Market Leaders Step Up to Help Hard-Hit Nigeria During COVID-19 Crisis

Many countries are beginning to ease the COVID-fueled lockdown measures and reopen their economies once again. The hope is that the worst of the pandemic is over as the spread of the coronavirus is being effectively mitigated by the authorities.

In Nigeria, however, the story may be different. This is because the pandemic has spread slower across the continent as compared to other parts of the world. However, Kano, Nigeria’s second biggest city with a population of 5 million, is suffering from what The New York Times describes as an “unchecked outbreak,” one that has gripped the region after an insufficient response to the first wave of the virus.

Though Nigeria’s official count of COVID-19 cases is still below 40,000 as of July 23, 2020, reports suggest that the unofficial numbers based on anecdotal evidence are higher. The Lagos Commissioner for Health, Prof. Akin Abayomi, recently reported that there is ongoing active community spread of COVID-19 in the state, and with the ban on interstate travel also lifted, the imagination is left to run wild on how far the coronavirus pandemic will travel across the country.

While the situation in Nigeria may sound dire, it is also bringing out the best in many people and companies that operate in the region. Doctors, nurses and other healthcare professionals have stepped up to care for sick patients despite lacking the personal protective equipment (PPE) to do so. Similarly, members of both the public and private sectors are chipping in however they can. Let’s spotlight some of those efforts.

Nigerian Remittance Market

Total remittances to the Sub-Saharan African region totaled roughly $48 billion last year. The market, however, is bracing for a decline of more than 23% in remittances this year to $37 billion as a consequence of COVID-19 followed by a bump of 4% in 2021.

According to The World Bank, Nigeria is a major player in the global remittance market as it was the no. 1 recipient of inflows in the Sub-Saharan African region in 2019. However, it doesn’t come easy, as “many Nigerians abroad are working three or four jobs to make ends meet,” according to Abike Dabiri-Erewa, Chairman of the Nigerians in Diaspora Commission.

Nearly $24 billion flowed into the country last year, far ahead of Ghana, with $3.5 billion in inflows. Nigeria is also ranked as the no. 6 recipient for remittances amongst low to middle income countries as told by Dr. Ann Amuta, Tenure-Track Assistant Professor of Public Health, on social media.

Dr. Amuta detailed how a married couple who attended medical school in Nigeria came to the United States a decade ago. While it was a struggle to afford their flights back then, they now earn a combined $750,000 annually in general surgery and pediatrics. Dr. Amuta explained, “They have so much now and have done so much for their families back home. Even built houses and started a business for his mom.”

Considering the billions that flow into Nigeria annually, not to mention the contribution that remittances make to the region’s GDP as depicted in the graph below, it is not surprising that the disruption of flows into the country has caught the attention of the public and private sector.

Source: World Bank

In the private sector, one of the companies are that is doing its part during the pandemic is remittance service provider, Sharemoney. The company supports payments to a number of Sub-Saharan African countries, including Nigeria. For the month of June, Sharemoney has been offering zero fees for Nigeria, allowing more critical funds to make their way back home to families.

This relief couldn’t come sooner for Nigerian migrants, considering that the average cost to send money to Sub-Saharan Africa is higher than other regions, at approximately 9 percent vs. a global average of 6.8 percent as of Q1 2020. The rise of “mobile money transfers” is expected to drive these rates down over time.

In addition, there is also a push to expand Nigeria’s remittance market to include Bureau de Change (BDC) Operators among the payment channels. The Association of Bureaux de Change Operators of Nigeria (ABCON) wants BDCs to support contactless and digital payment channels in the Nigerian diaspora and is calling on policymakers and regulators to adopt know-your-customer standards to break up what it considers to be a monopoly in the local industry.

Fintech in Nigeria

Incidentally, Nigeria is already one of Africa’s dominant players in financial technology, one that includes a flurry of startups and digital offerings by financial institutions in the country. Nigerian fintech plays are forecast to generate $543 million in revenue by 2022, according to a new report by MasterCard and MTN Group.

The report, “State of Play: Fintech in Nigeria,” reveals that remittances are the most mature sub-sector in the space, thanks to a flood of user-friendly apps that are in the pipeline.

● Payment processing company, Interswitch, powers much of the online banking and financial product infrastructure.

● Flutterwave, headquartered in San Francisco, is focused on the African market, where it helps entrepreneurs to grow into major corporations by supporting payments from anywhere globally. It was launched by a Nigerian and recently raised $35 million for its African expansion push.

● There are dozens of other fintechs operating in the country including cross-border payments startup Chipper Cash and digital wallet company Venmo.

Help is on the Way

Although Nigeria continues to suffer from the fallout from COVID-19, there is help coming from nearly every direction. Nigeria has been reeling from weakened oil prices, which has impacted oil revenue in the country and crippled supply in the midst of the pandemic. As a result, electricity providers have failed to deliver power to essential industries including healthcare and the food supply chain.

Renewable energy companies have stepped up to fill in the gap. According to reports, clean energy mini-grid project, Green Village Electricity Projects, has come through to power healthcare facilities when they need it the most, including “ COVID-19 isolation, testing, and diagnostic centers”. Green Village Electricity is delivering power to homes via solar-based electricity.

Meanwhile, the Central Bank of Nigeria has stepped up to make it easier for households and small and medium-sized businesses to receive financing. The Central Bank has lifted a requirement of a guarantor, which is usually there to mitigate the risk of default, for COVID-19-related loans, which has generated a robust response from the Nigerian community.

Additionally, the EU and UN delivered $22 million worth of “vital supplies” to arm the country in its fight against the pandemic. The testing kits and lab equipment, of which there are more on the way, were funded via the One UN COVID-19 Basket Fund, and is meant for the poor and most vulnerable citizens.

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Gerelyn Terzo is a staff writer at Sharemoney, a money remittance service that is passionate about improving the lives of immigrants. The granddaughter of an Italian immigrant from the town of Teora whose first steps in the U.S. were on Ellis Island, Gerelyn resides in New Jersey.

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