E-Financial
MasterCard Says Nigeria, 3 Others on Digital Evolution Threshold
A new Digital Evolution Index from MasterCard shows that South Africa, Egypt, Kenya and Nigeria are quickly moving towards digital evolution.
However, South Africa’s digital economy is the most developed in Africa, and one of the fastest growing in the world, according to the new Digital Evolution Index developed by MasterCard and The Fletcher School at Tufts University that tracks a country’s movement toward digital evolution, gauges progress and assesses challenges in 50 countries comprising the Index.
South Africa ranks 33 out of the countries measured by the index in digital readiness, which is defined by the markets’ ability to support and encourage digital commerce and payments. In Africa, it ranks ahead of Egypt (48), Kenya (49), and Nigeria (50).
South Africa also emerged as the fourth fastest growing digital economy behind China, Malaysia and Thailand.
“South Africa’s speed of growth can be attributed to the rapidly increasing proportion of the population with Internet access, an 86 percent adult mobile phone penetration rate, and a highly developed telecommunications network. However, what is significant is that all four of the African countries measured share a common trait of moving at a high rate of speed toward digital evolution, demonstrating huge growth potential for e-commerce,” said Ted Iacobuzio, Vice president, Global Insights, MasterCard.
The Index analyses four key underlying drivers and barriers that govern a country’s evolution into a digital economy, Demand (consumer demographics, income and internet access); Supply (technology and infrastructure); Institutional Environment (governmental policy), and Innovation (environment for creating startups and the overall competitive landscape).
Each country is given an overall digital readiness score between 0 (low digital readiness) and 100 (digitally saturated), which is derived from an average score of these four interdependent drivers.
The index also provides an indication, by country, where the next billion Internet users will come from globally.
According to McKinsey, Africa’s Internet penetration stood at 16 percent (167 million people) in 2013, and is forecasted to reach 50 percent (600 million people) by 2025, indicating the online consumer market will quadruple over this time.
“There are currently 2.9 billion Internet users in the world, a feat that took over 20 years to achieve. The next billion users will enter the market much faster than this. A significant proportion of these will come from Africa, where the four countries studied – Egypt, Kenya, South Africa and Nigeria – all represent exceptional growth potential coupled with short-term opportunity,” said Iacobuzio.
The study analysed each market’s evolution from 2008 to 2013 and grouped each country into one of four trajectory zones:
‘Stand Out’ countries have historically moved at a high rate of digital readiness and maintain high levels of digital transactions;
‘Break Out’ countries are typically developing countries that currently have low readiness scores, but are rapidly evolving;
‘Watch Out’ countries face various challenges, but have significant opportunities for investment; and
‘Stall Out’ countries, while possessing a history of strong growth, are highly evolved and offer little potential for change.
The Index positions South Africa as a ‘Break Out’ country with an overall score of 30 out of 100 in 2013. Its score jumped from 24 to 34 between 2008 and 2012, a substantial increase compared to other countries.
While infrastructure investments in South Africa will drive e-commerce to achieve a likely 30 percent growth rate in 2014, the Index indicates that demand for e-commerce currently lags the global average.
“South Africa may have a relatively average Index score overall, but its digital landscape is evolving rapidly. If this evolution continues at its current rate, South Africa has the potential to grow into a strong digital economy. It is a prime candidate for becoming a ‘Stand Out’ nation in the future,” he says.
The three other African countries ranked in the index are classified as “Watch Out” countries. Egypt scored 17.3, Kenya scored 16.9 and Nigeria scored 13.7 out of 100. These countries are just starting out on their journeys towards digital readiness, each facing different challenges.
“Encouragingly, Egypt, Kenya and Nigeria fared well in their speed of digital growth. This points to their potential to develop into evolved digital economies that further encourage digital payments, and enable future e-commerce opportunities,” he said.
Key African Insights:
Egypt’s Innovation score of 29.5 and its Demand and Supply drivers both above 15 helped place it second in the African rankings.
According to the Index, Egypt has the potential to be one of the top 10 fastest evolving countries globally in the next five years.
Mobile payments are in place for an impressive run due to the the first ever interoperable Arabic mobile money implementation in Egypt. While the e-commerce penetration rate among Egyptians is still low at 3.4 percent, Egypt’s online purchases are expected to triple by 2016, according to Euromonitor.
