CBN should float the Naira to solve the foreign exchange challenges, says KiakiaFX MD

Abisoye Coker, MD, KiakiaFX

Mr. Abisoye Coker, Managing Director, KiakiaFX, is seeking to leverage on technology to disrupt the Nigerian foreign exchange market and make operators and customers enjoy a new experience. In this interview with FELIX OLOYEDE, he shares the company’s vision and proffers solutions to the challenges bedeviling the country forex market. Excerpt:

What brought about KiakiaFX?

KiakiaFX is an indigenous company registered in 2017. Its core objective is to provide a disruptive technology in the FX market. The technology brings FX buyers and sellers to meet on one visual window. And the benefit to the buyer and seller is that there is ease of doing business. There is ease of transacting and processing those foreign exchange deals.

What are you bringing to the market that is different from what others have been offering?

Our business is very niche driven. We are all accustomed to the traditional way of foreign exchange trading, which is walking into your BDC operator, bank, or parallel market operator- your Aboki on the street to exchange your FX. What KiakiaFX has done is to bring both the buyer and seller together under a visual window, thereby, enjoying what the Nigerian government and other governments all over the world have been clamouring for, which is a cashless economy, where there can be a exchange of goods and services electronically. KiakiaFX brings that niche into the FX market.

We still have challenges with Internet penetration in Nigeria. Did you consider this when you decided to take this path?

Technology is evolving across many nations. And Africa is not left out. We will not wait for technology to attain certain level before we adopt it to deal with certain matters. We understand that Internet penetration across Nigeria is a growing process. We have not waited for internet penetration before clamouring for cashless economy.

The government and indeed everybody in the market space is looking for easier means of doing business. We are internet dependent. It is a growing face; we think over the next couple of years, we will attain excellence in technology especially in the area of internet provision. And it will catch up with our technology.

Cyber fraud still poses a grave challenge to the Nigerian financial sector. What have you put in place that would shield you from internet fraudsters?

Cyber fraud is happening across economies. I don’t think it is peculiar to Nigeria. Even in the United States, cyber crime is something everyone is seeking to curb. But our platform is a retail platform. On our platform, you can’t do more than $2,000. More importantly, those transactions have to move from bank to bank.  And it is tied to customers’ BVN and banking information. The YahooYahoo boys are operating with ease because they move cash across channels. Our technology will prevent that by creating a system where those transactions have to go within operations.

We have security measures within the system to track huge transactions and those who try to do multiple sundry accounts. The system is there to block such people who seek to use it for such. However, we maintain that our system is for retail exchange. We don’t want those transactions with large inflow to go through our systems. They cannot because of the restrictive measures in place to checkmate volume of transaction that can go through our platform.

Are you working with the commercial banks?

Definitely! We do not have a choice than to make sure our operations are tied to the banks and banking system. More importantly, it is a four-way system, where you have the customer, the platform, banks and the regulator. And all of them are intertwine into our system. Under the platform you have the BDC operators and the consumers who are the customers.

The BDC operators who are looking to expand their businesses by having better reach of consumers in the world-wide web and by using technology to push that market. On the other hand, you have a consumer who is looking for safety, convenience, the best rate and he is seeking not to be exposed to the parallel market exposures, where you can be given fake currencies and sundry issues.

You said you work with BDCs. Do you work with them as a bloc or individually?

Currently, we are working with them as individual BDCs, who are looking to enhance their business operations by having a larger market space.

Do you have any plan to work with Association of Bureau de Change Operators of Nigeria (ABCON), which is their umbrella body?

We have approached ABCON and we are having some conversations. But ABCON also has its own plans of introducing technology into the market. We hope those talks would look for a better unified process to do business together.

You recently went into partnership with TurtleWax BDC. What is the objective of that partnership?

It is a pioneer partnership, but it is a mutually beneficiary partnership. What KiakaiaFx is doing is seeking to help TurtleWaxBDC in enhancing its market space via technology; that comes to ease cost for both parties. They expect that through technology we can boost their market by expanding their customer base. No longer would location be such a problem to their customers because it is using technology. Their customers can access them anytime and anywhere.

For the period that you have been in operation, what has the experience been like?

The technology was just launched recently. We have been in operation for few months. It is a gradual process because it has to do with technology. Nigerians take sometimes going into technology. But some far, TurtleWax customers are responsive to the technology and they are happy with it. They find it as a more convenient tool to access their BDC operator.

