The eNaira, introduced in October 2021, has so far failed to gain widespread acceptance. The IMF says that the average number of eNaira transactions is about 14,000 per week, meaning only about 1.5% of the total number of digital wallets are being used.
Some 98.5% of wallets are not even used once a week. The IMF says “a coordinated policy drive” is likely to be needed if the eNaira is to break through.
Some government officials complain that the rollout is being frustrated by fintech. Jumia, for example, one of Nigeria’s leading e-commerce platforms, has no way of using eNaira on its platforms. “I wouldn’t say it is my firm that hasn’t embraced it,” Dozie says. “I would say it is consumers.”
Dozie says the government has not been innovative as regards to selling the eNaira idea to Nigerians. “Like any business, it is not good enough to say I have a product. How are you going to market it? How are you going to explain it to people?” The government could have studied successful foreign models like Oyster Card in the UK which was integrated into the public transport system, he says.
Sparkle, which was founded in 2019 and has nearly 200,000 customers, saw an increase in users in early January when the central bank’s naira redesign policy left cash scarce. “Since the eNaira is a government-led initiative, opportunities abound,” Dozie says. “First, all your taxes, and customs duties can be done through that. That will create effectiveness.”
“What it needs is coordination because the government is big enough to make it their prime source of payment and once that is done, what you will see the private sector do is to build innovations around them.”
Dozie applauded the new foreign exchange policy of the Nigerian government which seeks to unify all exchange rate windows.
Although Sparkle is registered as a microfinance bank and is not allowed to conduct foreign exchange transactions, the policy will still help the company because some of the costs of operations are valued in dollars. A unified exchange rate would make it easier to raise capital as investors would be assured of easily getting their money out when they want, he adds.
“When you’re raising capital from foreign and local sources, what they want to know is when I bring in dollars, what rate can I take it out? So we welcome this new policy.”
There will be short-term disruptions, he says, but the move will “increase the depth of the FX market that is lacking and preventing us from sourcing funds,” Dozie adds.
Dozie’s father Pascal Dozie founded Diamond Bank in the early 1990s and the younger Dozie took over as CEO in 2014. By 2019 he had to step aside after the bank was acquired by Access Bank. Diamond’s overexposure to the oil sector had led to increased non-performing loans.
Dozie sees his time at Diamond Bank as a learning curve. “There are many lessons. I ask myself whether I am happy where I am and I look back at what I had then and what I have now. The most valuable lesson I have learnt is that there comes a time when you have to move and drop everything,” he says.
Sparkle is different, he says, because the focus is mainly on the customers. “As an entrepreneur, how you innovate is much faster. At Sparkle, the only person you can classify as a banker is probably me. Everybody else is actually a customer and comes with a customer mindset,” he adds.
“I have learnt more about banking in the last three years than I learnt in the 10 years while I was in Diamond Bank because I am building while over there we were managing and trying to grow. I have no regrets.”
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