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Zimbabwe Suspends Mobile Money Platforms to Push Fiat

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Zimbabwe government has banned all mobile money platforms in the country in an attempt to recover the falling local fiat currency Zimbabwe dollar.

Friday’s decision might cripple the already struggling economy of the country as around 80 percent of the transactions in the country were done on mobile money platforms due to the shortage of banknotes.

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The country is also battling with escalating inflation which led to the adoption of the US dollar under the regime of the former leader Robert Mugabe. However, last year the current President Emmerson Mnangagwa’s administration banned the use of foreign currency in Zimbabwe and introduced Zimbabwe dollar again.

“Government is in possession of impeccable intelligence which constitutes a prima facie case whereby the phone-based mobile money systems of Zimbabwe are conspiring, with the help of the Zimbabwe Stock Exchange, either deliberately or inadvertently, in illicit activities that are sabotaging the economy,” government spokesman Nick Mangwana sain in a statement.

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Trying to revive a scrapped fiat

With the scrapped local fiat, many mobile money companies emerged in the country and the government was keenly watching the growth in the sector that was becoming a roadblock on the reintroduction of the local fiat.

EcoCash, a major mobile money platform that was earlier accused of fanning the rapid spike in the street exchange rate of the Zimdollar versus the US dollar, defied the government’s order on the suspension of such platforms.

“We urge all Ecocash users…the majority of whom do not have bank accounts, to remain calm and continue to do your lawful transactions as usual,” the company stated.

EcoCash also raised questions on the authority of the government saying that the orders regarding the payments industry should come from the central bank.

The Zimbabwe central bank, earlier this year, revealed that taking steps to regulate the digital currency industry, taking a U-turn from its previous hostile stance, however, with the recent government’s position against mobile money has put up a question on the move.

Source: https://www.financemagnates.com/fintech/news/zimbabwe-suspends-mobile-money-platforms-to-push-fiat/

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Saudi Arabia Monetary Authority to Award More Fintech related Licenses, as Number of Digital Transactions Continue to Rise

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The Middle Eastern country of Saudi Arabia has become a more active player in the global economy as it focuses on diversifying its economy. The Saudi government and local businesses have been adopting the latest technologies to streamline operations. The MENA region country has also been helping its residents cope with the socio-economic challenges created due to the COVID-19 outbreak, which has negatively impacted the nation’s private sector, according to a senior official from the Saudi Financial Sector Development (FSD) program.

The FSD program was introduced around three years ago. It has reportedly managed to achieve 90% of its targets and the the Coronavirus crisis has led to increased activity in the Fintech sector with more consumers using digital platforms and services, according to Faisal Al Sharif, director general at the FSD program.

Al Sharif, whose comments came during the 15th virtual edition of the Euromoney Saudi Arabia conference, noted that the FSD’s targets for Saudi Arabian Monetary Authority (SAMA) awarding Fintech related licences was only three by the end of this year. There are eight such licenses that have been issued, Al Sharif confirmed.

As first reported by Arabian Business, the target for cashless payments was 28% by the end of 2020, however, nearly 37% of all transactions are now digital.

Al Sharif believes Fintech solutions will play a key role in improving the Saudi economy and the FSD will focus on enhancing the services offered by this sector and also Islamic finance, as the country prepares for next year. This doesn’t necessarily mean that the FSD program was not affected by the pandemic, Al Sharif said. However, he didn’t specifically mention what these challenges have been.

He noted:

“If we go back to pre-pandemic days, plenty of key performance indicators have achieved their target. However as the pandemic has laid its shadows along all the globe, we have seen certain challenges in the first quarter of 2020.”

Despite these challenges, Fintech services are increasingly being adopted by Saudi businesses and companies based in other MENA regions countries. The Saudi government has been quite supportive of Fintech (in general) with SAMA establishing a regulatory sandbox for testing the latest technologies in 2019.

Muhammed Mekki, founding partner at AstroLabs, a global business incubator that was licensed in Saudi Arabia in 2018, stated that the Kingdom’s startup sector is now moving forward and has been “propelled by this combination of a compelling, deep, local market that’s hungry for tech-enabled solutions; along with a new fuel of venture funding that’s blossomed in the last year or two.”

Fahad Aldossari, deputy governor for research and international affairs at SAMA, revealed:

“A number of government measures, including the lockdown, disrupted economic activities. This actually impacted the private sector, and especially the SMEs.”

In a recent interview with CI, Kokila Alagh, Founder of KARM Legal and a member of the MENA Fintech board, stated:

“Saudi Arabia has emerged as a front-runner in digital banking. The Kingdom has become one of the top digital banking markets in MENA, with more than three quarters of banking customers using online or mobile apps. The Saudi Arabian Monetary Authority (SAMA) recently created a regulatory sandbox and has managed to attract local and international Fintech companies to provide innovative financial services to Saudi markets.”

Source: https://www.crowdfundinsider.com/2020/09/167157-saudi-arabia-monetary-authority-to-award-more-fintech-related-licenses-as-number-of-digital-transactions-continue-to-rise/

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UK Extends Coronavirus Support Programs for Businesses

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In a statement today, the UK Chancellor of the Exchequer Rishi Sunak announced an extension of Coronavirus programs that support impacted businesses. The Chancellor announced that the Bounce Back Loan scheme will offer greater repayment flexibility for firms including an extension of the length of the loan from six years to ten.

The Coronavirus Business Interruption Loan Scheme (CBILS) also received an extension on the term  of loans from a maximum of six years to ten years.

