Mr Akinwale Goodluck, Deputy Chief Executive Officer of AfricaNenda, a financial inclusion (FI) accelerator, says that Nigeria’s introduction of the eNaira as the Central Bank Digital Currency (CBDC) of the Central Bank of Nigeria (CBN) is a forward thinking financial inclusion (FI) scheme.

But the CBN, he says, needs to work with stakeholders to deepen the penetration of the eNaira to address the overall national efforts to accelerate FI, which he also sees as a continental imperative. 

At the MWC Africa 2022 held October 2022 in Kigali, Rwanda, Mr Goodluck’s AfricanNenda launched The State of Instant and Inclusive Payment Systems in Africa (SIIPS) report, which is the FI accelerator’s initiative with the World Bank and the United Nations Economic Commission for Africa (UNECA), that aims to inform payment actors in Africa and beyond about the developments in the instant retail payment system (IPS) ecosystem on the continent.

On the sidelines of the MWC Africa 2022 in Kigali, where he was a speaker on a high-powered FinTech Summit at the gathering of the African mobile ecosystem, Mr Goodluck speaks in an exclusive interview with Technology Times on the key findings the SIIPS report, the evolving instant and inclusive payments across Africa, Nigeria’s eNaira and related matters below:    

On why AfricaNenda beamed radar on Africa’s instant and inclusive payments landscape

Mr Akinwale Goodluck: African Nenda is a financial inclusion accelerator. Our mandate is to ensure that by 2030 all Africans are financially included. We understand that there are a lot of things going on in Africa in terms of bringing people in, but we are focusing on the installation and implementation of instant and inclusive payment systems, IPS. In the course of our work, across several geographies in Africa, we found out that one, there is a significant lack of data. We need a lot more referencing data, we need indexing data, and it was clear that there was the need to commission a report that would take you look at the state of instant and inclusive payment systems in Africa. Looking at it from the national level, regional level, and ultimately at pan-African level. We then decided to work with our partners, the World Bank and UNECA, we prepared the terms of reference and started the work, collation of data, meeting people, looking at case studies, putting all these together and that has culminated in the report that was launched.

On key findings of State of Instant Payments study across Africa 

Mr Akinwale Goodluck: A lot of interesting things I would say. One, there is a significant shift in Africa towards inclusive payment systems. There is a clear understanding that the only way we can deliver and achieve financial inclusion for all would depend on how quick we can implement instant inclusive payment systems that are, one, low cost; that provide for low-value transactions, provide for high-volume transactions, are available 24/7 365 days a week, irrevocable payments and very very pro-poor and also very inclusive in terms of a multi-party participation. 

So we look at payment systems that banks can participate in, mobile companies can participate, fintechs can participate and indeed any other stakeholder in that whole payment space.

On roadmap for African economies and imperatives of cross-border payments    

Mr Akinwale Goodluck: We understand that we need national payment systems. We also understand that if we have national payments that are thriving, then we must provide for cross border payment systems. We want to make it possible for Wale in Ghana to be able to pay in a local currency, and transfer money to Shina in Ethiopia, instantly, at a very very low cost because it is not only about making the rails available, it is also about what are we putting on those rails. It is only by generating activity, creating wealth. That’s the only way we can really lift our people out of poverty.

For us at Africa Nenda, working with a lot of stakeholders, one is how do we build these payment systems? So we are supporting payment systems, national government in terms of pre-project, in terms of capacity building, in terms of the provision of catalytic funding, and also helping them to secure funding from project donor agencies, grantors all over the world. We are working with a lot of multilateral financial institutions, African Development Bank, the Bill and Melinda Gates Foundation. The idea ultimately is that with the amount of insights that we have, we are able to help join the dots. We are able to let people see the bigger picture. We are hoping that people will begin to consider some alternatives such as putting some of these infrastructure in the cloud so that we reduce the cost of deployment, the time to market and the cost of usage. So all these things are practical steps we are doing in terms of being able to deliver a payment system that serves the poor.      

