Nigeria Archives - Adedeji Olowe

Nigeria’s 200m+ population is a scam

Nigerians recently got a massive shock about something that some of us in the industry already knew to be true for years: Glo’s subscriber numbers were always nothing but a mirage.

Quite a number of us had always suspected Glo’s touted customer base to be ghosts or ogbanje subscribers. But this only became glaring when the Nigerian Communications Commission (NCC) enforced its rule that a phone line would only be considered to be active only if it’s been used within the last three months. After this, Glo’s numbers fell from the sky. Their reported active subscribers dropped from 62.1 million to 19.1 million.

Crazy, right? Absolutely. It had everyone wondering what the hell happened.

But for those of us who’ve been in the industry long enough, it wasn’t exactly surprising. Glo’s numbers never seemed to add up and it was easy to see they weren’t being truthful. It was probably easiest for those in banking to uncover this ruse faster than others—phone numbers tied to banking services for SMS alerts, or even alerts for other everyday services, are usually people’s most important numbers. And for those who get to see things from the inside, when you analyze the breakdown, most of those numbers customers provide are MTN numbers, followed by Airtel, then some Glo, and if you look with a microscope, you’ll find a few 9mobile customers.

Funny enough, six or seven years ago, you’d probably have seen more 9mobile (they were called Etisalat at the time) numbers than Glo. But this was before 9mobile (Etisalat) ran into some FX trouble and the Arabian owners dug themselves into a gilded 6-foot grave. When we pair the NCC’s directive with Isa Pantami’s enforcement of the National Identification Number (NIN) policy (every phone line needs to be linked to the user’s NIN in order to remain active), Glo’s drop was inescapable. With 156 million active lines in Nigeria today, and many Nigerians owning more than one phone line, the truth about telcos’ inflated subscriber figures is out in the open now.

But the thing is that nobody cares what caused Glo’s numbers to decline so dramatically. That’s not the real story here. The real story is that this scandal is part of a larger pattern of exaggeration when it comes to numbers in Nigeria: how rich a guy is; a girl’s body count; and the population of Nigeria.

Glo’s scandal merely mirrors the bigger issue; that just like Glo, Nigeria’s population figures have also been bloated for the longest time.

In Nigeria, the numbers will look you in the eye and tell you the dirtiest lies ever. Don’t be deceived.

Nigeria 2006 census results (by geo-political zone)

Geo-political Zones	Population (million)	Percentage of Population
North-Central	20.3	14.51%
North-East	18.9	13.52%
North-West	35.9	25.58%
South-East	16.3	11.68%
South-South	21.0	14.99%
South-West	27.7	19.74%

Northern Zones	75.2	53.60%
Southern Zones	65.1	46.40%

Nigeria total projected population (2006 – 2022)

Years	Projected population
2006	140,431,790
2007	144,636,162
2008	148,987,688
2009	153,408,431
2010	157,898,421
2011	162,450,998
2012	167,054,454
2013	171,704,412
2014	176,438,990
2015	181,248,792
2016	186,121,277
2017	191,053,912
2018	196,042,933
2019	201,135,262
2020	206,283,338
2021	211,493,324
2022	216,783,381

Sources:

National Population Commission, National Bureau of Statistics, Demographic Statistics Bulletin 2022, Dataphyte

There are only 138 million people in Nigeria!

About five/six years ago, Prof. Olayinka David-West introduced me to Tunde Akin Moses and Chidinma Okaniru who were both MBA students at Lagos Business School (LBS), to conduct an intriguing research project to take a closer look at Nigeria’s population numbers and find a plausible figure for the total population in the country. The conclusion of our research was that despite what the official figures claimed, Nigeria’s population shouldn’t have exceeded 138 million at that time.

The major red flag was the year-on-year consistency of regional population ratios. Nigeria hasn’t conducted a census since 2006, yet the figures follow a predictable pattern. Compare this with other countries which conduct censuses every 10 years or, even better, rely on accurate records of births and deaths to track their populations. Nigeria, however, seems to keep projecting numbers without accounting for the significant demographic and economic shifts.