Kenya’s Innovation score of 32.9 was its highest driver score followed by its Institution score of 14.
This is due to a combination of factors including the country’s mobile payment capabilities, led by the M-Pesa platform, which shows an evolved mobile market where 25 percent of Kenya’s GDP travels through M-Pesa.
In 2013, Kenya’s mobile penetration rate was 72.5 percent growing by 5.6 percent to 32.3 million subscribers during the second quarter of 2014. Kenya faces challenges with its Supply and Demand drivers, which if focussed on over time will lead to an improved overall Index score.
Nigeria’s Innovation and Institution drivers fared relatively well largely owing to the Central Bank of Nigeria’s Cashless Policy that is expected to drive growth in electronic payments and e-commerce, the country’s increasingly urban population that will have better access to the Internet over the coming years, and the fact that Nigeria has 94 percent mobile penetration.
Its Supply and Demand drivers have much potential for improvement, with scores of 6.8 and 7.3 respectively, pointing to a need for improved technology and infrastructure.
However, Nigeria showed the greatest potential for digital growth.
Globally, Singapore, Sweden and Hong Kong are the top three countries on the Index with the most active and advanced digital economies with scores of 56, 55 and 53.5 respectively.
The United Kingdom and Switzerland round out the top five, while the United States ranks sixth among the 50 countries measured.
The Digital Evolution Index is an output of the study conducted by researchers at The Fletcher School with the support of MasterCard.
Analyzing datasets from public sources, such as The World Bank, and private sources such as EMPEA and Dow Jones VentureSource, the research team created an analytical framework for recognizing patterns and making sense of the global digital landscape, discerning country trends and evaluating their relative strengths and weaknesses.
The methodology for the Digital Evolution Index measures the current ability of countries to deliver on consumer demand and business supply capabilities, in combination with governmental policy and climate for innovation – four drivers defining digital readiness that were identified in the research hypothesis.
In addition to the current state, the study measured each country’s trajectory across the four drivers from 2008 through 2013.
The index then layers a quadrant matrix to visualize the trajectory of a particular country.
Central Bank of Nigeria (CBN) has issued a fresh advisory warning the public about the persistent activities of fraudsters peddling fictitious contracts, loans, grants and intervention funds under the guise of affiliation with the apex bank.
This is aimed at protecting Nigerians from financial fraud.
The advisory, signed by Mrs Hakama Sidi-Ali, acting director, Corporate Communications, noted that despite an earlier advisory issued on November 18, 2024, these criminal elements continue to exploit unsuspecting individuals with fake offers falsely attributed to the CBN.
The apex bank has once again disclaimed any association with such claims, describing them as entirely fraudulent and misleading.
“The Central Bank of Nigeria has not authorised, licensed, or appointed any individual, group, or organisation to act on its behalf in offering contracts or financial benefits to the public,” the statement clarified.
According to the CBN, it does not engage in unsolicited communications, via emails, phone calls, SMS, WhatsApp or any social media platforms, to award contracts or disburse funds. It also stressed that the bank does not request payments or fees in exchange for any financial service or opportunity.
The apex bank urged the public to remain vigilant and to immediately report any suspicious approaches to law enforcement agencies or the nearest CBN branch.
“The Central Bank remains committed to safeguarding the financial interests of the Nigerian public and continues to work closely with security agencies to investigate and curb fraudulent activities,” the statement added.
This advisory, the CBN spokesperson noted, comes as part of the regulator’s wider mandate to ensure transparency, financial integrity and public trust in Nigeria’s financial system.
Securities and Exchange Commission (SEC) has ramped up its fight against Ponzi schemes in Nigeria, vowing to take decisive action against illegal fund operators while educating the public to prevent further victimisation.
At an awareness campaign held in Abuja, the SEC emphasized its commitment to saturating public spaces with information about illegal investment schemes before enforcing the law on perpetrators.
Speaking at the event, Ms Frana Chukwuogor, executive commissioner Legal and Enforcement, Securities and Exchange Commission, warned of the dangers of patronising illegal fund operators known as Ponzi schemes.
She said that the Commission deemed it crucial to sensitize traders, empowering them to make informed decisions when approached with investment requests.
