MTN, the largest telecom operator in the country, saw over 2.8 million subscribers drop from its internet business leaving 67.8 million subscribers in January from 70.6 million subscribers in December. The decline was the most MTN Nigeria has seen since May 2023. 

The drop, however, didn’t affect Airtel and Globacom as both telcos gained subscribers in the same month, according to the latest data from the regulator. Airtel gained the most subscribers in January with 890,935 subscribers joining the network and helping to solidify its position as the second-largest internet service provider with 45.9 million subscribers. Globacom also gained 192,313 subscribers in January. 

Subscriber gains from Airtel and Globacom helped to reduce the impact of MTN’s subscriber decline on the industry. Airtel grew its subscriber base from 45.0 million subscribers to 45.9 million subscribers. Globacom also grew its subscriber base from 43.9 million subscribers to 44.1 million subscribers. 

In December 2023, the NCC directed all the telecom operators in the country to deregister all phone lines without a NIN and those with unverified NINs. A spokesperson for MTN Nigeria told TechCabal that the operator started compliance almost immediately after the directive was issued. The company also made several advertorials regarding the directive which led many subscribers to take steps to update or register their NIN.

The deadline was supposed to have expired on March 29, 2024, however, the NCC has now extended the deadline for the disconnection of unlinked lines to July 31, 2024, per TheCable. 

The telecom operator has had a history of fines with the NCC which it is still trying to put behind it. In 2015, the company was fined $5.2 billion for failing to disconnect customers with unregistered SIM cards. 

MTN Nigeria’s subscription decline dented the overall industry internet figures in January. According to the NCC, the total number of subscribers that dropped off across all networks was 1.84 million leaving operators with 161.5 million subscribers from 163.3 million in December 2023. Aside from MTN Nigeria, 9Mobile continued its nearly nine-year decline with 94,824 subscribers leaving the network in January. 9Mobile now has 3.53 million subscribers. 

The plan restricts the drivers to main city centres such as Ikeja Central Area, Surulere, Lekki, Victoria Island, and Ikoyi in Nigeria’s commercial capital, the only place Moove operates under the Uber brand in the country. 

The company was responding to speculations that drivers are leaving the platform in droves due to an expensive daily remittance. Moove is also facing aggressive Lagos state task force officers who either impound the company’s vehicles or deflate their tyres. . 

Moove told TechCabal that it is yet to start discussion with the government on bringing a solution to the constant harassments of its drivers. 

Apart from getting beaten by touts, Moove drivers are also concerned about the conditions and the cost of operating on the platform. According to a driver who recently left the platform, drivers are limited to at most 12 trips within 12 hours for 6 days and are mandated to pay N9,400 per day for 48 months, in addition to the daily 25% commission to Uber. 

Moove’s remittance rates are almost the same as Lagride, another drive-to-own e-hailing platform backed by the Lagos state government and managed by a private company, Ibile Holdings. Drivers on Lagride are expected to remit N9,000 per day to own the vehicle, in addition to a 25% commission (used to be 20% as of January) to the managing company. GAC was supposed to be maintaining the vehicles for the drivers, but a driver told TechCabal that the company has deviated from the plan and drivers are now required to maintain the car themselves with no compensation. 

The agreement between Moove and Uber is such that drivers are allowed to lease the vehicles on a drive-to-own basis and drive under Uber. This means they remit a N9400 daily amount to Moove and also pay a 25% commission to Uber on every ride. 

Taiwo Ajibola, regional managing director, Moove Nigeria, told TechCabal that enforcing the geofencing plan was aligned with the company’s original mission of targeting customers in specific urban areas, mainly commercial and industrial districts. Drivers in the past had been driving the Suzuki S Presso outside the specified geofencing which was responsible for the vehicle being seen in different parts of the state. 

Ajibola said the rate at which drivers exited the platform has fluctuated over the years. He does not believe the cost of daily remittance is what’s driving many of the drivers away. He insists that the company is making efforts to make its services affordable. For example, Ajibola said, while the going rate for a brand new Suzuki S Presso is around N9.9 million, the last unit of the vehicles Moove acquired in 2022 cost far less because the company bought it in large volume. He declined to say the actual cost of the vehicle. 