Just pause for a moment and think about the changes over the last few decades: significant urbanization over the last 40 years, increased rural-urban migration as people continue to seek access to better service coverage and economic opportunities, and young people emigrating in droves, AKA japa.

The population projections we rely on are based on the 2006 census which was probably an exaggeration. Even then, there were suspicions and the Governor of Lagos State at that time, Bola Ahmed Tinubu, openly challenged the census results, commissioning one for Lagos, which estimated 17.1 million people—roughly the same as the reported population for Kano. How??

Let’s do some quick population maths

Today, we have about 156 million reported active phone numbers, so let’s break that down. Many Nigerians own more than one SIM card, so if we assume an average of 1.5 numbers per person, we’re looking at around 100 million individuals using phones. SIM cards are so cheap and accessible that almost everyone has a phone line.

If we estimate that nearly every Nigerian aged 13 and above has a phone, that gives us around 100 million adults and another 10–20 million children and with a buffer, Nigeria’s population should logically fall somewhere around 130 million. So where did we get this 200+ million we keep reciting? These aren’t definitive numbers, these are my conclusions based on observable trends and logic, not a blind acceptance of official claims. I stand to be corrected but you can read more about how I arrived at this figure before you come for me.

The reality is that Nigeria’s population might not be as large as we’ve been told, and the telco data provides a new lens to scrutinize these figures.

Why inflate population figures …

Especially when it makes our GDP per capita look worse?

The short answer is: incentives. Let me break it down:

Allocation of resources and national benefits

In Nigeria, population figures are tied to the distribution of national resources. The number of local governments, House of Representatives seats, and even federal revenue allocation are linked to population size per region. A region with a higher reported population typically receives more funding for infrastructure, healthcare, education, and other essential services, so they may inflate their figures to secure a larger share of the national moi-moi.

Financial incentives

Beyond resource allocation, there’s a financial motivation for inflating population figures. At its core, this is about influence and control. Larger populations mean more political power, which translates into more opportunities to direct financial benefits toward a region or group. Politicians and policymakers from areas with inflated populations can use these numbers to lobby for more projects, grants, etc.

Influence on election outcomes

Elections in Nigeria rely heavily on population figures to determine the distribution of polling units, voter registration, and voting power. Regions with inflated numbers can justify a larger number of registered voters and secure more polling units, making it easier to influence election outcomes.

Attractiveness to international organizations for funding and aid

On the international stage, a larger population creates the impression of a country with significant needs, making it more attractive to international organizations that offer funding, aid, or loans. The governments and agencies can use these higher figures to negotiate for larger financial packages, claiming these are necessary to support the growing population.

Each of these incentives creates a system where inflated population figures are actively pursued and instead of addressing the country’s real demographic needs, the numbers are propped up to serve political agendas.

Nigeria is worse off as the giant of Africa: Let’s shrink to grow

Contrary to what those at the helm of affairs believe, we’d actually be better off if Nigeria’s population turned out to be smaller than what we’ve been led to believe. Here’s why:

For starters, some of our vanity metrics would improve. Per capita GDP, for instance, would likely double. Of course, this won’t immediately make our lives better, but it would significantly enhance Nigeria’s economic outlook; which could open up new opportunities for us.

A smaller population figure also means fewer resources are needed to support everyone and a better chance at improving the overall quality of life.

Right now, Nigeria’s actual population is probably around 60% of the reported numbers. A proper census will reveal the truth and help us to make more informed decisions as a nation. Accurate data is critical for planning, and policy formulation that genuinely address our needs.

For this to happen, we’d need a well-executed population census, ideally built on top of the successful (surprise!) National ID—maybe Tinubu will decide to fund one next year. Who knows?

And when we do discover that the numbers are false, I don’t think anyone should be punished even though they lied. What’s done is done. Let’s just focus on building a better country.

But irrespective of this long story, what I know for sure is that Nigeria’s population numbers, as they stand today, are a scam.

I’ll be waiting for anyone who wants to tell me differently.

Solar power and batteries are the future of power in Nigeria

Nigeria’s power issues persist, but solar energy and new battery tech offer us hope. Affordable, lasting solutions are making energy independence possible without having to rely 100% on the government.