The Chancellor also announced he would be extending applications for the government’s coronavirus loan schemes that are helping over a million businesses until the end of November.

As a result, more businesses will now be able to benefit from the CBILS, the Coronavirus Large Business Interruption Loan Scheme (CLBILS), the Bounce Back Loan Scheme and the Future Fund.

The Future Fund is a matching program where the UK government will match investments in qualifying early stage firms in a covertible securities offering.

The Chancellor worried about the resurgence of COVID-19 and the “threat to our fragile economic recovery.”

Innovate Finance CEO Charlotte Crosswell commented on the news:

“We welcome the extension of the coronavirus business loan schemes in response to the ongoing economic uncertainty caused by Covid. Innovate Finance has been in regular conversations with government officials and regulators over the summer, on behalf of non-bank lenders to highlight the unique and important role they are playing in providing finance and emergency loans to SMEs. While the CBILS extension is a crucial step, it is only a short-term measure. We have consistently advocated for a long term solution for SME financing and are therefore encouraged by the announcement that the Chancellor will introduce a new, sustainable scheme from January onwards. We look forward to continuing our discussions with government on our proposals for the new scheme.”

Crosswell said that banks and non-banks must work together to continue lending in an uncertain environment to suppor economic recovery and UK competitiveness.

“The Fintech sector stands ready to play an important role in funding SMEs, to help them manage the uncertainty of the crisis and plan for their future growth,” stated Crosswell.

Earlier this week, it was reported that businesses across the UK have benefitted from 1,328,091 government-guaranteed loans worth £57.3 billion during the crisis through the schemes.

This includes 1,260,940 Bounce Back Loans worth £38 billion, 66,585 loans worth £15.5 billion through the Coronavirus Business Interruption Loan Scheme and 566 loans worth £3.8 billion through the Coronavirus Large Business Interruption Loan Scheme.

Regarding the Future Fund, to date, there has been £720 million worth of convertible loans approved for 711 companies since the fund opened for applications on 20 May. This amount has been matched by at least the same amount from third-party investors.

Fintechs are facilitating both the lending programs as well as the Future Fund.

Source: https://www.crowdfundinsider.com/2020/09/167191-uk-extends-coronavirus-support-programs-for-businesses/

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Fintech Lenders in Indonesia to Support Government with Disbursing Loans to SMEs as Part of COVID Relief Effort

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Asosiasi Fintech Pendanaan Bersama Indonesia (AFPI), which is an association of 156 Fintech lenders, is reportedly planning to work cooperatively with the Indonesian government to distribute funds that are meant to offset the economic problems and challenges created due to COVID-19.

As of September 2020, the Indonesian government has issued 25% of the planned IDR 695 trillion (appr. $46.8 billion) it has set aside for COVID-related financial relief for local businesses.

The AFPI has been creating credit profiles for various Indonesian businesses. The association has reportedly collected data on 25 million local entities since June of this year.  AFPI manages this data by using appropriate analytics tools developed to reach underbanked or financially underserved Indonesians and their micro-, small and medium-sized enterprises (MSMEs). The data may be used to assist with disbursing COVID relief funds to local residents and businesses that the government is planning to help.

Most of the AFPI members offer peer-to-peer (P2P) lending services.

Chatib Basri, a member of the advisory board at AFPI stated:

“One of the merits of P2P platforms is data. And this data is the main problem in the disbursement of [funds from the government, whose]… data is outdated, especially for the lower-middle-income segment…. There needs to be a good collaboration between regulators and the industry. Collaboration on data could be a ‘quick win’….”

Adrian Gunadi, chairman of the Indonesian Fintech Lenders Association (AFPI), confirmed on September 23, 2020 that P2P lender Investree had received an allocation from the State’s Bank Mandiri so that it can disburse the funds as part of the national economic recovery plan. As reported by the Jakarta Post, the funds will be provided to several small business owners.

Adrian, whose comments came during the Jakpost Fintech Fest (a virtual discussion/event), noted:

“That is one way we could see fintech playing a very big role, especially when everything is going digital because of the pandemic. The government is moving toward a less-contact economy.”

He added:

“I think that is where fintech will become more relevant. It has to be part of a bigger ecosystem for us to be able to accelerate the relief effort for Indonesia.”

Ravi Ivanuri, an advisor at Big Four auditing firm PricewaterhouseCoopers (PwC), said that financial authorities in other countries had been working toward improving their digital financial services during these unprecedented times. However, he claims that Indonesia is leading the charge in the Southeast Asia region when it comes to developing and supporting a Fintech-friendly environment. But Ravi also recommended that more coordination is required between regulators and local businesses.

He also mentioned:

“Maybe in the next one or two or three years, if there is more and more collaboration set up between these regulatory authorities, there will be more clarity for fintech players in terms of how to comply with these different regulations.”

As of June 2020, there were 161 licensed or registered P2P lenders operating in Indonesia. Only 12 of them are Sharia-compliant, according to recent data from the OJK, the nation’s financial regulator. The nation’s P2P lending platforms have managed to help around 20.6 million borrowers by connecting them with 539,460 lenders.

But COVID has had a major negative impact on certain segments of Indonesia’s Fintech sector. Its non-performing loan (NPL) ratio has jumped to 7.99%, which is part of a worsening trend that began in March 2020 (when the Coronavirus crisis began). The NPL stood at 4.22% in March 2020, which is significantly more than the 2.62% from last year.

Source: https://www.crowdfundinsider.com/2020/09/167160-fintech-lenders-in-indonesia-to-support-government-with-disbursing-loans-to-smes-as-part-of-covid-relief-effort/

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