“We’ve had some churns as a result of maybe the driver had a change in the job that he had or some other reasons. But the rates have remained the same. The numbers keep fluctuating but really what we are seeing is negligible statistically speaking it is less than what would be any significant impact on the business,” Ajibola said. 

Suzuki S Presso is supplied in Nigeria by CFAO under a drive-to-own arrangement by Moove Africa. Before the S-Presso units were launched into the Nigerian market, Moove drivers were using Suzuki Alto which has a lower purchase price than the S Presso. 

Mike Ojeh, a former Uber driver, told TechCabal that he doesn’t have a problem with the N9400 repayment to Moove. In 2022, he leased a Suzuki Alto, which is cheaper than an S Presso, and was paying N7000 daily to Moove as repayment for the vehicle, as well as Uber’s commission and a maintenance fee. The conditions for 12 rides in 10 hours per day were a major highlight for him, as he always met his target and was able to make more rides to take money home.

Over 218 drivers have graduated from the Moove drive-to-own initiative, according to Ajibola.  

Car dealers who spoke to TechCabal said her best bet, given her budget, was a Nigerian used Toyota Corolla. A combination of foreign exchange volatility, customs duty, and shipping costs are putting the prices of cars beyond the reach of many Nigerians.

“I bought a car worth $600 and got it shipped for $1600. When it got to Nigeria, I had to pay about N3 million ($1,886) to clear the vehicle. This has never happened in the history of our business,” Kolawole, a car dealer, said. 

It now costs at least ₦5 million to buy a foreign-used sedan and ₦3 million for a Nigerian-used one. That is more than double the cost from 2023, according to data supplied by Pankaj Bohhra, co-founder of Fixit45. 

The rise in prices coincides with a decline in imports. The number of cars imported through the Tin-Can Island port, the entry point of choice for many Nigerian imports, dropped from 32,000 units in 2018 to 4008 in 2023, according to Dera Nnadi, the Customs Controller of the Command. 

Local assembly and production have also failed to grow. At a summit in 2020, Yemi Osinbajo, former Vice President, noted that available assembly plants delivered fewer than 14,000 cars.

Prices are forcing many to compromise 

Those prices are forcing adjustments as some companies switch to Nigerian-used official cars or relatively new or unknown brands as cheaper alternatives to Japanese cars, which have always been the preferred option. 

Other companies lease cars or use flexible auto financing for purchases. 

For individual customers, auto loans are still largely unpopular. While many financial institutions offer auto loans, consumers are unaware of them or don’t understand how they work. Ngozi, for instance, believes vehicle financing options have high-interest rates.

Ojurongbe Damilola, head of technical services at Cars45, believes customers are slowly warming up to car loans, citing an increase in financing requests compared to the past year. 

Ultimately, Nigeria’s car market is at a crossroads, and navigating the new normal will cause short-term pains. Local production is unlikely to increase, and as long as macroeconomic conditions remain the same, financing may still not be compelling enough for consumers. 

The new licences will put Kuda in direct competition with startups like LemFi and Nala, which style themselves as global neobanks for Africans in the diaspora. 

This is not Kuda’s first crack at the remittance market. In 2022, it secured a payment licence in the United Kingdom and rolled out a subscription remittance offering with a flat fee of £3 and a transfer limit of £10,000. One person with knowledge of the company’s business told TechCabal that the product has now been discontinued, theorising that the market was not ready for a subscription-based remittance offering.

It makes it likely that when the neobank rolls out its offerings in Canada and Tanzania, it will not go the way of subscriptions. 

The remittance market has become more attractive to investors as more Nigerians and Africans seek greener pastures abroad. In 2022, Nigeria was Canada’s fourth largest immigration source country, welcoming 22,085 Nigerian immigrants, making 5.06% of Canada’s total number of permanent residents. At the same time, over 100,000 Canadians of Nigerian descent call Canada home. In 2022, remittance inflows into Africa totaled an estimated $100.1 billion, accounting for 3.4% of Africa’s GDP. 

By focusing on markets like Canada and the UK where the number of Nigerian migrants continues to grow, Kuda has an opportunity to grow its foreign exchange revenue at a time when the FX rates are decimating the profits of startups. 

One cryptocurrency exchange told TechCabal that operators received the draft proposal on Friday. The SEC first shared the draft on virtual asset providers in 2022 and, at the time, proposed N500 million in minimum paid-up capital.