Power has been a challenge in Nigeria since I was born. In fact, it has been a challenge for years before I was born. And it’s starting to look like it’ll outlive me. There’s never been any time in Nigeria when we didn’t have power issues, at least in my time and the impact of this constant struggle with power is crippling—the lack of reliable electricity has caused many aspects of life and development in Nigeria to remain messed up.

It’s difficult to understand why these issues persist because I’ve seen things that weren’t available in Nigeria, become available over the years. For instance, I grew up in the time when there was no telephony in Nigeria; when as of January 2001, out of 100 million Nigerians, only about 400,000 had a telephone line. Things were really bad back then, and communication was incredibly limited. However, we saw what happened when telephony was done; it felt like the entire Nigeria suddenly became connected, like one team. If telephony hadn’t progressed like it did, Nigeria would’ve been a shell of itself today.

I witnessed a similar thing for the spread of the internet in Nigeria as well. Around 2015, the internet began to gain importance here. Initially, we didn’t have access to the internet but then the GSM providers started making mobile internet connectivity available and in all fairness, they did an amazing job. Then MainOne laid the first cable, and internet pricing dropped significantly. After this, MTN introduced the West African Cable System (WACS) here. Although we always had SAT-3, but it was just a disgrace and GLO’s internet service wasn’t really impactful. However, the improvements brought by MainOne and MTN marked a turning point for Nigeria.

The internet became so accessible, and this, combined with the widespread telephony, allowed people to start to build bigger businesses because they could connect with others more easily. This transformation was also crucial for the development of Nigeria’s banking and fintech sectors. The efficiency we enjoy from innovative solutions like those of Paystack, Flutterwave, and Moniepoint , and services such as POS payments and interbank transfers, wouldn’t have existed. Maybe the only thing we would’ve gotten is USSD technology since it works without internet access.

The internet happened but Nigeria’s power problem persists

Despite the progress in telephony and internet connectivity, here we are and the power problem still remains unsolved. It’s safe to conclude that the reason power still hasn’t happened is because it depends so much on infrastructure and the government doing the right thing. The government’s attempt to address this by privatizing the power sector at some point was a step in the right direction, but it fell short when they decided to hold onto electricity transmission and they’ve just just made a mess of it.

Today, Nigeria has an installed generating capacity of 13,000 megawatts, but only about 4,000 megawatts can be evacuated at any time. If transmission was never in the hands of the government, I’m very sure we would be doing about 100,000 megawatts. But that hasn’t happened yet. There’s been a lot of interesting news about the government bringing in people to do things better, but any meaningful improvement is still likely to take some years before it materializes.

Solar power is a big deal

Recently, we’ve started seeing the evolution of solutions that don’t depend on the government; solar energy and the likes. While these solutions are quite expensive, prices are gradually decreasing, making it a more viable option for more people.There are some companies like Imperium from Sterling Bank and Asolar, founded by my friend Hakeem Shagaya, doing interesting things in this space. We also see Lumos and thousands of other smaller players who aren’t established brands also making significant strides in providing solar solutions.

Before now, people used a combination of grid electricity, inverters and generators to take care of their power needs. So they’d use the electricity generated from these sources and store it in batteries for later. But grid electricity and generators have become so expensive now that this approach has become more difficult to sustain. Then people realized that the sun that is roasting us daily offers an abundant source of energy.

Thankfully, the Nigerian government and its public servants aren’t in charge of the sun, or else they might have made it stop shining. So now more and more Nigerians are turning to solar power as a practical and cost-effective alternative.

Battery technology makes solar energy an even bigger deal

Away from solar, I recently read a report on Bloomberg which said that by next year, global battery production capacity will be five times the demand, leading to a glut. While this might sound like good news, don’t count on it because such gluts can even result in higher prices. However, the long-term impact could be beneficial and I foresee Nigeria being a main beneficiary. A glut could lead to a significant drop in battery prices, and I expect China to be in the center of this, going by their track record.

For instance, consider what they did with manufacturing a vehicle with capabilities similar to a Tesla Model 3 but at half the price and with China’s competitive production strategies, it’s only going to get cheaper. Those guys are crazy good like that.

