also said additional licence applications were being assessed and that approvals-in-principle would be granted on a case-by-case basis once the requirements were met.
However, on September 4, SEC clarified that it has not yet fully licenced any cryptocurrency exchange.
On his part, Buchi Okoro, chief executive officer (CEO) of Quidax, said regulation helps check operators’ activity in the space and protect investors.
The House of Representatives Public Accounts Committee, has asked Guaranty Trust Bank (GTB) to calculate and remit the Value Added Tax (VAT) on the commission from Remita between 2015 and 2022 to the federal government recovery accounts.
Remita is a financial solution gateway technology used by the federal government for collection of revenue for Ministries, Departments and Agencies to the Treasury Single Account (TSA).
The committee chaired by Hon. Bamidele Salam gave the directive on Thursday at the ongoing investigation into alleged revenue leakages through REMITA platform and non-compliance substantively with standard operating procedure and other allied service agreements.
The panel raised two issues on evidence of remittance of VAT components of Remita collections and collection of fees in the first regime of the Remita transaction.
But, Ahmed Liman, executive director of GTBank, said the bank did not remit the VAT for the period of eight years.
He said: “We believe that Remita is saddled with the responsibility of sharing the commission fees between the payment receiving parties.
“In our mind, we think Remita has done the needful before sharing the fees between the parties.”
Liman also said the collection of fees in the first regime of the Remita transaction, the bank charged 0.75 per cent on all the payers who used the platform.
The executive director added that the bank received N254.4 million from the Accountant General through Remita in 2018.
The committee resolved that the bank should calculate and remit the VAT on the commission fees received from the platform from 2015 to 2022 to the federal government recovery accounts domiciled with the Central Bank of Nigeria (CBN).
Other Banks that appeared before the committee on the same issues were Keystone, Sterling Bank, Polaris Bank, FCMB, Ecobank, Wema among others.
The committee referred the aforementioned banks to the reconciliation sub-committee in order to address the discrepancies that were noted and get a new date to re-appear before the panel.
Central Bank of Nigeria (CBN) has announced new regulations for processing Point of Sale (PoS) transactions across the country, directing that all POS transaction are to be routed wither through the Nigeria Interbank Settlement System (NIBSS) or Unified Payment Services Limited (UPSL) hence, breaking the monopoly of the former on transaction processing.
In a circular dated September 11, 2024 to all payment service providers on connectivity to Payment Terminal Service Aggregators (PTSA), the CBN directed that payment service providers are to commence regularisation with the PTSAs and notify the CBN in writing to confirm compliance, within 30 days from the date of the circular.
In order to achieve the objective of tracking electronic transactions in Nigeria, the CBN had in August 2011, granted a PTSA licence to Nigeria Interbank Settlement System Plc (NIBSS).
Following concerns over channelling all Point of Sale (PoS) transactions through a single aggregator, it had on April 19, 2024, granted a second PTSA licence to Unified Payment Services Limited (UPSL).
Nearly five months after it granted the licence to UPSL, the CBN has directed that acquirers are “to route all transactions from PoS terminals at merchant and agent locations, whether on physical or electronic PoS terminals, through any CBN-licensed Payment Terminal Service Aggregator (PTSA).”
The circular further read, “PTSAs are required to send PoS transactions to only Processors certified by the relevant Payment Scheme, nominated by the Acquirer and licensed by CBN. All licensed Processors must be integrated with both PTSAs, thereby allowing Acquirers the flexibility to choose which Processor(s) and PTSA to utilise.
“All Payment Terminal Service Providers (PTSPs) must ensure that their PoS devices and applications are configured to route transactions through any PTSA, as directed by the Acquirer.
All PTSPs shall submit monthly returns to the CBN, detailing the number of merchants and agents they manage, along with the PTSA services used to route the corresponding transactions.
“Each PTSA is required to submit monthly returns to the CBN, detailing all transactions processed through their platforms. The returns mentioned above are expected to be submitted to the Director, Payments System Management Department, no later than seven days after the end of each month.”
SEC Says 50 Crypto Exchanges have Applied for Licenses
CBN Orders PoS Operators to Route all Transactions through NIBSS or UPSL
Reps Panel Asks GTBank to Remit VAT on Remita Transactions to FG
Big Larry, Nollywood Actor is Dead
NIMASA, BOI Partner to Grow Capacity In Maritime Sector
NDIC Plans to Liquidate 87 Microfinance Banks, Others
Introducing TECNO POP9: The Smartphone That Redefines Affordability
NIN: NCC Tightens Loose Ends, Introduce Self-Help Measure
SMEDAN Inks MoU with NIPOST to Offer 15% Logistics Discount to SMEs
ALX Nigeria Moves Over 12,000 Youths Closer to Jobs in Six Months
E-Financial3 days agoCourt Freezes N548.6m of Nigerian Crypto Users over Naira Fluctuation
E-Business2 days agoFour Nigerian Start-ups Selected for NBA Africa Startup Accelerator’ Demo Day
Telecom3 days agoHuawei’s Tri-Foldable Phone Stirs Chinese Pride but $2,800 Price Tag Panned
E-Financial3 days agoUBA Appoints Nweke, Deputy Managing Director
Telecom3 days agoMTN, Accenture Conclude OpenRAN Trial as It Eyes Network Shift
Telecom3 days agoStarlink Boosts Traffic for Rural Nigerian Cell Sites 45 Percent – AMN
News2 days agoSiBAN Sacks Obinna Iwuno, Its National President Over Abuse of Power
E-Business3 days agoPrivate Malware to Ransomware-as-a-Service: the Rise of Mallox