“Our SEC has indirectly told the community that this game is for the big boys,” said Rume Ophi, a crypto expert. 

A crypto exchange operator who asked not to be named told TechCabal believes local operators should unanimously reject the proposal. 

“This proposal locks out a lot of local players. I suspect at the end of the day that the foreign-owned companies will dominate the crypto space in Nigeria,” said Tim Akimbo, a Bitcoin expert. 

Apart from the N1 billion minimum paid-up capital, virtual asset companies must also provide current Fidelity Bond covering at least 25% of the minimum paid-up capital.

A fidelity bond is a type of insurance that offers business protection against losses caused by employees who commit fraud, theft, and forgery. The rules also allow the SEC to, at any time, impose additional financial requirements on the digital asset operator commensurate with the nature, operations, and risks posed by the company. 

The commission also increased the number of additional documents required for registration. The new rules require “a sworn undertaking that the applicant will be able to operate an orderly, fair, and transparent market in relation to the securities including derivatives that are offered or traded, on or through its platform.” 

Both telcos ended a 15-year-long dispute over interconnection fees after MTN agreed to accept N2 billion in interest payments instead of the original sum of N3 billion, TechCabal exclusively reported this week.

Globacom had initially paid N1.6 billion as the principal debt but had disputed the interest accrued on the debt, a source close to the matter told TechCabal. This prompted the NCC to set a timeline of 21 days for both parties to agree on the interest amount and when it would be paid. 

The NCC intervened to prevent any possible disruptions to the over 61 million subscribers on the Globacom network. 

“The Commission reiterates that strict adherence to the terms and conditions of licenses, particularly those delineated in interconnection agreements, is imperative for all Mobile Network Operators (MNOs) and other licensees within the telecommunications industry,” said the NCC statement. 

Henceforth, mobile network operators must submit records and regular updates regarding interconnectivity to the NCC. The commission also said it would adopt a transparent approach towards industry indebtedness.   

“This means you must request TID for each merchant with their details and wait for NIBSS to generate it before they can assign a terminal to that merchant,” one person familiar with the CBN’s plans said. 

Before now, mobile money operators like Opay or Palmpay typically requested TIDs in bulk to assign terminals quickly, but recertification will mean acquirers (banks and mobile money operators) have to register each TID separately. Registration requires the provision of an address, BVN or Tax Identification Number (TIN), business name, and F1 Code of the acquiring bank. 

The validation of a POS terminal delivered to a particular location would be handled by licenced Payment Terminal Service Providers (PTSPs) like Interswitch, ETOP, or CitiServe. 

“Banks will typically select and map each terminal registration with a particular PTSP that sets it up, deploys, and continues to support the merchant. PTSPs are also the bridge to terminal procurement from the OEM as banks/acquirers were not allowed to engage directly with OEM for procurement,” a product manager at a fintech startup said. 

While there is no timeline given by the CBN for the commencement of the recertification exercise, TechCabal learned that the Nigerian Interbank Settlement System (NIBSS) was mandated by the CBN to come up with a geofencing plan that ensures that terminals are not used outside the locations where they are registered. The terminals, once certified, can only be used in the location where it is deployed. If the POS terminal is used outside the address or location, NIBSS will disable it.

While the timeline of recertification is unclear, mobile money agents will be asked to provide additional information as part of their KYC to enable them to operate Tier-3 accounts. A Tier-3 account allows transactions of up to ₦1 million, and customers can hold up to ₦1 billion in deposits. 

Before now, agents were allowed to operate any level of tiered accounts provided that proper KYC was done and necessary documentation was achieved. Tier-1 accounts are the most popular among agents because they require minimal documentation to open and operate. The recertification is likely to push agents towards operating more Tier-3 accounts. 

The plan also mandates the audit of agents and review of their processes by acquirer banks, Super Agents, and MMOs to align with the proposed recertification program and beyond. 

Mobile money operators who spoke to TechCabal on condition of anonymity said they are still trying to get clarification on some of the features of the certification exercise for POS terminals.

In January, NGX, Nigeria’s stock market, was the world’s best-performing stock market, but amidst this rally, a crucial watchdog is missing: the board of the Securities and Exchange Commission (SEC). Nigeria’s SEC oversees the exchange and protects investors but has operated without a board for nearly a year.

