Address to the Nigerien National Assembly By Christine Lagarde
It is a privilege for me to be here with you today. I am grateful to President Mahamadou Issoufou for inviting me to your beautiful and vast nation. And, distinguished members of the Assembly, I am deeply honored to be here to address you today.
This is by no means my first visit to Africa, or indeed Niger. But it is my first visit as Managing Director of the IMF. I am deeply committed to making the IMF as effective as possible in meeting the needs of all its member countries—large and small, wealthy and poor alike. And this is an important opportunity for me to hear your perspectives and to strengthen our partnership for the years ahead.
Unfortunately, I am not here under the best of circumstances. These are challenging times for the global economy.
“On entend le fracas des arbres qui tombent, mais pas le murmure de la forêt qui pousse.” [Touaregue proverb]
As the thunderclouds of risk are gathering, Niger and others in the region will need to watch them carefully.
So, let me talk about four things today:
- First, the state of the global economy.
- Second, the implications for Africa.
- Third, some thoughts about the policy path forward that might help Niger guard against these global risks and capitalize on new opportunities.
- And, fourth, how the IMF can help.
1. Global Outlook and Policies
I have said many times, the world economy has been poised in a dangerous phase. The growth outlook has dimmed considerably in recent months. And, worse, there are severe downside risks.
The immediate threat is a downward spiral—of confidence, of financial market instability, and of unsustainable government debts—that together lead to weaker and weaker growth. On top of this, unemployment remains unacceptably high in too many countries.
The advanced countries in the Euro Area are at the center of the crisis. And they must be at the center of any solution.
But, we should not lose sight of the bigger picture—the need to restore stability and growth, growth that produces jobs.
Policies in the advanced economies need to strike an appropriate balance between fiscal and monetary policy to promote growth and stability. It also means forging ahead with structural policies that are focused squarely on boosting competitiveness, growth, and jobs. And, it means strengthening financial sector regulation to ensure a safer and more stable financial sector that is better able to support growth.
As Jean-Paul Sartre said, “Our responsibility is much greater than we might have supposed, because it involves all mankind.”
Without action, the crisis of confidence will grow. This would affect all countries, all regions, without exception.
2. Implications for the Region
This brings me to my second point: how might these escalating global risks affect the region?
Let me first acknowledge the progress made in Sub-Saharan African over the past decade. By no means do I want to diminish the challenges that remain. But the starting point for our discussion has shifted; shifted for the better.
Good economic policies have provided a platform for strong economic growth. Across the region, growth has averaged 5-6 percent or more over the past decade and that growth has lifted millions of people in Africa out of abject poverty.
Unfortunately, the food and fuel crisis of 2008, and the global financial crisis that followed, took a heavy toll. Economic growth in Africa declined and the social consequences were severe—the World Bank estimates by 2015 the rate of poverty in Sub-Saharan Africa will be 2 percentage points higher than it would have been without the crisis.
Still, it could have been even worse. When the crisis hit, many African policymakers were able to respond effectively. Most countries were able to maintain critical spending on health, education and infrastructure. And we saw many countries in the region recover quickly, now returning to growth rates enjoyed in the mid-2000s.
This is a testament to the hard work and dedication of Africa’s policymakers. They reduced budget deficits and public debt in the years before the crisis. They brought down inflation and built up foreign exchange reserves. In short, they built up macroeconomic buffers and put their economies on a fundamentally stronger footing. This enabled most countries to maintain critical social and infrastructure spending when the crisis hit.
But, the latest fallout from the advanced economies is testing Africa’s resilience again.
The trade and financial ties, so critical to driving our economies forward in good times, have—ironically—become the linkages that can spread today’s escalating economic risks.
A sustained growth slowdown in advanced countries, together with continued financial market instability, will dampen demand for Africa’s exports. It may also inhibit private financing flows, remittances, and possibly aid. This is not a welcome thought for Niger—aid flows are important and remittances have already been disrupted by the upheaval in Libya.