Back to batteries, a new battery technology, sodium-ion batteries, is another welcome development. Unlike lithium batteries, which can account for over 60% of the price of a new car, sodium-ion batteries are significantly cheaper, potentially reducing costs by 40-50%.

You’re probably wondering why we don’t hear about sodium-ion batteries being used in cars. This is because despite the fact that sodium-ion charges faster and are cheaper to manufacture, the major problem is that sodium-ion batteries have less storage capacity compared to lithium- based batteries. However, sodium-ion batteries are a promising option for home energy storage solutions; they’re cheap and durable enough.

Solar + Batteries + Fintechs = Energy Independence for Nigerians

Maybe this is what’s going to happen to Nigeria: the Chinese will come to Nigeria/Africa and start building cheap ass sodium batteries and solar panels that will last for years. And with Nigeria close to the equator where the sun shines the living daylight out of everybody, we’re good.

Recently, I was on a call with Hakeem Shagaya and he told me about a power solution they could get for me. The solution he described is 5 kilowatts, about the size of a fridge and costs around N5 million and can be paired perfectly with solar panels. But I have 24/7 power where I live now so I don’t need it, but If I were still in my former house, I would have invested in it without hesitation and just gone off grid electricity completely if I wanted to.

Now imagine how much more widespread the adoption of this solution would be if it was cheaper? And the great thing about solar panels is that they only lose about 25% of their capacity in 10 years, and they can last up to 20 years. Even for those who might not be able to afford sodium-ion batteries, combining them with traditional lead-acid batteries could still offer a practical solution

With these developments, financial service providers can also plug into this and use the opportunity to introduce credit solutions for people to access solar and battery technology on credit and pay back over time. This is what we’re doing at my company, Lendsqr; looking for lenders who really want to get it on these innovative things and fund people who want to buy these solutions and gradually achieve their energy independence.

Companies like Lumos and Asolar are already doing great stuff with Energy-as-a-Service which allows people to access energy solutions even if they cannot afford the upfront costs. They offer energy solutions with flexible payment options, and if you miss any payments, they can turn off your energy unit completely.

Nigeria’s energy revolution is already here

Looking ahead, I see a significant shift towards energy independence in Nigeria as more people embrace solar energy and battery technology. And with this, the grid electricity transmission companies are dead in the water. The Gencos may survive but people would have moved on to covering their houses with solar panels.

This means that if the Chinese do this very well, they can just forget about trying to dominate the developed foreign markets who already have everything, and instead, take advantage of the immense opportunities to directly supply and manufacture these affordable and high-quality solutions in African markets.

I just hope the government doesn’t try to meddle with the developments in this sector. If they want to get involved, they could support by making sure the taxes, tariffs, and duties associated with these solutions are next to nothing.

I remember when we used to talk about fiber optics, and everyone thought it was a big deal. Now fiber is everywhere, the adoption of internet services like Starlink is growing. Yes, some of these solutions are still expensive but one day somebody will copy them in China and flood the market with cheaper alternatives and this is definitely something I look forward to.

The bad economy makes a cashless Nigeria more realistic than ever

Inflation is driving Nigeria toward a cashless economy, making electronic payments essential. This shift, though challenging, offers opportunities for fintech growth and streamlined government oversight.

Anyone who’s been watching the fall of the Naira, can only be astonished by how many notes it takes to buy anything these days. Just four years ago, in January 2020, $1,000 was worth about N360,000 which meant you’d get 360 pieces of N1,000 notes or 3,600 pieces of N100 notes. By the way, that’s 3.6kg to log around if you went for the N100 notes and a N1,000,000 composed of ten N100,000 bundles are 1kg.

Fast forward to 2024, $1,000 is now a disastrous N1.6 million. To use that cash to make some payments, you need 1,600 pieces of N1,000 notes. So, you’d have to count out 16 bundles of N100,000. If you want that in N100 notes, that’s 16kg to carry around. The weight of this note is the testament of how bad things are for Nigerians.

With so much deadweight to carry around, everyone is looking for more and more notes to be able to do anything substantial and many are realizing that carrying the volume of cash required to do most things now is just simply impractical.

