Nigeria Unveils A National Domestic Card Scheme, “Ways and Means” Loan, Stamp Duty

A few days ago, I wrote how US banks are trying to take it to the likes of PayPal and Apple Pay by coming together to build financial products which could move them from the center of the smiling curve to the edges where more value could be captured:

“The companies which are at the center capture least value, and most times, there are the ones which support the ecosystem the most.  But those at the edges capture the most value even though they do not provide a lot of catalytic support in the ecosystem. PayPal and Apple Pay operate at the edges and extract tons of value while the US banks remain lost in the center capturing just a small value.”

People, it seems like Nigerian banks have the same plan: build a card network to ensure Visa, Mastercard, etc do not eat all the nice stuffs: “The Central Bank of Nigeria (CBN) on Thursday, in conjunction with the Nigeria Inter Bank Settlement Systems (NIBSS) Plc, the Bankers Committee and other financial ecosystem stakeholders, launched the National Domestic Card Scheme in a virtual event.”

“The launch of this historic Scheme presents a new dawn in the Nigerian payment ecosystem and unveils the unique opportunities presented by the Nigerian retail landscape. It is indeed the beginning of a new era, charting the future of the payment landscape as the first Domestic Card Scheme to be launched on the African continent,” the statement said.

What can I write? I wish Interswitch Verve good luck as an asymmetric attack comes to disintermediate it at scale if indeed this new system is not being powered by it [it is likely this is a logo matter with Verve still running all]. In this payment universe, it is all frenemies; no enemy, no friend, it is all about interest. Yes, who keeps the most transaction fees as those cards are used! Nigeria – a transaction-economy and everyone is looking for his or her cuts, including yours truly!

CBN, Nigerian Banks, NIBSS Launch AfriGo, Nigeria’s National Payment Card

Press Release by CBN

The Central Bank of Nigeria announced in 2022 that it will be launching a National Domestic Card Scheme in conjunction with the Nigeria Inter-Bank Settlement Systems (NIBSS) Plc, the Bankers Committee and other financial ecosystem stakeholders.

The new Domestic Card Scheme is a robust in-country Scheme tailored to address the specific requirements of Nigeria’s payment industry and provide innovative offerings tailored to the Nigerian market and beyond. The Scheme will transform the domestic and African payment landscape through the promotion of innovation in payment, enhancement of interoperability domestically and internationally and improvement in the suite of products and solutions offerings by banks and other financial institutions such as debit, credit, virtual, loyalty and tokenized cards.

The National Domestic Card set to be delivered to over 200 million Nigerians offers unique value propositions through enhanced data sovereignty and transaction security, better pricing opportunities, reduced demand for FX, enhanced financial access and support of the growth of a robust and inclusive digital economy, amongst others.

The brand unveils of the new Domestic Card Scheme by CBN and NIBSS will take place on Thursday 26th January at a virtual event that will be graced by critical stakeholders in the financial ecosystem such as the Governor of the CBN, Deputy Governors of the CBN, the Director General Securities and Exchange Commission and Managing Director of the Nigeria Deposit Insurance Corporation. Also expected at the event are representatives of multilateral agencies, Switches and Processors, Payment Service Banks, Mobile Money Operators, Payment Terminal Service Providers, Payment Solutions Service Providers, card manufacturers and industry associations.

The launch of this historic Scheme presents a new dawn in the Nigerian payment ecosystem and unveils the unique opportunities presented by the Nigerian retail landscape. It is indeed the beginning of a new era, charting the future of the payment landscape as the first Domestic Card Scheme to be launched on the African continent.

CBN Lending N22.8 trillion in “Ways and Means” to Federal Government

Meanwhile, the apex bank has explained why it lent  N22.8 trillion in Ways and Means to the federal government. The bank governor, Godwin Emefiele, explained that “the central bank is a banker to the government and also a lender of last resort to the government”. This implies that it has the constitutional authority to do the lending.

• “because we are lender of last resort, it will be irresponsible for us to sit idle, it will be a dereliction of our duty as the lender of last resort to ignore the government and allow the economy and Nigerians to suffer.”
• “What we did by lending to the government as lender and banker of last resort is normal in any part of the world particularly when countries face crises. Any central bank, any FED will do what we have done.”
• “So that we appeal to those who are exaggerating the purpose behind ways and means to take it easy with us and believe that by the special grace of God that since the president has written to the national assembly, we will eventually give the approval to allow CBN to securitize” the loans.

According to Nairametrics, “The ways and means provision allows the government to borrow from the Apex Bank if it needs short-term or emergency finance to fund delayed government expected cash receipts of fiscal deficits.”

Stamp Duty Amount

More so, Godwin Emefiele, has noted that the total revenue collected as stamp duty on behalf of the Federal Government in 6 years, between 2016 and 2022, is N370.686 billion. There has been speculation that this was well higher (N89 trillion). Nonetheless, auditors will check if they are unremitted funds on stamp duty, even as the apex bank governor made a promise: “If there is any uncollected stamp duty, the banks will pay to the last kobo.’’

•  “Total assets of all banks are N71 trillion; total deposit in banks is N44 trillion.
• “From 2016 till date, stamp duty collection has amounted to N370,686 billion.
• “The Federal Inland Revenue Service has disbursed N226.451 billion of the money to the Federation Account Allocation Committee, while the balance of N144,235 is in the CBN.
• “The highest collection of the stamp is N71 billion, collected by First Bank.’’

Register for Tekedia Mini-MBA (Jun 3 - Sep 2, 2024), and join Prof Ndubuisi Ekekwe and our global faculty; click here.