The potential for greater volatility in commodity markets could cause further disruptions. This could see both winners and losers within the region. It will also be an important watch point for Niger, given the growing importance of natural resources.
But, for many countries in the region, my main worry is that their capacity to absorb further shocks is less than it was three years ago. This would be even greater cause for concern if the global slowdown turns out to be more pronounced this time around.
This means that policies need to walk a fine line—on one hand, defending against the immediate risks from the global slowdown, while also preserving budget resources to invest in infrastructure that can help promote employment and growth.
But, for the most part, policymakers need to focus on restoring the fiscal buffers that served them so well during the last downturn.
3. Niger’s Policy Path Forward
Which brings me to my third point: how reforms in Niger can help guard against these risks and also capitalize on new opportunities. At the outset, let me be clear—I am impressed by the government’s ambitious development plan.
Investments in the oil and mining sectors provide the opportunity for a brighter economic future. But, it will not be easy to fully realize Niger’s economic potential.
First, you must contend with growing global risks. Then, there is the hard truth that relatively few countries have managed natural resource wealth well. Although, Niger has an advantage—you can benefit from the experiences of others.
And, at home, Niger faces some daunting development challenges. Poverty is the most pressing concern, with more than 40 percent of the population living on less than $1.25 a day.
The serious food shortages that have emerged in recent months are a sober reminder of Niger’s vulnerability to climatic shocks—especially drought—and food insecurity. Yet, weak infrastructure and the high cost of doing business inhibit the development of agriculture and other sectors.
These needs may be great. But the increase in oil and mining revenues, if used effectively, could help promote more broad-based and inclusive growth. Growth that would benefit all Nigeriens.
I see three broad priorities for achieving this goal.
One, effective and transparent management of natural resource revenues.
Niger’s adherence to the Extractive Industries Transparency Initiative earlier this year is a major milestone.
A key objective should be to offset, to the extent possible, Niger’s vulnerability to fluctuating commodity prices as natural resources become a more important source of budget revenue.
This requires a medium-term approach to fiscal policy that aims to smooth out spending and helps to use the gains from higher prices wisely.
“Il faut creuser les puits aujourd’hui pour étancher les soifs de demain.” [Touaregue proverb]
I can’t stress enough the importance of being prepared. A little saving during the good times can go a long way to guard against future shocks.
Two, maximizing returns on natural resources.
This means channeling natural resource revenues toward efficient public investments in infrastructure, agriculture, health and education. Investments that will yield high returns and that are needed for growth and jobs.
It is important to create space for other critical public spending. Stronger social safety nets are particularly important. They help the most vulnerable in times of crisis. Your comprehensive support system to manage and prevent food crises, the Dispositif National de Prévention et de Gestion des Crises Alimentaires, is an excellent example.
But, I urge you to keep a watchful eye on public debt sustainability, containing aggregate borrowing and debt levels while seeking to get the best possible terms on loans.
Three, pursue a broad-based development strategy
Niger’s growth and development strategy should not focus exclusively on developing natural resources and public investment. Improving the business environment will help attract more job-creating private investment in a wider range of sectors.
Encouraging a more diversified economy will reinforce efforts to help Niger better withstand shocks. It will also be more likely to deliver more inclusive growth, with opportunities and jobs for the entire population. I experienced Niger’s warmth, hospitality and dynamism, first hand, when I met villagers this morning at the market in Boubon.
Nigeriens are a tremendous resource. And I encourage the government to be even more inclusive in developing the new Economic and Social Development Plan 2012-2015.
4. Role of the Fund
This brings me to my fourth and final point: this is a broad and challenging agenda, and the IMF is here to support you in that endeavor. A deeper dialogue—with the IMF listening even more carefully to your needs and Africa’s needs—will help us serve you even more effectively. It will help us be a better advocate for the region in global forums.
I am committed to a deeper, more fruitful dialogue.