Inflation continues to destroy the value of the Naira and no new higher denominations have been introduced. Even with the smaller notes, when was the last time you saw N10, N20 or N50? It’s almost like they’ve become entirely useless. So, what we’ve seen in recent times is that people are increasingly turning to electronic payments for their everyday transactions, shifting us further away from a cash-driven economy.

Cashless economy: the Government’s push vs the economy’s hard shove

I didn’t fully grasp the magnitude of this issue until someone from TechCabal reached out to me to discuss the line items of the national numbers. We saw that the number of electronic transactions had shot up significantly but there was something off with the revenue being paid to the Government from what the banks were reporting; it wasn’t commensurate with the volume of transactions.

Everyone expected more electronic transactions to have a commensurate increase in what the Government is earning with electronic transfer levy.

Looking at this more closely, we then figured out the reason for this. What has happened is that small ticket transactions are now being done electronically which wasn’t the case before now. Previously, most electronic transactions were for amounts over N10,000, which used to be a significant amount of cash to carry. And people would have to pay a N50 electronic transfer levy. Back then, we were primarily paying for small items with physical cash and electronic transactions were larger, which made it easier for the Government to collect revenue.

But now with inflation and the rising costs of living, how much cash can one carry around even to fulfill the most modest transactions? Over the last 4 years, items that cost N1,000 then are now N5,000 and above. So, if you withdrew N10,000 from the ATM and you could spend N1,000 ten times for various items, you need to withdraw N50,000 to do the same thing.

Beyond the fact that the average Nigerian is impoverished, they can’t even get the N50,000 from the ATM easily. Most ATMs now dispense a maximum of N5,000 per withdrawal, if you can get it to give you cash to start with.

It then makes sense for everyone to switch to digital payments. Yes, many of these individual transactions often fall below the threshold for fees like the electronic fund transfer levy.

Naturally because of this, the Government isn’t seeing the expected revenue (and we hope they don’t) because this Government will tax a dead man just to raise funds (and possibly waste it on useless expenditures).

The interesting thing is that the Central Bank of Nigeria (CBN) has been pushing for a cashless economy sinc2 2012; but they have not been successful because of half-hearted implementation and multiple policy reversals. But it’s fascinating how the bad economy has led to changes in the trend of transactions, doing what the CBN couldn’t – shoving us, ruthlessly and mercilessly, toward a cashless Nigeria.

Electronic transactions are becoming increasingly essential, bringing the cashless economy closer than ever. If the Government doesn’t introduce higher Naira denominations and keeps us locked at the N1,000 note, we might just see all transactions move to electronic and a fully cashless economy may soon become unavoidable. If the situation worsens—say, if a sachet of pure water becomes N500 or the exchange rate reaches N3,000 to $1 (God forbid)—cash will become practically useless. But we never know, they may decide to introduce a higher value note.

Implications and Benefits of a Cashless Economy

As electronic payments become more prevalent, physical cash will become less necessary. People won’t need ATMs anymore but unfortunately businesses in that space will be destroyed. Also, the whole issue of the Government frowning against people spraying Naira at parties will vanish because where will the cash come from? Unless they want to spray dollars.

With the transition to electronic transactions, the Government will have a much better view of the real economy because all financial movements will have digital footprints.

Additionally, we can expect fintechs to remain very successful as this shift presents significant opportunities for them to thrive as they’ll need to meet the growing demand for digital payments. Banks will also benefit from streamlined operations since they won’t have to handle cash so much and shift their focus to digital transactions instead.

However, there are challenges to consider. Fraudsters will find new ways to exploit the system, especially for those who may take a while to understand how electronic payments work; making easier targets for phishing scams and likes.

What I don’t understand is how kidnappers will request for ransoms. I’m not sure the unavailability of Naira in cash might be enough to deter them. Perhaps they might shift to demanding ransoms in dollars. Whatever it is they decide to do, I hope they fail miserably at it and get caught.

But by and large, beyond the unfortunate and challenging circumstances driving this, a move towards a cashless economy could offer substantial benefits. Perhaps this is just what we need to give the Government a clearer understanding of what’s really going on with our economic activities. And if managed effectively, this shift could turn a difficult situation into an opportunity for significant improvement in our financial system and the Nigerian economy.