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“President Tinubu has not made any appointments yet,” an investment analyst at the SEC who declined to be named told TechCabal. Typically, the president appoints board members, and the Senate confirms the appointees to insulate the board from political interference in its job to keep the SEC accountable. 

The NGX and the SEC did not respond to TechCabal’s request for comments at the time of this report.

The term of the previous board expired in May 2023. Per the SEC website, the board comprises a chairman and four other members, including the Ministry of Finance and Central Bank representatives. The SEC’s Director-General, Lamido Yuguda, is the highest-ranking official on the board, per the SEC’s organogram.

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Despite the optimism around the NGX in the last year, there have been concerns that need regulatory attention. The market’s frothiness has masked allegations of insider trading and a vital criticism: the NGX’s inability to attract new and exciting listings.

EDC Nigeria, a securities research firm, says the rise in stock prices is due to investors taking positions “in fundamentally driven stocks as we approach the earnings season.”

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“We are at a very advanced stage, and we’re about to finish the technology side of it in terms of activating some features,” said Fasasi Sarafadeen Atanda, President of AMMBAN. He also noted that the Nigerian Interbank Settlement System is one of the drivers of the initiative. 

The collaboration effort is also driven by the Nigerian Electronic Fraud Forum, Lilian Phido, the head of Corporate Communications at NIBSS, told TechCabal. 

“Constant innovation within the industry underscored the necessity for the Central Bank to establish a dedicated body (named the Nigerian Electronic Fraud Forum) which consists of all key players and stakeholders to proactively work together in collaboration as an industry in ensuring the integrity of the payment systems across the nation,” said Phido. 

The feature will be prominently displayed on the PoS terminal agents across the country. After a meeting with NIBSS last week, AMMBAN hopes the feature will be ready for launch by the first quarter of 2024.

There is also a coalition of security agencies, including the Nigerian police, Department of State Services (DSS), AMMBAN and NIBSS, to enable the easy tracking of fraudsters at agent locations. The coalition hopes to mandate a common identification system for the over 1.7 million banking agents on the AMMBAN database. 

There are also discussions for agents to be trained and certified, but other stakeholders take a dim view of this strategy.

“The entry point of the fraud is not agent location but the fact that some accounts and wallets aren’t tied to real identities,” said Femi Omegbenigun, CEO of 3Line Card, a Nigerian payments company. “The fact that these accounts have underlying KYC issues means agents are not always aware that the money they are disbursing is proceeds of fraudulent transactions.” 

And while whistleblowing channels exist nationwide, agents have only sometimes used them, said the AMMBAN President. There have been occasions when banking agents raised issues with particular transactions they considered suspicious and reported to the banks, but the financial institutions failed to act. 

When the same issues were reported to security agents, they sometimes asked for money before taking action. “The individual agents are always discouraged from pushing that because you will end up wasting your money and resources,” Atanda said.

While they wait for the new feature on the PoS terminals, Atanda says the agents have commenced the implementation of the BVN-NIN policy of the CBN. New customers must provide either a BVN or NIN or both to open an account.  

“Recent developments in the payment services landscape have raised concerns regarding the use of technology and the existing licensing and regulatory framework,” Cardoso warned at the bankers’ dinner. “Any intentional or unintended non-compliance will be subject to sanctions, as operators have the responsibility to ensure that they are licensed for the activities they undertake.”

Cardoso added that the apex bank planned to review Nigeria’s existing licensing framework for payment services. 

Days after that warning, the central bank mandated all financial institutions to collect ID cards before creating financial accounts. Under a 2013 central bank rule designed to support financial inclusion, Nigerians without identity cards could open lite-versions of bank accounts or digital wallets, which could only receive N50,000 ($63) at once and have a maximum balance of N300,000 ($380). The second salvo was the Nigerian Inter-Bank Settlement System (NIBSS) taking a shot at fintechs that were not licenced to collect deposits but were nevertheless listed as deposit institutions on mobile money transfer apps. Central banks and commercial banks in Nigeria jointly own NIBSS.

The results of the two announcements have been mixed. The CBN’s announcement that it will mandate all account holders to submit identification was widely supported by financial institutions. The move is expected to help stem rising fraud in the sector. But even that is doubtful as a significant proportion of cyber fraud cases involve users who had identity cards that passed the smell test. 