An important lesson that the IMF has learned in recent years is that for our financial support to be effective, it must reach our members quickly and leave sufficient room for high-priority spending, to support growth and protect the most vulnerable.
That is why we have boosted our concessional lending capacity and made our lending instruments more flexible.
We are also reinforcing our efforts to assist the region with policy and technical advice. The IMF has expertise to offer, expertise that can help African countries achieve their social and economic objectives. For example, we will continue to work closely with Niger in providing critical technical advice on budget execution and management, tax policy, and analysis of natural resource projects. We can also play an important role, through our regional technical assistance centers, of facilitating a sharing of expertise country-to-country.
Niger is at a critical juncture. The policy road ahead is not an easy one. The stakes are high; only heightened by today’s global risks. But the opportunity is great, to change course and chart a new future for all Nigeriens.
“Le présent n’est pas un passé en puissance, il est le moment du choix et de l’action.” (Simone de Beauvoir)
But Niger is not alone. We all must do our part.
The IMF—and others in the international community—must be prepared to do more. We are your friend, your partner. We are here to listen and help you chart your course to a more prosperous future and lasting gains for all Nigeriens.
Beyond Transactions: The Payment Revolution
By Marwan Forzley, CEO of Veem
The uninterrupted disruption brought on by the pandemic accelerated the need for robust, digital-first tools created to support remote teams and accelerate online commerce.
As offices across the US moved to work from home for indefinite periods, specialized back office departments handling sensitive information have had to go a layer deeper to find tailored solutions that support the transition of their in-person workflow. For finance teams, payment approvals, issuance, and general management became a challenge overnight. Particularly for those who — even in 2020 — continued to send and receive paper checks through the mail.
For years and even to this day, millions of small business owners around the world have relied on slow and confusing bank processes to manage their business finances. Every day, they spend valuable time using old, complex and expensive platforms to transact with domestic and international vendors — never knowing where their payment is or even when it arrives at its destination.
With ongoing economic and logistical uncertainty looming as we move into 2021, this old norm should not be expected for much longer. This year has seen small business owners wear more hats than ever before, and has influenced a mass adoption of online financial applications that offer heightened security, save more time, and provide more value as budgets tightened.
A study conducted by Mastercard earlier this year saw online business-to-business payments skyrocket in popularity with more than half (57%) of small business owners across North America turning to digital services since the start of the pandemic to improve cash flow and modernize their payment processes.
If this study is of any indication, the days of making an appointment with a banker or sending a wire transfer through an outdated web portal have passed. And the time for the payment revolution is here.
Putting the user in the driver’s seat
Major world events have always acted as a catalyst for innovation and change. As of a result of the growing pains we experienced this year, in 2021 businesses can finally say goodbye to huge transaction fees and bank-imposed gatekeeping when it comes to managing their financial processes.
The financial technology firms, in partnership card and local bank networks and sometimes even each other, have been building and iterating on products over the past decade that were created to work flawlessly from a desktop or smartphone.
For the first time, small businesses have access to needed, user-friendly financial tools packaged to make their lives easier. No longer reserved for major enterprises, those previously underserved by traditional banks can sign up for applications that consolidate billing, payments, working capital and more to one central dashboard.
With the owner in the driver’s seat, they can better communicate with vendors and customers and reallocate their time previously spent manually sending, receiving and reconciling payments toward growing their business — without ever stepping foot out of their home.
Genuinely seamless and automatic integrations with complimentary functions aligned to core financial activities mark a fundamental change in how businesses will choose to operate moving forward. Not only should experiences be integrated, but the entire lifecycle of the transaction should be digital.
Consider a freelance contractor that uses a time tracking and invoicing software to invoice a client. Through an integration between the time tracking tool and Veem (a complete online business payment tool) the client receives and captures the invoice within their Veem payment dashboard. Because Veem and Quickbooks are integrated partners, as soon as the invoice is received, a bill is automatically created, marked as paid, and reconciled on the client’s accounting software as soon as the funds are issued.