Fraudsters are raping the Nigerian fintech space to death

Rape and financial fraud share a common thread: the silence of victims, often due to shame. In Nigeria, banks and fintechs suffer a N12 billion loss to fraud, yet remain silent, fearing the stigma. This silence hampers justice and perpetuates the cycle of crime.

Rape is the absolutely worst thing that could happen to anyone. It’s so horrible that if rapists are caught and sentenced to death, many people won’t even bat an eye and simply believe it’s justified. It’s so horrible that some rape victims commit suicide.

But if it’s such a terrible offense with severe consequences, why do rapists often get away without consequences? The answer is pretty straightforward, albeit very sad: Most rape victims would rather keep mum than expose these bastards.

Naturally, the next question could be why are victims so reluctant to step forward to the extent that many accept that they may never get justice but stay silent all the same?

The answer to this, much like the former, is also quite straightforward.

Shame.

Nigerian banks and fintechs have been shamed into a N12 billion silence

It’s no secret that victims are often shamed into silence and even merely the thought of being shamed is enough of a deterrent for those who may want to speak up. Many times, people even forget about the guilty party and focus on grasping at straws to blame the victim and try to convince them that they were complicit in their attack.

Similarly, shame is what makes it difficult for financial providers whose businesses have been defrauded to speak up even when they can get justice from the authorities.

Would you believe that since the start of the year, there has been a systematic rape of banks and fintech? I’ve personally tallied ~N12 billion lost to frauds and hack. Every bank and fintech hit has been groaning in silence but no one is ready to speak up.

And I’m not just talking about small or new banks, I’m talking about from the big 5 banks all the way down to the smallest ones; fintechs included. Business Day recently mentioned Fidelity, Access Bank, and others who have lost billions to fraud over the last few months.

The discussions about fraud are happening behind closed doors, Telegram channels, WhatsApp groups and the groans are growing louder but still, no one is ready to break this costly silence.

And that, fellow Nigeria, is what the fraudsters are banking on.

Why is fraud running so rampant?

A major cause for concern is sloppy APIs and weak security infrastructure that allows bad actors to gain access to financial systems and move money out. However, despite the more sophisticated systems and security measures with the large banks, people are often the weak links in the system.

Generally, humans will be careless but it also happens that bank staff are bribed to bring in compromised devices to work, etc. which makes it possible for fraudsters to access the banks’ database externally and use private APIs to perpetuate all sorts of crimes.

Of course, we can’t leave out the fraud committed using debit/credit cards and POS machines. Chargeback fraud is so rife you could write an entire book around it. Chargeback destroyed Union54, a once promising African card processor.

What happens to the stolen funds?

Well, the stolen funds take quite the journey. First, the money is sent to another bank, split and passed through even more banks before it then moves through some certain new generation banks; some of which are foreign-owned.

Nigerian banks protect themselves. When cases of unauthorized transactions are reported, it usually triggers a flurry of emails and calls between the banks and the accounts suspected to be involved are restricted pending further investigation. There’s a legal agreement between banks to do this. Albeit, not sanctioned by CBN.

Unfortunately, the new generation banks and fintechs don’t comply with this rule and so the stolen funds simply disappear. Poof!

What’s the implication if this continues?

The reality is that the traditional commercial banks make enough profit to cover getting hacked by APIs so while we should be concerned about them, they’re not the ones most affected by this menace.

The real problem is with the everyday Nigerian who loses their hard-earned money. If the banks are unable to trace where the money went, there’s nothing they can do and their money is simply gone.

The ability of the financial sector to play its role effectively is rooted in trust. Even the strongest economy will crumble if end users lose faith in the financial system. This is what’s at stake while fraudsters continue to destroy decades of work that the CBN, banks, and fintechs put in to build the system we currently have.

For all its many woes, Nigeria is actually ahead of quite a number of its counterparts in terms of the capabilities in the financial sector; especially with electronic transactions.

Therefore, if Nigerians lose in electronic transactions, that sets us back significantly and all hopes of growing the economy vanish.

