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CBN’s new fraud policy: debit first, questions later
M-Pesa faces an old friend
Zenith Bank increases staff salaries by 20%
Nigeria hopes to subsidise electricity tariffs with new $15 billion pitch
World Wide Web 3
Events
Regulation
CBN’s new fraud policy? Debit the banks first, ask questions later
In a move that might have some bankers sweating, the Central Bank of Nigeria (CBN) has issued a strong message: banks and fintechs are now directly responsible for fraudulent transactions that slip through their systems. The regulator has directed the Nigeria Inter-Bank Settlement System (NIBSS) to debit bank settlement accounts for any fraudulent funds received, burdening financial institutions with the responsibility to tighten their fraud prevention measures.
This tough-love approach stems from the CBN’s growing concern over rising fraud rates in Nigeria’s financial services sector. Nigerian banks lost ₦42.6 billion ($27.7 million) to fraud in Q2 2024, highlighting the urgent need for stronger safeguards. The CBN has been increasingly scrutinising fintechs for compliance issues since early 2024, and this new directive suggests that the regulator is taking no chances.
While the new policy is still taking shape, it’s clear that banks will improve their Know Your Customer (KYC) processes and fraud detection systems. As one banker told me, “If a bank allows a fraudulent transaction to pass through its system, it has to bear the consequences.”
In December 2024 when a major bank lost ₦7 billion ($4.5 million) to fraud, NIBSS debited the settlement accounts of the fintech that received some of the proceeds of the funds without explanation, according to people close to the matter.
The banking sector is bracing for the impact of this new policy, with some banks already implementing stricter controls on transactions. While the jury is still out on the industry-wide response to this move, one thing is clear: tightening accountability is a critical step in fighting fraud.
Fincra is hosting an exclusive fintech mixer on 12th February 2025 in Nairobi, bringing together industry leaders for networking, conversations, and connections.
Limited spots—RSVP now.
Fintech
M-Pesa has a new an old challenger: Airtel Money
Kenya’s mobile money market, a one-horse race that favoured M-Pesa, is undergoing a dramatic shift. It is now a fiercely contested market, with customers growing increasingly price-sensitive. The operator offering lower prices will capture a larger market share.
On Tuesday, TechCabal reported that Airtel Money, Kenya’s second-largest mobile money operator, doubled its market share from 2.9% to 7.6% in just one year, chipping away at M-Pesa’s customer base. Airtel Money’s strategy hinges on affordability, with lower transaction fees and free Airtel-to-Airtel transfers.
Airtel Money’s growth strategy is to expand its retail agent network through strategic partnerships while attracting high-value users with higher transaction caps to make bulk transactions on cheaper charges. For example, sending KES 1,000 ($7.7) costs KES 11 ($0.093) on Airtel Money, compared to M-Pesa’s KES 13 ($0.093).
Safaricom, M-Pesa’s parent company, now faces pressure on two fronts. Its telecom business is battling fierce competition from satellite internet service provider (ISP) Starlink, while its fintech arm is under siege from Airtel Money’s aggressive growth over the past year.
M-Pesa’s advantage lies in its wider utility than Airtel Money. Beyond basic money transfers, M-Pesa offers users the ability to borrow loans through services like M-Shwari and KCB M-Pesa, as well as access insurance products—features that provide added financial flexibility and security. These services create a strong ecosystem that goes beyond simple transactions, making M-Pesa indispensable for millions of Kenyans. Additionally, M-Pesa remains the preferred option for merchant payments due to its acceptance and trust among businesses. However, can this trust sustain M-Pesa in this competitive market?
While the industry often pays homage to M-Pesa for pioneering Africa’s fintech evolution, we may be witnessing a case of iterative technology surpassing its predecessor—or simply a battle of business wits. Right now, Airtel Money is winning.
Whatever the case, M-Pesa is in a tough spot, and the pressure is mounting for one of Kenya’s biggest businesses. Will it bounce back?
Banking
Zenith Bank increases staff salaries by 20%
Zenith Bank, a Nigerian tier-1 commercial bank, has raised the bar in Nigeria’s banking industry by increasing salaries for nearly 10,000 employees by 20%, effective January 2025. However, it falls short of the 40% salary increase set by GTBank, another tier-1 lender, in September 2024.
