The Central Bank of Nigeria (CBN) needs US dollars desperately to help cushion the nation’s balance of payment, and fight deterioration of the Naira, and is going to Nigeria’s best export: the diaspora community. Yes, the apex bank has unveiled a really ingenious scheme called “Naira 4 Dollar Scheme”. Largely, if you wire US dollars to Nigeria via the approved IMTO (international money transfer operators) like Western Union, the payout bank will pay your recipient N5 per $I besides the recipient receiving the full amount you wired in US dollars. The CBN Governor mentioned in a Diaspora Series organized by Fidelity Bank Plc.

It is not Christmas or Salah yet but CBN is already loaded to send goodies. Send $1,000, your recipient will receive the $1,000, and extra N5,000, even if the payout is received in cash or domiciliary account. Two things are evident here:

• CBN wants to use this to change habits, pushing diasporas to use the formal channels to wire money home. You will not get this extra credit if you use the non-approved channels. Here, the channels are you must use the approved IMTOs and the destination would be to deposit money banks (the commercial banks). Those running cryptocurrency accounts will not benefit.
• CBN needs US dollars and is hoping that this will make the diasporas to open their wallets and wire money home. If it succeeds, it could be another way to stabilize the Naira, just as crude oil sales help internationally.

According to PwC, remittance to Nigeria was about $23 billion. Certainly, the central bank will not budget to carry such in perpetuity. This explains why the bank has put a window on this; it would begin on Monday 8th March 2021 and end on Saturday 8th May 2021. This is short term but if it is extended over a long time, you can call it a “quasi-devaluation” for the masses who are lucky to have families abroad.

In an effort to sustain the encouraging increase in inflows of diaspora remittances into the country, the Central Bank of Nigeria (CBN) hereby announces the introduction of the “CBN Naira 4 Dollar Scheme”, an incentive for senders and recipients of international Money Transfers.

Accordingly, all recipients of diaspora remittances through CBN licensed IMTOs shall henceforth be paid N5 for every USD1 received as remittance inflow.

In light of this, the CBN shall, through commercial banks, pay to remittance recipients the incentive of N5 for every USD1 remitted by sender and collected by designated beneficiary. This incentive is to be paid to recipients whether they choose to collect the USD as cash across the counter in a bank or transfer same into their domiciliary account.

In effect, a typical recipient of diaspora remittances will, at the point of collection, receive not only the USD sent from abroad but also the additional N5 per USD received. Please note having discussed with banks and IMTOs, the scheme takes effect from Monday 8 March 2021 and ends on Saturday 08 May 2021.

Good People, please remember to join me with the Vice President of Nigeria, the governor of the Central Bank of Nigeria, the CEO of Fidelity Bank Plc, and other business leaders of our nation in two hours. Link to register FREE is here.

Union Bank has unveiled an investing app, M36 – “a digital investment platform offering a range of investment opportunities for investors of all levels through a self-service app. In addition to its robust investment product offering, M36 provides access to investment advisors; life-essential products and services and a 24-hour lifestyle concierge, combining simplicity and functionality to deliver a seamless user experience”. Simply, the core aspects of banking are increasingly being digitized. 

When you consider the performance of Goldman Sachs as a public company, you will realize that serving just the 1% may not deliver the alpha since massive reduction in information asymmetry makes relying on extremely expensive financial products a bad strategy. So, today, GS has joined the mainstreet, selling credit cards, looking for $1,000 investors, and more. Since that pivot, the stock performance has been visible. This is what technology does – it reduces marginal cost, removes information asymmetry and makes it possible to serve many customers, optimally. Volume matters because the  unbounded supply of information has diminished the value of old-century proprietary reports. 

You do not need GS to know that a startup’s app is used by 1 million users; just check Google and Apple app stores! You do not need GS to know the traffic on that website as Alexa has that. So, business models which are built on exclusivity and constrained supply of information are facing challenges.

Union Bank desires to become Nigeria’s Robinhood, the extremely popular investing app in the United States. Of course, I am not sure M36 is free as we have for Robinhood. But no matter what, the bank is looking at the scale playbook.

Why am I writing this? I am coming back to strategy. M36 does not have anything with Union Bank on it, from branding perspective.  From color to name, there is nothing Union Bank. In other words, it wants to present this app as an emergent fintech in the market, to swim alone, and possibly thrive. Contrast that with Wema Bank’s ALAT which reminds you that it is from Wema. 

As digital technologies disintermediate rainmakers, banks would be looking for new playbooks. The goal for most would be to be at the edge of the smiling curve and the implication is that everyone wants to be a fintech! At the end, customers will win because better products will emerge in the market.