We’re all going to remember this coronavirus pandemic a bit differently.
Students are at home, churches and mosques are empty, international travel is at a historic low, medical resources are stretched thin and some countries are on lockdown.
The coronavirus pandemic is rocking the global economy and many sectors are feeling the turbulence. But what exactly is going on with financial services?
Here are some highlights:
C is for COVID-19, C is also for Cash-less
In light of the coronavirus pandemic, cash handling has become a major concern.
Health experts believe the novel coronavirus, which causes the potentially deadly COVID-19 disease, is transmittable through surfaces, including paper money, that have been handled by an infected person. The belief is that these viruses can stay active on cash and other surfaces for at least 10 days. That’s a concern not only for deposit-taking financial institutions but also for all businesses that handle cash.
While the World Health Organisation (WHO) has refuted claims that the virus is transmitted through cash, it advises that “It is good hygiene practice to wash your hands after handling money, especially if eating or handling food.”
Given that other coronaviruses, including Severe Acute Respiratory Syndrome (SARS) and Middle East Respiratory System (MERS), were transmitted through fomites, erring on the side of caution by limiting cash handling and embracing contactless payments would be prudent.
More DFS, less cash
To encourage social distancing and limit the spread of coronavirus, a few mobile money providers are encouraging customers to embrace digital payments by reducing or waiving transfer fees.
Safaricom, the operator of M-Pesa in Kenya, is leading the charge; suspending fees for 90 days. Other providers like MTN Uganda have followed suit. Governments are also looking to DFS to help fight the pandemic as the Central Banks of Ghana and Uganda have lowered transfer fees and raised transaction thresholds to encourage the use of digital financial services and limit cash transactions.
Read Also: Nigerian Banks Seek to profit from Kenya’s Deal-Making Frenzy
Likewise, our own Guaranty Trust Bank has eliminated instant payment transfer fees of N5000 and below.
Read more about the fee waivers here.
With COVID-19 on the table, all bets are off
Betting companies are not immune to the impacts of the coronavirus pandemic. The suspension of major global sporting events including the UEFA Champions League, European football leagues, African Nations Cup, etc., punters are void of activity and their hosts, betting companies, declining revenues.
Read more about the impact of the pandemic on betting.
A surge in DFS and remote banking
Mobile finance apps are witnessing more activity than ever before, even as users embrace digital finance platforms and avoid crowded bank branches. Banks are also beginning to respond to the pandemic by shuttering their branches. The UAE’s largest bank, First Abu Dhabi Bank, has suspended a number of banking services at its branches and contact centres including cash deposits as part of safety measures against the coronavirus. In the US, big banks such as Capital One and JPMorgan have closed down several branches in their efforts to curb the spread of the coronavirus.
Read more here.
Placing the economy on meds
All signs are pointing to an impending economic recession as global markets are closing and hampering all budgets and economic growth projections.
Nations are trying to evade this fate by stimulating their economy with diverse interventions. The USA, for instance, is exploring direct cash payments (up to $1000) to help their citizens weather this season, even as hundreds of thousands of people are stuck at home and out of work.
The sliding oil prices combined with the glut also put Nigeria in a very precarious position. Remember, oil revenues make up the lion share of our forex income.
On Wednesday, March 18, the CBN announced a 1 trillion naira intervention fund to support local manufacturing and import substitution. It will also support the medical sector to ensure that laboratories, researchers and innovators work with global scientists to patent and produce vaccines and test kits in Nigeria.
COVID for eCommerce
With reductions in physical activity, where people are compelled to stay at home and businesses suspend operations, eCommerce is reaping the benefits as organisations like Amazon plan to hire 100,000 extra warehouse and delivery workers.
Read Also: COVID-19: How ecommerce sustained thousands of jobs during lockdown
The continued spread of the coronavirus has meant consumers are increasingly relying on online retailers and online payments as they avoid going outdoors and face low inventory at physical stores.
Pharma gets a shot in the arm
On Saturday 21 March, the Bankers Committee pledged to provide grant funding facilities in Naira and foreign exchange to pharmaceutical companies, enabling them to procure raw materials and equipment to boost local drug production. Ironically, as the virus continues its rampage on industries and international markets, it has opened the storehouse for funding our diseased healthcare industry! That’s a plus….
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With Nigeria’s confirmed cases of the COVID-19 rising daily, the next few weeks will be critical to our success in containing this pandemic and controlling its impact on our economy. We believe we will overcome this plague.
In the meantime, we will keep tabs on the impact of the coronavirus pandemic on the industry over the coming weeks.
Please stay safe, wash your hands and practise social distancing.
Source credit: Sustainable and Inclusive Digital Financial Services initiative (SIDFS) initiative of the Lagos Business School