Aside Zenith Bank and GTBank, Union Bank and Sterling Bank have also raised staff salaries over the past six months, signalling an industry-wide move to address the high cost of living crisis in Nigeria’s inflationary environment (read: strategic move to retain talent.)
The rate of job switching in the banking industry is high, as many professionals possess transferable skills that make it easy for them to secure positions quickly at competing banks. For example, banks often hire contract staff for their engineering teams, which makes it easier for these workers to move between institutions.
The banks are well aware of this, which is why salary increases are often seen as necessary to retain staff in an environment where skilled professionals are always in demand.
However, the question remains: can these salary increases keep pace with Nigeria’s rising inflation and the lure of opportunities elsewhere? How are smaller banks that make less money supposed to compete with the bigger banks with deep pockets fighting to retain talent? Which banks are eyeing salary increases next?
The rising cost of doing business and keeping skilled workers is getting more expensive. Banks are just doing what they need to stay competitive.
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Economy
Nigeria hopes to subsidise electricity tariffs with new $15 billion pitch
The Nigerian government wants to take ₦11,250 off its citizens’ monthly electricity bills.
Our story on the impact of costly electricity tariffs on Akiode, a low-income community in Lagos state showed the grim realities faced by Nigerians in the light of the recent electricity tariff increase.
In April 2024, Nigeria removed subsidies on electricity (which costs the government about ₦700 billion ($451 million) yearly), increasing electricity tariff threefold. The country also introduced a tiered system of electricity supply, grouping neighbourhoods by the duration of electricity supply, with Band A customers paying ₦225 per kilowatt for at least 20 hours of daily electricity.
The Nigerian government is now looking to provide respite for these households who have had to cope with increased electricity prices amid soaring cost of living. The government is about to secure a deal that might subsidise electricity tariffs for poor households.
In its pitch to investors at a World Bank energy summit in Tanzania, the government is looking to raise $15 billion from private investors to plug an estimated $23 billion funding gap it needs to revitalise its struggling power sector. This pitch means that Nigeria’s power sector may offer higher tariffs, albeit subsidised for poorer households.
If secured, the funds will provide subsidies of 50-kilowatt hours—or ₦11,250—monthly off citizens’ electricity bills. The government will offer these subsidies either through consumption or via vouchers. The Nigerian government believes the fund will help provide electricity to 86 million people in the country who are currently without power.
However, the government’s approach to funding raises some important questions. While higher tariffs might attract investment, they also lead to increased prices for businesses and consumers. The government plans to offset these price hikes with subsidies, essentially using taxpayer money to cover part of the cost.
You might wonder, wouldn’t it be more effective to incentivize the energy industry through tax breaks or rebates? This could potentially stimulate investment without burdening consumers with higher prices and requiring costly government subsidies.
CRYPTO TRACKER
The World Wide Web3
Source:
Coin Name
Current Value
Day
Month
$101,968
– 1.01%
+ 9.55%
$3,123
– 2.68%
– 7.74%
$3.09
– 1.07%
+ 48.66%
$230.85
– 3.99%
+ 21.76%
* Data as of 06:05 AM WAT, January 29, 2025.
Events
GITEX AFRICA 3rd edition is NOW OPEN for registration. Africa’s largest tech and start-up event will be held from 14-16 April 2025 in Marrakech, Morocco. Attend to see the leading brands in tech, and the most innovative startups, and network with tech leaders, investors, speakers and government delegations from across Africa and across the globe. Register here.
The Lagos Tech Fest is set to hold its fifth edition from February 19–20, 2025 at the Landmark Event Center, VI, Lagos. Lagos Tech Fest gathers startups, innovators, investors, and government representatives to shape Nigeria’s tech future through conferences, exhibitions, networking, and driving ecosystem investments. Get a ticket here.
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Written by: Ganiu Oloruntade, Emmanuel Nwosu & Faith Omoniyi
Edited by: Timi Odueso & Olumuyiwa Olowogboyega
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