“Most of the fraud that we see is the virtual account space, which is more difficult to tackle,” Esigie Aguele, co-founder and CEO of VerifyMe Nigeria, told TechCabal. “The government could be doing more to institutionalise fraud reporting instead of leaving it to just one agency,” he added.

The second regulatory action from NIBBS had mixed reactions. For one, the memo fell short of specifying what companies had broken the rules and were collecting deposits when they shouldn’t have. This left ample room for misinformation to spread on social media. It forced leading fintechs to reassure their customers via email and social media.

“It’s been a chaotic day with customers panicking,” a communications director at a leading fintech told TechCabal. “I wish regulators understand that these things affect human lives.” 

The announcement was well-received by financial sector professionals who feel an overhaul of the fintech space is overdue. “Read the 4th paragraph in Governor speech at CIBN conference… fintech doing more than what they are licensed to do,” one bank executive who leads the digital solutions unit of his bank told TechCabal. Nigerian banks both offer services that fintechs depend on, as well as operate directly competing digital products. NIBSS is also co-owned by Nigerian banks and the central bank. 

Then, two days before Christmas, the central bank announced that it was removing a two-year restriction that blocked banks from processing crypto-related transactions. The announcement seemed to open the door for a regulated crypto industry in Nigeria, and startups like Yellowcard, a pan-African crypto exchange, promised to “immediately” apply to be licenced under the new regulatory regime.

However, hopes for looser crypto policies were moderated early in the new year as the central bank clarified that it was not yet comfortable with the crypto industry. On January 2, 2024, the bank released guidelines that retained a ban on banks holding or trading in virtual assets and limited cryptocurrency accounts to only deposits made in local currency, with withdrawals limited to two every quarter.

The case of the commercial banks whose boards and management got the axe has been brewing since December after a report by a special investigator claimed the banks were fraudulently acquired. The central bank said Keystone Bank, Polaris Bank, and Union Bank committed infractions ranging from “regulatory non-compliance to corporate governance failure.” 

“CBN [is] signalling that compliance is going to be a big deal going forward,” Tola Onayemi, CEO of Norebase, a compliance-tech startup, said on X, formerly Twitter.

Regulation across board

Financial regulators are not the only ones asserting themselves. Nigeria’s Corporate Affairs Commission (CAC), responsible for registering businesses, planned to enforce a rule forcing private companies with foreign shareholders to have a minimum of N100 million (roughly $126,600) as paid-up capital. Paid-in capital is the amount the owners of a company have paid in exchange for shares in the company 

Before now, Nigerian companies with foreign shareholding only needed to put up N10 million (about $12,660) as paid-up capital. Part of the fees the CAC charges for company registration depends on the amount of paid-in-capital the company has received, a private wealth management lawyer told TechCabal. By increasing the minimum 10-fold, the CAC will increase its revenue from registering new companies. 

The CAC notice refers to a 2022 rule, the Revised Handbook on Expatriate Quota, which was issued by Nigeria’s Interior Ministry. At face value, the rule only applies to companies that need a business permit and a Combined Expatriate Residence Permit and Aliens Card (CERPAC) to operate in Nigeria. But this broader application of the rule by the CAC means that even Nigerian founders who do not need a business permit or a residence permit (because they are Nigerian) will be forced to increase the paid-up capital to regain compliance. 

In a private group chat for tech founders and investors, seen by TechCabal, one entrepreneur wondered why the CAC appealed to a rule from another agency instead of the Company and Allied Matters Act (CAMA), a revised version of which was passed in 2022 to regulate corporate registrations in Nigeria. The CAMA is the same law that establishes the Corporate Affairs Commission. 

The commission reversed course less than 48 hours later. In a statement published on December 22, 2023, it asked the public to disregard the notice given two days prior. “Our initial notice was based on the Federal Ministry of Interior Handbook on Expatriate Quota Administration 2022 Revised Edition. We shall issue an amended notice with regards to the above in due course,” the later statement said. The reaction on social media was furious. 

“There are things that make business so inhospitable in Nigeria, yet we just find a way to move on.  The fact that CAC could issue two conflicting statements within 48 hours, with no advance warning was triggering,” Subomi Plumptre, an executive at Volition Cap, a Lagos-based asset management firm, wrote on X, formerly Twitter.

At any rate, the message of the last 30 days is clear. Africa’s biggest recipient of venture capital funding has entered regulatory waters.