Does a customer need to have a domiciliary account before he can use your platform?

It is a cashless portal. So, the customer will require a Naira account and a Dollar domiciliary account to do any transaction on KiakiaFX. What the technology is all about is promoting cashless process of doing business. It changes the dynamics of doing business. At a point in time, goods and services were bought in cash. If you want an item, you pay cash to get the item. Then PoS came. It took an adjustment process. Now, if you go to the market, you would be provided with PoS as means of payment. People are accustomed to it.

So, with technology, it is a growing process. If anybody says technology will not catch up in forex transaction and sundry transactions across board, then, we will be fooling ourselves. It is cumbersome for now, but will ease later. We are used to receiving currencies and when we receive currencies, we are exposed to a lot of ills.

People are giving fake currencies, currencies that have got out of acceptability with banks. Most customers do not really understand what currency is being handed-over to them. With ease and technology that takes out of the picture. This seems cumbersome for now, it is because we will grow to understand the need to do transactions seamlessly and without cash.

Where do you see competition coming from?

With every business, success breeds competition. The most important part of it is that KiakiaFX technology is evolving. We have several cards in our hats. And over a couple of months, a little more will be put out. We are introducing and will continue to introduce disruptive technology in the area of foreign exchange, to make FX easier, faster and simpler.

Don’t you see banks posing a challenge in the future as they might want to adopt a simpler technology to that of KiakiaFX?

If you have been following the activities of the Central bank of Nigeria (CBN), it has been encouraging many of the banks have embraced Fintechs. And it has said that the banks should continually go into partnership with indigenous Fintechs as area to expand businesses. For banks foraying into the fintech space, today, they have regulations that limit them in that area. Each bank has its area of responsibility.

If banks go into exchange of currencies that customers can just walk in, they will kill the operations of the BDCs. And if the BDCs are out of business, there would be more problems for the economy, because the people in those businesses are out of job. That is why the regulator must ensure that the banks don’t take away the businesses of fintechs, but rather partner with them. There has been some strategic partnership over the years. So, we don’t see ours to be different.

So, if any bank seeks to partner with us, our objective is to make FX transactions simpler and easier. And we have the bank encompassed in our programmes. We have not taken the banks out our business processes. The banks are embedded in our businesses and processes. We expect that banks look at ways of doing things better than taking away businesses from businesses that have come up with new concepts to aid their own operations.

How do you think market volatility would impact your business?

I will reiterate that platform allows the ease of doing business. As for the market volatility, parties are expose to it – the customers are exposed to it; the operators- the BDCs are exposed to it. What we must encourage is a way to balance up. The volatility will go into the free float. Until we have a free float of the FX market, we can’t look away from the possibility of having volatility in the market from one time to the other.

If we don’t deal with the problem of co-dependence on foreign exchange, nothing is going to change. It is an all-encompassing requirement of    the government and all Nigerians who are in the business of doing business to look for a better platform and attack all those issues in the bud and seek a way to address them. We can’t the volatility on the part of the customers and the operators. What we try to do is to ease the process of the exchange.

Are you calling for free float of the exchange market?

I will love to answer that question diplomatically. Our true reality is that we are a consumer nation. And as long as we are heavily import-   dependent, we don’t have a choice than to rely on FX for transactions. If we don’t deal with this issue, by making sure we actually know the real state of our currency, rather the CBN seeking to intervene. With CBN’s intervention, we are not solving the problem. We are only stitching a worn-out cloth. We need to look at a more encompassing way to deal with the problem. And one of the things to consider is free float of the currency. What exactly is the strength of our currency, the Naira?

Do you expect more volume of transactions as we go towards the electioneering period?

We anticipate that there will be inflow of currencies in and out. We talked about the fact that we are very dependent on foreign exchange. There will definitely be a play of FX across markets during this political period. It is a common norm. This has not changed, and it will not change. This is because a lot of Nigerians businessmen hold different currencies.

As they are going to seek elective offices, support elective offices, there has to be currency exchange. We spend naira here, so the printers who will print posters, who will run campaign structures, they would require payment in the Nigerian Naira. So, if there are exchanges, it would be rampant during the electioneering period, because we look to free up their cashes in however currency they have held in order to clamour for support as they seek political offices.