How Banks Can Assist Entrepreneurs With Long-Term Loans, By eTranzact Chief Executive
By EMMA EKE
How do we ensure public acceptability of cardless means of payment given the hiccup in online banking?
IF a couple of things are put right, the attitude of the people will change generally. There is no gainsaying that Nigeria has been far better off since the emergence of electronic banking. This will continuously improve, moreso with the advent of modern technology, which many solution providers have embarked on. For instance, we have just introduced a cardless system of payment to the Nigeria Police. It is like a warrant card, which enables a multifunctional work for the Police. Also, it will serve as an identity card, a befitting identity card for a Nigerian policeman as well as functions as pay card, for his payroll. By that, we are offering new global services, through the ATM cardless cash.
This will enable even the urban and rural people to participate fully in the financial sector, knowing that they can transfer money to people even with or without bank account, so long as they have cell phone and an accessible ATM machine. They can cash money, using some prompted codes or personal identity number (pin).
Secondly, there is what is called the e-transact representative platform. This is a mini security. The challenge has always been that of how to check cases of frauds in e-payment system or other online transactions. They are growing by the day, but today, there is an e-transaction response to them.
How can an unathorised person be checked?
The cardless services, via ATM, allow a user to give somebody his card and a pin for a particular transaction on any available ATM. That can only be used only once. It means that if somebody gets your card and you have raised a pin for him, but due to normal traffic bottleneck in Lagos, for instance, he could not execute the transaction, within the period that your permission had elapsed, and because you need to permit him from your cell phone, through what is called total-self -specification, or multi passport specification on the web, it means all he requires is a second passport, which you can give him from your cell phone to his own. You can generate a one-time pass code that can be used to authorise the e-payment transaction.
These are some of the improvements introduced to ensure that a better e-tranzact, mobile-commerce platform, which allows any bank to have fraud-proof, funds transfer takes over the fraud prone one. On the part of the service providers, subscribed banks are meant to be able to manage their cards, either on the e-tranzact switch or any other switch that they use. Even individuals can manage it through their own mobile phones. I believe that it poses a very unique approach to online banking.
To what extent are local contents involved?
It may surprise you to hear that the patent rights of this system belong Nigeria. But internationally, we are targeting global partnership. Meanwhile, we are in Europe, America and even Asia. We are already in about five countries and that include the United Kingdom. We know that in the next couple of months, we will be moving to the United States of America in full swing. So, we are doing something, which is geared towards promoting Nigerian image in content and form.
What of the acceptability of the products in Nigeria; is it not for the elite only?
What makes the difference with ours is that, as a technically-based and already established services, our banks are embracing it. And since it is mainly for the sector to upgrade its system, it is an issue.
Secondly, we are helping to solve other problems associated with the economy generally - the current thing being that it is an access to everybody, who aspires for trusted means of payment. And this has a way of really making a whole lot of difference.
In addition, the fact is that through the online transaction, Nigeria, as a country, is getting better than some other developing economies. This is because, here is a product that its owners can proudly say is enjoying local supports, which give it some place of national pride.
And if it is true that anybody, who has a cell phone, can use it, I don't think that it will be right to say it is elitist. I really think it is for anyone that can use the mobile phone.
To what extent can poor state of infrastructure affect cardless payment system?
Like all mobile commerce, or anything that has to do with mobile banking, or mobile phone, it needs improved infrastructure to function well. The same is said of functionality of the GSM companies and the other private network operators. What it means is that mobile banking is dependent on two kinds of existing protocols, which is either as short messages (SMS) or a general packet radio services (GPRS).
Of course, what happens is that if the network is down, may be due to poor power supply, it affects all these value-added services. Just like the same reason you cannot send or receive calls, so will you not be able to send SMS. But that is one the global challenges that the sector is grappling with it.
However, most service providers in the country have been improving on the state of poor infrastructure-base. For instance, our network has been receiving up grade since 2001 till date and operators can only improve from where they are right now.