She explained that the campaign is a proactive step to combat the surge in fraudulent investment schemes in Nigeria, aligning with the Commission’s broader strategy to educate the public about Ponzi scheme risks and unregistered investment platforms before enforcing regulatory action.
“Our approach is simple but firm. We are not just a regulator that barks and does not bite. We believe in engaging, enlightening, and empowering the Nigerian people before enforcing the law. We will sensitize before barking and biting,” she stated.
She explained that too many Nigerians, especially those at the grassroots, fall victim to Ponzi schemes due to lack of information or false promises of quick, unrealistic returns, emphasizing that many of these schemes are not registered or regulated by the SEC, making them dangerous and illegal.
“We have seen people lose their life savings, their businesses, and their peace of mind.
That is why we are taking this message to the markets, motor parks, online platforms, anywhere Nigerians are making financial decisions. Prevention through education is our first line of defense,” she added.
Mr Abdusalam Khalid, head of Enforcement Department, Securities and Exchange Commission, warned that while education is the first step, it will not hesitate to prosecute illegal operators who refuse to cease their fraudulent activities
He urged the public to verify all investment opportunities through official channels and report suspicious activities through the SEC helpline.
Some bank users in Abuja have declared they will opt for electronic mail alerts from their banks to cut costs and reduce charges on their accounts.
Some of them who spoke to the News Agency of Nigeria (NAN) on Sunday said they would deactivate the Short Message Services transaction alert linked to their accounts.
Mrs Dorathy Azinge, a customer of GTCO, described the increase in SMS charges as exploitative.
Azinge said that in spite of various transaction charges debited from her bank account on a daily basis, the bank still increased SMS charges.
”This move of increasing SMS charges is very exploitative even though they cited telecommunication charge.
”What about all the numerous unwarranted debits that I get from my account, and they are using telecommunication increase as yardstick to increase theirs.
”GT will remove different charges from my account until they give me minus balance,” she said.
Another customer, Ms Elizabeth Abu, said she would visit her bank to opt for her transaction alerts to be sent to only her e-mail address.
Abu who complained about the reduction in her capitalised interest on her account, said the numerous debits were becoming frustrating.
” It does not make sense for the bank to charge me for a transaction I did and also charge me for the alert they sent.
” It means that customers are the ones paying heavily for all these services.
” These charges are reflecting on the profits declared by these banks, and we are the ones paying for this,” she said.
Mr Clement Arubu, a customer with First HoldCo Plc, said he received various transaction debit alerts from his bank totalling N1, 050 monthly.
Arubu said the debits were huge, especially when calculated between 10,000 customers of the bank.
” Most customers receive these alerts and neglect them because to them, the money is small but when you debit the same money from about 10,000 customers then, you can be sure that the money is huge,” he said.
Mrs Catherine Itoha,, said a bank had yet to reverse over N20,000 debited from her account through various failed Point of Sale transaction since about 11 months.
Itoha urged some banks and their staff to adopt principles of fair practice in handling their customers.
” Customers are the reason why banks are in existence so, we deserve to be treated fairly.
”GTB debited me in about four different transactions that I did but up till now, they did not reverse any of these monies.
”I visited the bank, filled forms, spoke to their staff personally but still the issue was not resolved since last year.
”If this money did not go to a staff, it means it is part of their profit,” she alleged.
Mrs Esther Arthur, a Fidelity Bank customer alleged that some of the banks were making profits from charges on customers for their transactions.
Arthur described the situation as sad and frustrating, recounting,”I withdrew N10,000 from a First Bank Automated Teller Machine and the machine showed me that I will be charged N100 because it wasn’t my bank.
”When I finished the transaction, to my greatest surprise an alert came into my phone and when I checked it, it was an alert of N630.00 against the N100 on-site ATM charges that the Central Bank of Nigeria instituted.
”This is so sad,” she said.
Mr Augustine Ode, a Zenith Bank customer, appealed to the CBN to check excesses of some banks that were allegedly defrauding customers.
The News Agency of Nigeria (NAN) reports that GTCO had informed its customers of the SMS transaction alert fee increase from N4 to N6 per message.
The bank had said that the adjustment was due to a recent increase in telecom rates.
Credit: NAN
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