In this flow, the contractor only needs to send an invoice, and the client only has to approve the payment for everything else to move. Thoughtful integrations like these empower businesses to log-in to one application, but benefit from several, ultimately eliminating inefficiencies.
Understanding that old habits die hard, it’s expected that businesses of any size have questions when it comes to moving payments from a bank to an online provider.
Answering these questions with unprecedented product value and relentless transparency is the best way forward to bring more businesses onboard in 2021.
This means providing up front pricing, tracking, choice and flexibility to users. Before, during and after the pandemic, cash flow management remains the most critical part of running a small business. Digital payment providers enable the entrepreneur to have unparalleled insight, visibility, and control over their cash flow.
Through non-bank payment options, businesses can secure their information over a secure data network, watch their money move from origin to destination, and choose the speed at which they would like funds to move. By these tools working in harmony, the user can remove friction and spend more time focused on their business.
Separating the signal from the noise
2020 is a year that changed everything for the global small business community. In a report by Veem issued at the start of the pandemic, an overwhelming 80% of businesses shared that they anticipated COVID-19 to impact their business over the next 12-16 months. Problems surfaced that many didn’t even realize they had. And in finding those problems, businesses turned to technology to support them.
As enabling technology, it’s our job to listen and bring clarity and solutions to those contributing to and growing our local and global economies despite the hurdles and challenges they’ve faced.
Right now, small businesses deserve more. More access, more choice and more credit. In the road ahead we expect online payments and bundled user friendly financial services to play a pivotal role in the recovery of small businesses. The payment revolution will see the continuation of important and meaningful products that value the users time and enable businesses to launch, grow, and scale regardless of what’s to come in 2021.
The UK’s hidden payments crisis: why businesses should rethink their payments strategy
By Edwin Abl, Chief Marketing Officer at Modulr.
As the economic conditions imposed by the Coronavirus endure, businesses are facing a dilemma about how to reduce operational costs while meeting customer needs in as economical a way as possible. And all without compromising on their quality of service.
A recent survey of 200 payments decision makers across the UK, revealed there are hidden costs of payment processing which will have an exponentially greater impact on wider businesses if left untreated. It found, UK businesses are spending an average of £1.5m a year in costs attached to payments – money they simply cannot afford to lose to inefficient processes in these uncertain times.
Businesses need to plug any holes in their boat to avoid sinking. And for many this includes the examination and recalibration of their payments strategy.
The research reveals that the payments process now represents a huge 12% of a business’s total operational expenditure. With two-thirds (64%) of all businesses expecting the cost of payment processing to increase over the next two years.
Two thirds (67%) of payments decision makers surveyed believe the way they process, and service payments has had a direct impact on their customer experience. In fact, 62% of respondents believe the hidden costs of poor payments outweigh the hard costs. This indicates that a poor payments strategy is no longer something business leaders can ignore, as it now has a far greater and unseen impact on wider business mechanics.
The top three hidden costs attached to inefficient payment processes were ‘impact on customer experience/satisfaction’ (38%), ‘influence on relationships with other teams and departments (35%) and ‘impact on competitor differentiation’ (31%).
These findings suggest there is widespread consensus that getting payment operations right, directly creates performance boosts elsewhere in the business. When asked to estimate, as a percentage, the business performance boost received if hidden payment inefficiencies were resolved, the average margin for improvement was +14%, with traditional banking the sector most likely (31%) to predict a performance gain greater than +15%.
The 5 key steps UK businesses can take to drive payment efficiencies
There are five key areas payments decision makers and tech leaders should be looking to change, so that they can drive end-to-end payment process efficiencies:
1 – Locate hidden payment process inefficiencies
Visibility is a key issue. Respondents across large (46%) and small businesses (47%) say they have very clear metrics directly related to payment process costs. Only 8% say that they don’t understand the costs involved. Yet, businesses know they could do better with improved visibility of costs. Both large and smaller companies cite ‘lack of visibility for operational costs’ as the top challenge when it comes to achieving strategic goals around payment process and money services provision.