By law and regulations, banks and fintechs are required to declare to the CBN whenever there is fraud; either hacks or just the everyday “Nigerian Prince” scenarios. But we have to be pragmatic for a minute here. Remember the shame we spoke about earlier? Well, this is where it comes in. The shame associated with declaring a successful fraud attack to the CBN prevents affected organizations from doing so.

If you have had the misfortune of CBN having you to explain your mistakes, then you would understand while sometimes when you kids get bullied in school, (or even more dastardly, raped) then you would know why no bank sings to the CBN when they are taken advantage of.

To make it worse, when customers hear a bank has been hacked, it immediately reflects poorly on the business and suggests incompetence and an inability to meet expectations.

It’s almost like the fraudsters responsible for these terrible acts don’t even exist at all.

But who is to blame here?

The short answer is everyone!.

Quality of human resources within the banking and fintech ecosystems have taken the hit as every smart one of them has “japa“. Some of us may claim to “love” Naija but the truth is, the best and brightest have gone leaving us at the mercy of digital night marauders.

Poor quality has led to poorer platforms. We now have very powerful APIs and other technical capabilities with sub-par resources to monitor and secure them. We are all dead men walking.

Banks and fintechs are sloppy with their Know Your Customer (KYC) and Customer Due Diligence (CDD). Or how do you explain Adedeji with N100k inflow over 24 months suddenly getting N10m and immediately moving that money out?

Super agents aren’t able to explain how sudden cash flies through some agents as cash and there are no ways to hold anyone accountable.

CBN is also not on top of these fraud issues. They don’t need someone to report themselves to know that all isn’t right with the system.

Enough of victim blaming and shaming.

How do we restore the trust that lines the financial system

We’ve already established that everyone has dropped the ball but irrespective of who’s to blame, this issue must be addressed urgently. If not, once the trust in the system is destroyed, the center wouldn’t hold. Fintechs and digital financial services is one great thing Nigeria does well. It shouldn’t die.

CBN and banks should lead a tougher chargeback regime, similar to what happens with cards, for interbank frauds. This will force every bank to take KYC and CDD seriously.

Any bank on the chain found not to have done proper fraud profiling for transactions should be held responsible for the amount that passed through them. Enough of end-customers holding the bag when everything goes south. Let’s hold banks accountable for a change.

CBN, Banks and NIBSS should make it easier for anyone to report fraud. The current process is broken and doesn’t help anyone. They need to collaborate with the Nigerian Communications Commision (NCC) to make fraud so expensive for fraudsters so they reconsider their career choice.

For instance, once implicated, a fraudster should be banned from all electronic transaction channels from 1 year to forever. Good luck to this individual.

The issue here is consequence management. When the authorities make the consequence for fraud expensive and damning, fraudsters will begin to borrow some sense.

Until then, welcome to the league of the onlookers. Because everyday is like Christmas for these fraudsters while the rest of us are wondering when this comic episode will end.

Tinubu’s student loan plan is great. But there is a better way to do it.

The Student Loans Act is a step forward, but its current setup may fail. Some strategies such as simplifying criteria, involving private banks, and focusing on merit can ensure its success.

The Federal Government of Nigeria recently signed the Student Loans (Access to Higher Education Act, 2023 into law. This is a big step in the right direction of providing affordable credit for all Nigerians. Nigeria can’t grow without credit – that’s a fact.

Only a little over 1% of Nigerians are successfully enrolled in a higher education institution and we can’t pretend not to know that the major barrier to accessing higher education for the majority of Nigerians is simply that they can’t afford it. What the Government has done now is to provide a solution to significantly lower that barrier for indigent Nigerians and empower their future through education, to be more productive members of the society. What’s more? These student loans are interest-free; at least for now.

This is definitely commendable.

However, with the way the student loan scheme is currently set up, it might just be destined for disaster. The strict criteria and paperwork required are quite unrealistic for the less privileged students these loans are targeted at. For instance, to qualify for the loan, applicants need to prove that their household income is less than N500,000 per annum or N47,000 per month. This means bank statements and maybe even tax clearance certificates. Needless to say, this poses a problem for low income households who mostly work low paying blue collar jobs or engage in petty trading and remain outside the formal financial sector.