I believe that the national infrastructure bases are still going to improve, because the better achievement that the country can make will depend on state of its infrastructure. We cannot but strive to do better because we have banks as our clients, which are looking for nothing but the best, including other business clients and all categories of people depending on the system to better their existence.
Is the private sector getting all supports from the government today?
The truth of the matter is that we have a viral private sector in this country, a committed sector that doesn't look at, to what extent that government support has been before contributing to the growth of the economy. If you look at the high performing sectors, they are all from privately-owned. Take a case of the GSM firms, and the impact they have created in the country's growth, you will agree with me that no government owned company can achieve such.
So, the private sector has done so well. But has it been really easy working under some prevailing conditions in the country? This becomes an issue that can be addressed based on individual experience as entrepreneurs.
But in all, we have tried. Anybody that is saying anything to the contrary will say so depending on where he is coming from. I think what government still needs to address is the right environment created for the private sector to survive. This is will be needed by way of provision of infrastructure; taking the electricity issue more seriously.
As a result of its poor state, the cost of producing anything in this country is still high, because you still have to depend on the alternative source of power. Companies and individuals have to generate their own power and it is somehow expensive, considering the cost of diesel and other things. But generally, I will say that the private sector is doing well despite all of these shortcomings.
What is the success of securing bank credit facilities?
In other to help expand the small and medium-scale enterprises in this country, the Central Bank of Nigeria (CBN) once came up with the idea of shoring up the capital base of banks to a minimum of N25 billion per bank. This, we were told was to boost the small and medium enterprises. And the thinking was that many banks would invest more in companies. But ever since, it has not been very easy. Before any bank can give you a loan, which is mainly short-term you applying will have a proper business plan, which they view and hoping to understand what the vision and mission of such a business are. The next issue becomes how are they going to recoup their money, because the money is not really theirs.
I think one area that the small and medium-scale enterprises should look at is that of proper documentation of their business plans, to be sure that they themselves fully believe and understand in such plans. It is not for the bank to execute but for the promoters of the business. The entrepreneurs need to know, exactly what they are trying to achieve and whether it is really possible to. Sometimes, they need to take time to study the business, the environment before coming out.
In answering your question, I have seen that it has been difficult for small and medium enterprises to secure loans. To me, I think it is because they are not presenting their case well before the banks. Our banks are supposed to be well capitalised and they should now have more money to be able to give to the industry and companies that really need it and have the right need for it. The small and medium enterprises are seen as institutes in anticipation, meaning that their promoters as part of investing arm of the company are also shareholders. So, they try to work within the outfit to see to its success.
When it becomes an institute, nothing is by shorthand again. For any good investor, after three to five years, he may want to exit. And that is how it is supposed to be reflected in a business plan that you are giving to a bank. It is believed that within that number of years, you would have broken even, and such should be in your exit plan for your shares, after which the firm should be listed in the stock market. The exit plan also helps in convincing banks, which may be coming as equity participants, to invest in such business.
What is your assessment of the sector and mission statement?
We believe that the time for someone to put money in Ghana-must-go bag is getting over with e-commerce. Also, the time for us to stop that practice is now, because we are passionate about putting an end to it. We are determined to see a vogue of walking into a paying machine with or without card and collecting your cash. All that you see us do is geared towards achieving this feat.
If you look at what we are doing on the cardless payment, all falls within the same mission of providing a secured, convenient and cost effective means of making and receiving payments, electronically. And that is what we are going to continue to aim at.
This has also been enhanced by the platform provided by ICT sector. As at today, this has made the ICT the main driver of all aspects of the economy, globally and locally, whether you are into manufacturing, dancing, name it, you need ICT.
So, it is not just in Nigeria, it is a global phenomenon. Our mission has been clear and that is what we want to attain. It is to provide a comfort for people and reassure them that what looks impossible in this part of the world can easily be done.
Biz Inter velentine 16/11/08
