Nigeria to exit FATF grey list of financial crimes in 2025
Here's why this should matter to you
Nigerian News: Nigeria to exit FATF grey list of financial crimes in 2025
Nigeria is expected to exit the Financial Action Task Force (FATF) grey list by late 2025, according to the Chief Executive Officer of the Nigerian Financial Intelligence Unit (NFIU), Ms. Hafsat Bakari.
Our thoughts:
So, on Nigeria exiting the FATF list, this will be amazing news. The list is usually released in October every year, and so the Nigerian government is working hard to ensure that they meet all the requirements to get taken off the list by that time.
Well, what exactly is this list about? As a background, this FATF—Financial Action Task Force list—is part of a global anti-money laundering framework, and the idea is that every country is supposed to meet some set of standards to prove that they are not in support of, or sponsoring, financial crimes.
Nigeria was added to the Financial Action Task Force's (FATF) grey list in February 2023, after a 2021 Mutual Evaluation Report found gaps in its financial crime prevention measures. And if you noticed, over time it has become harder to do transfers out of Nigeria.
The transactions get flagged unnecessarily. If you are using a Nigerian card, it won't go on some websites. It's all because of this list.
What happens is that compliance departments in every bank just adds Nigeria and Nigerian financial service systems or transactions to a particular flagging system, such that your transactions need to be extra scrutinized.
Now, what will happen when this is resolved and we actually get taken off the list?
Increased foreign investment: The first thing is that there will be increased foreign investment because a lot of foreign investors look at this list to determine which countries they can trade with.
Lower transaction costs – Another thing is lower transaction costs. What we have currently is that if you are receiving payments from Nigerian cards, the fees are higher, taking into cognizance the compliance cost of doing transactions with you.
Easier global trade – Another impact is that it will be easier for Nigerians to trade globally seeing that trade is backed by financial institutions, wider acceptance of Nigerian financial institutions will result in more seamless trade for Nigerians around the world.
The process of getting off this list will require us tightening some processes around managing or reducing illicit financial inputs. I strongly hope that we get off this list by October this year.
Or else we will have to wait another year for it. Fingers crossed.
Global News: BP shuns renewables in return to oil and gas | NVIDIA beat earnings expectations
BP has announced it will cut its renewable energy investments and instead focus on increasing oil and gas production.
Our thoughts:
The first thing is, this highlights the impact of politics on business. The previous posture of global leadership was through climate change, renewable energy.
But a new sheriff is in town who is pro oil and gas and all that, such that businesses and energy companies would eventually change strategy to align with politics. And that's very important.
The decision on leadership of key countries is very important, because it drives business and drives trade. Now, for BP, what does this mean? The fact is, the return on investment is usually more, and quicker for fossil fuels than for renewable energy.
So, investors in British Petroleum will be excited by this move because it signifies a possible increase in revenue, subsequent dividends, better valuation, and possible share buybacks: buying back shares.
Now, on the other hand, it's important to note that if everybody goes in this direction, the profit that is being anticipated may not happen. Why? Because there will be increased supply of crude, which will lead to lower prices.
So, this excitement will be short-lived because in the end, oversupply might kick in and profits will reduce. So, this could be short-term as it might be, as it's not all moving in one direction.
Also, they may experience regulatory backlash. Because there are still regulators in the energy space that have put limits on, or provided guidance on renewable energy investment.
So, there’s still regulation they need to deal with in respect to climate-related policies, carbon taxes, and possible legal action against fossil fuel companies because of the impact on the environment. These, in the long term, could also impact profitability.
As a short-term trader, the announcement has been made, and the market has already responded to it. But in the long term, you may need to consider your position on that asset because you need to look at the impact it will have on the market and subsequently returns.
And there’s a chance of possible legal action as well on oil and gas, p articularly as oil and gas affect the climate and environment.
African News: Kenyan Bank Begins Transactions On Pan-african Payment System
Kenya’s KCB Group, which operates in seven East African countries, has integrated with the Pan-African Payment and Settlement System (PAPSS), a platform developed by the Africa Export-Import Bank to facilitate seamless trade across the continent.
Our thoughts:
If you've ever watched Men Who Built America (and if you haven’t, I highly recommend it), you would agree that the stories that were collapsed into one hour or less actually represented in real life, years of toiling of the protagonists; such that, in retrospect, what seemed like tiny drops of water at that time eventually became a mighty ocean.
This is what is happening with Africa. As slow as it might seem now, in retrospect, we will realize that right before our eyes the building blocks of reinventing, or developing Africa were being put in place.
The Pan-African Payment and Settlement System (PAPSS) was developed by the African Export-Import Bank as part of the infrastructure necessary to implement the African Continental Free Trade Agreement, which is aimed at fostering trade across Africa.
This integration from KCB — Kenya Commercial Bank Group, which has presence in seven East African countries, is significant because it plugs these seven African countries, through the Kenya Commercial Bank Group bank to direct access to trade with the banks in the countries that are already plugged into this system.
Currently, we have a couple of West African banks, driven largely by Nigerian banks with presence in those countries that are plugged into the PAP system.
What this means, ultimately, is that as more banks continue to integrate, we could reach a point where I can trade directly between Naira and Kenyan Shillings without needing to convert to USD.
That is quite significant. It supports trade, exports, and tourism while also shielding the African economy to an extent from the impact of financial movements in developed markets.
It shields the African economy to an extent from the impact of financial movements in developed markets to an extent.
For us, it's important to highlight this, because things are happening slowly, but surely, and the idea is for you to plug in before it becomes obvious that the food has been cooked and is sweet, because at that point, it will be too late.
So, as an investor, you are looking for opportunities to plug into the AfCFTA in a sustainable way. As a business person, you should be thinking about how to trade across African currencies and expand your operations across the continent.
Long story short, with these building blocks in place, combined with the changingposture from the developed North, it appears that Africa is forced to go up, and we are here for it.
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