In addition to this, applicants are required to provide at least two guarantors from a limited list of: a level 12 civil servant, a lawyer with 10 years post-call experience, a judicial officer or a justice of peace. The chances that the poor families run in the same circles with these people are slim to none. Even if these requirements are somehow met, there’s no certainty that the loans will be granted as they are subject to the availability of Government funds. These are some of the concerns with the current student loan plan.

This way will fail. Miserably.

Why is it important to ensure the student loan scheme works?

Student loans will secure the future of Nigeria with talent and allow the economy to grow at a sustainable pace. The impact would be felt within a maximum of four years with the fresh graduates’ entrance into the labor market. The labor market will be set to receive an inflow of better qualified job seekers. There might not be enough jobs right now but there’s equally a shortage of talent in the labor market.

Naturally, a reduction in crime will be expected to follow. Educated students are more likely to get jobs and create value than risk their lives or freedom for crime. Even the rent-seeking activities and the entitlement it breeds amongst our young people will see a decline.

With better education and an accompanying improvement in the standard of living, Nigeria will see a rise in our currently poor human development index (HDI) score.

An uneducated Nigeria in 10 years will be a disaster of epic global level.

Is there a better way this could be done?

This is too good an opportunity to pass up or botch. Here are a few ideas that could be implemented to improve the way the student loans will run:

There should be a student loan financing scheme which students, regardless of their parents’ income, can access as long as they meet the schools’ admission requirements. This way, there is much more focus on the ability and merit of the students rather than their parents’ circumstances. This also means it shouldn’t be limited to the poorest students alone.

This financing can be processed through the universities. The universities, upon acceptance of a qualified candidate, can apply for financing on their behalf. Of course, the universities must also meet a certain standard that assures financiers that the student will receive a quality education that increases their chances for success upon graduation. In view of this, the financing may be restricted to certain courses for which job opportunities are readily available. This helps to manage the risks associated with repayment down the line.

Additionally, transferring the responsibility of financing the loans to the existing private banks takes care of the “disbursement is subject to the availability of funds” clause. Public-private sector partnership can go a long way in ensuring the success of this initiative.

Involving the banks means students may also have the option of securing their admission first and processing the financing through the banks. The only role the Government might play in this is to back the loans; to guarantee the loans in a sense, so the banks can lend confidently.

Essentially, what this is what this could look like: Student Lagbaja gets admitted into ABC university and informs the university he would like to finance his studies via a student loan. He fills out an application for the student loan at the university and the university submits this request to a bank they would have partnered with for this purpose. The university assures the financier that the student is enrolled in an accredited program for a specific duration and they will receive quality academic instruction. Student Lagbaja’s fees are covered by the bank and that’s it. He can go into the world and succeed. And of course, start repaying the loan when due.

What are the benefits of implementing the student loan plan this way?

Let’s get straight into it:

The first benefit is that this way, the loans can be allocated with merit at the heart of the requirements. Enforcing a minimum standard of academic excellence to access the student loans also ensures that only the students with the best future prospects benefit.

The need for guarantors becomes irrelevant and this removes the classist implications of the current requirements of such out -of-reach high-ranking officials as guarantors.

Another benefit of this approach is that students can take responsibility for this process without involving their parents, who may be unable to help because they don’t have the resources or an understanding of what’s required of them.

Finally, a more efficient loan distribution network can be established through the banks. This removes the possibility of the process being held back by Government inefficiency, bureaucratic red tape and corruption.

What’s the assurance that this approach would work better?

It’s quite simple really. Banks are more effective with lending and loan recovery. We can’t forget that the Government already tried student loans in the 1970s and had to abandon the efforts when they couldn’t hold people accountable when it came to repayment.

Universities would also be forced to improve their offerings and facilities to be able to onboard more students who can attend on loan.

The final question to answer after considering all these is perhaps the question of how the Government will ensure the loans are cheap? Interest-free loans start and end with the Government. Incentives such as tax write backs would work quite well here to make lending attractive to the financiers and keep the loans at maybe even single digit interest rates.

I’ll give the current student loan plan an A for effort, but the follow-through is in danger if they decide to go ahead without making adjustments. At a time like this, let’s hope the Government hears the people and acts accordingly.