The report, the Nigeria Country Private Sector Diagnostic (CPSD), calls for placing greater emphasis on addressing infrastructure deficiencies and investment policies and identifies agribusiness, manufacturing, and digital entrepreneurship, among others, as high potential sectors that can speed economic growth and job creation in Africa’s largest economy.  

Launched as Nigeria works to recover from the impacts of COVID-19, the report examines how Nigeria’s vibrant private sector, dominated by smaller businesses, will require improved policy frameworks and reforms to support sectors beyond oil, which contributes nearly 90 percent of the country’s export earnings.  

The report also highlights how potential investors and Nigeria’s private enterprises can best benefit from the country’s extensive agricultural and mineral resources, its young and entrepreneurial labor force, and its strategic position in Africa with market access to other member countries of the Economic Community of West African States (ECOWAS).  

IFC country manager for Nigeria, Eme Essien Lore, said, “Nigeria’s private sector is among the largest in Africa and plays a critical role providing goods, services, and quality jobs to the country’s growing population.

“Addressing the challenges holding back Nigeria’s private sector—challenges deepened by the COVID-19 pandemic—will be critical to the country’s goal of lifting 100 million Nigerians out of poverty by 2030. Through the CPSD, IFC, and the World Bank have identified policy actions and interventions that can help unlock investment and jobs.” 

According to the report, targeted investments in agribusiness could directly benefit Nigeria’s poorest households and help improve food security. Reforms in manufacturing could support and facilitate investments in the sector, boosting quality local production and exports.

 The benefits to Nigeria of fully harnessing the digital economy are significant and would likely accelerate the pace and inclusiveness of economic activity in the country.

World Bank Country Director for Nigeria,  Shubham Chaudhuri said, “Nigeria’s Private Sector Diagnostic provides a road map to support the government in undertaking reforms that will help increase private sector investment and diversify the country’s oil-dependent economy.” 

IFC and the World Bank have also published a COVID-19 Rapid Assessment alongside the Nigeria CPSD. The rapid assessment provides insights for stakeholders on accelerating Nigeria’s recovery from the impact of the pandemic.

By TOBIAS ADRIAN and KRISTALINA GEORGIEVA

Progress to improve cross-border payments has been slow, but is just about to take off. That is how history evolves—one small step at a time, until it suddenly leaps forward.  The confluence of new technologies and renewed determination among policymakers are making significant improvements possible. Meanwhile, households and firms have come to expect (and demand) better services.

The stakes are high. Changes to cross-border payments have a bearing on the stability of the international monetary system, on financial inclusion, and on the efficiency of trade and financial markets. And reforms may unlock innovation and much needed growth, particularly following the COVID-19 crisis. But a leap forward will only be possible if the world works together.

And it has—in an exceptional manner. A roadmap to decisively enhance cross-border payments, led by the Financial Stability Board along with a wide set of institutions including the IMF, has just been endorsed by the G20. This is not one more report, but a set of concrete reforms, practical steps, and milestones that specific institutions will be held accountable to implement. Meanwhile, the IMF just published a staff paper on the macro-financial implications of new forms of digital money available across borders. Together, these papers provide a clear path forward, mindful of the challenges that lie ahead. If implemented, reforms have the potential to be transformative by making cross-border payments cheaper, faster, more transparent, and more widely accessible.

The next step

While international cooperation has gotten us this far, it will be all the more important to implement, and potentially even surpass, the G20 roadmap. Specifically, we need cooperation in four broad areas to ensure improvements to cross-border payments are effective, sustainable, safe, and equitable.

First, solutions to cross-border payments must be designed and pursued with all countries in mind. Countries differ considerably in implementation capacity, existing infrastructure, and financial sector development. And with different countries come different users. These cover large companies operating in less liquid markets, cost-conscious small- and medium-sized enterprises, and the 1 billion people sending and receiving remittances (which at an average cost of 7 percent are still double the target set by United Nations’ Development Goals).

The G20 roadmap is appropriately flexible given this diversity of needs. Some solutions involve improvements to existing systems, such as devising trustworthy digital identities essential for financial inclusion. Others are more exploratory and consider a world in which we can freely trade digital currencies across borders, much like we send emails today. It is essential that all these solutions continue to be pursued, discussed, tested, and some discarded—with an open mind.

Second, cooperation is essential to overcome countries’ “inaction bias,” and ensure solutions are widely applicable. A simple example is the operating hours of countries’ settlement systems: only when two countries extend hours so they overlap can cross-border transactions be settled in real time. No country will want to act alone. Even then, the two systems must talk to each other. But interoperability is not a given. It requires basic technological, design, legal, and regulatory standards. Cooperation will ensure these satisfy the needs of a wide community, which the IMF can help congregate.

Third, cooperation is critical to build solutions that benefit from the experience and perspective of all relevant actors—such as central banks, regulators, finance ministries, anti-trust agencies, data protection agencies, and international organizations. The Financial Stability Board report was exemplary in this respect. Moreover, the public and private sectors must cooperate, recognizing each other’s strengths: private companies to innovate and interact with users, and the public sector to regulate, supervise, and ultimately provide trust to the system. Where possible, public-private solutions should be explored.

Lastly, cooperation means recognizing the macro-financial effects that one country’s policies can have on others. For instance, new forms of digital money issued in major reserve currencies could improve domestic as well as cross-border payments. But they could also induce citizens abroad to forego their domestic currency, especially in countries with high inflation and volatile exchange rates. And digital money could potentially facilitate bank runs out of these countries. Meanwhile, source countries could see more volatile capital inflows and central bank balance sheets. Moreover, it is unclear if capital account restrictions, which many countries adopt, can be redesigned so they are not circumvented by digital money. Finally, the use of digital money could raise significant risks to financial integrity. These and other scenarios are detailed in our new paper.

Global links

Monetary policy, financial stability, capital flows, international reserves—all could be affected by transformations in cross-border payments, with implications for the international monetary system. The IMF’s founding members understood this link, which to some extent lies behind the vision to “assist in the establishment of a multilateral system of payments,” as stated in the Articles of Agreement.

Today, the IMF continues to play an active role in this space, working hand-in-hand with other international organizations. Our near-universal membership can help ensure that the digital revolution benefits people in all countries. And our global perspective can help recognize spillover effects, as well as provide a common forum to address the underlying policy dilemmas. Let’s engage on this promising path together.

Culled from IMF Blog

UK growth private equity firm, Dunedin, joined Visa in the round, which will be used by GPS to extend its geographical reach.

GPS successfully expanded into the Apac region last year, delivering payments services for Xinja, the second Australian neobank to be made an authorised deposit-taking institution, and WeLab Bank, the first homegrown virtual bank in Hong Kong.

Having been selected as one of the preferred issuer processors for Visa’s Apac Fintech Fastrack programme, GPS has worked with the card scheme to deliver a next generation showcase for the 2021 Tokyo Summer Olympics.

Kevin Jacques, vice president, Visa Ventures, comments: “GPS is an example of how we continue to invest in, and partner with, companies that provide valuable capabilities to the ecosystem and have potential to advance the payments industry. The business has a strong balance sheet, engaging leadership and growth across key regions, and we believe it will continue to be an important enabler for payments processing.” The value of the transaction was not disclosed.