Digital banking companies, including lenders and FinTechs, identified ‘lack of visibility for operational cost’ as a challenge when it comes to increasing payment services revenue (37%). This is in comparison with all respondents mentioning other issues such as lack of skills (25%) and constrained resources (25%) as secondary and tertiary challenges respectively.
For many businesses, developing a cost model for current and projected payment process costs, both hard and hidden, is a top priority.
2 – Make payments key to stakeholder experience management
Customer, departmental and even supply chain partner experiences are increasingly intertwined. There is no doubt that customer experience is a top priority for payment services strategy. But enhancing the broader stakeholder experience is a close second, and certainly complements the former.
Employee experience affects customer experience. So, payment services innovation must extend beyond customer touchpoints. Happy employees who feel they are working with effective and efficient payments systems will be best placed to enhance the customer experience. And, employees in commercial roles who have bought into the benefits of efficient payments will naturally want to extoll those benefits to customers.
Companies with a sophisticated and integrated supply chain are likely to be the frontrunners in implementing the integrated payment services that benefit all stakeholders, due to their historic experience. As customer experience management evolves into a broader discipline of stakeholder experience management, including employees and supply chain partners, it will become more crucial than ever to include payment services experience
3 – Integrate and automate to support payment innovation
Payment innovation is driving a culture change, connecting previously siloed functions such as IT and finance. There is increasing integration of systems from customer relationship management (CRM) and enterprise resource planning (ERP), into accounts and payments. The research tells us that payment processes are impacting nearly every department, affecting areas including customer experience, brand, leadership, business agility and ultimately, revenue. Integration enables new business models for paying suppliers and customers.
Automation is key to driving efficiency, replacing manual error-prone and time-consuming processes with real-time and responsive, digital ones. This is particularly the case when it comes to operational and payment processes.
Indeed, 52% of large companies say that team hours spent on payment processes was their biggest hard cost attached to payments, compared with 26% of smaller companies who share that view. This suggests that automation could contribute more to cutting the cost of payment processes in large companies.
A host of payments-as-a-service providers (including Modulr) are supporting customers to do just this by enabling them to stream a whole unified product ecosystem of payments functionality directly into their own software.
4 – Bring business leaders together
Payments innovation is driving systems integration and creating a more collaborative stakeholder ecosystem. As all the C-level roles become increasingly focused on the customer experience, the finance remit now includes overall business operations and its associated risks and opportunities. The role is evolving beyond just accounting, tax liability and funding. Therefore, closer collaboration between senior leaders is key to driving efficiencies and enhancing customer experience.
5 – Innovate by adding finance and payments to vertical services
Companies with a vertical focus are well placed to innovate by offering new payment services. In many vertical sectors, especially employment services, software vendors are increasingly embedding financial services facilities, such as payments, into their technology platforms. Employment services SaaS providers, across payroll, accounting, bookkeeping and more are offering financial services to existing and new customers within their specific ecosystem.
This means they can develop hyper relevant, convenient and delightful financial products and services for their end users through highly flexible, ‘plumbed in’ payments. This creates an ecosystem of stickier products while boosting the lifetime value of each end user.
Moving forward – engaging technology to drive efficiencies
If the onset of the Coronavirus crisis has taught us anything, it is that there are many advantages to investing in technology and having a digital infrastructure as responsive as your customer-facing experience.
However, whilst digital technologies enable companies to provide customer service in new ways during lockdown. These same businesses are failing to transform their digital strategies, with the biggest priority still being cost reduction (41%).
By not shedding legacy technology and shoring up operational efficiency, UK businesses are following an increasingly risky strategy. And one which will have an exponentially greater impact on the wider business if left untreated. Particularly when this widespread failure to act concerns the customer experiences that sit at the very heart of a proposition – the payments.
To find out how you can drive payment efficiencies into 2021 and beyond, download the full report here for all the insight you need.
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