On addressing regulatory hurdles in the way of instant payments across the continent, and recommendations for unlocking digital future for Africa

Mr Akinwale Goodluck: We have made a lot of progress across Africa recently. A lot of the regulatory bottlenecks remain but there has been a lot of progress and I think one thing that is driving the progress is that there’s a clear understanding across regulators in Africa that we must make financial inclusion available for all.

So it’s no longer about unbanked or banked. It is no longer about telco or non-telco. Right now, the model systems, best practice is a multilateral environment. A multilateral payment system whereby banks are playing, non-banks are paying, MNOs are playing, Fintechs, everybody in the digital financial systems is playing. We are looking at systems now where regulators, central banks are playing a very strong role in terms of setting up the scheme rules and also in terms of operating. Typically best to use an external party to operate. But again best practice suggests that when you have all the parties who are participating in the scheme also being able to sit at the table, then you sort of get the best out of the system.

So the regulators have come a long way, but there’s still a lot of work to be done. The regulators must use a bit more regulatory mandate to drive onboarding of financial institutions onto payment systems. The regulators must look at best practice in countries like India, in countries like Brazil where P2P is free. In India, even for P2P, there is no merchant discount rate. It is completely free. This has worked very well for Brazil. It has worked very well for India and we believe that as more and more regulators in Africa also minded to go along this route, we will see more and more people financially included and we will see the development of payment systems.

How Nigeria’s eNaira, the Central Bank Digital Currency (CBDC) introduced by CBN can scale

Mr Akinwale Goodluck: I think that it is still early days in terms of the adoption of the eNaira. There’s a lot of work that has to be done at the street level. A lot of sensitisation. A lot of reducing into the sensitisation into the local languages. There has to be greater ownership by all the stakeholders in terms of ensuring that one, the myths that had been put up against the eNaira are addressed. They must show that the private sector, the banks, the telcos can all work with the eNaira. Government must make the eNaira perhaps even more competitive than cash. You know, these are some of the things I believe will go a long way in driving adoption. But it’s a long journey. I think Nigeria is one of the pioneers of CBDCs (Central Bank Digital Currency). In the world today maybe we have 10 active Central Bank Digital Currency in play, a lot in pilot and a lot more countries are talking about it. So it’s good that a country like Nigeria has taken the bull by the horns and is gone ahead. A lot of people will learn from us. I believe also that the Central Bank will have to have a relook and see how they can ensure that it’s not necessarily internet-dependent so people without smartphones can also participate. I understand some of this work is already going on.

The road ahead on the African instant payments landscape

Mr Akinwale Goodluck: The road ahead, I think, one it’s exciting. I think that we rae going to see national payment systems thrive. And thereafter, there’s going to be a lot of work in terms of cross-border regional payment systems. It would start at the regional economic level, you would have the WAEMU (West African Economic and Monetary Union) which is the Francophone countries, you have the ECOWAS, you have the East Africa community, you have COMESA, you have SADC. So you will have some of these regional things. And these things would start working and ultimately we will have people competing at a pan-African level. So we see people like PAPSS (Pan-African Payment and Settlement System) and indeed other players who are also interested in switching at a pan-African level.         

We need to sort out the issue around settlement. Issues around dollar dependencies. We need to also ensure that if I buy a shirt from Shina in Ghana, there is transportation to get it to me in Lagos. Customs tariffs are aligned and all the great things that we’ve been talking about the African Continental Free Trade Agreement are actually implemented.

An African call to action for instant payments  data

Mr Akinwale Goodluck: One concern that we had in terms of putting together the state of instant and inclusive payments report was just the burden of getting data. 54 countries in Africa, we were only able to get data from about 26 countries. The data is often in a position where it’s easy to use, and requires a lot of cleaning. A lot of alignment. So it’s a call to action for people to understand that the more data we have, the better the report will be and the greater utility it would have for all practitioners.