More effective transaction processes and lower charges encourages Nigerians to seek cross-border employments amidst harsh local economic conditions.
Jonathan Chester, President of Bitwage, says to Cointelegraph:
“When it comes to the unbanked, now they have a way to receive international wages in a convenient and scalable fashion. There is nothing scalable or safe about needing to go to the same cash withdrawal location on every payday, to grab a bag of cash which you need to smuggle back home to hide underneath your bed.”
The nation’s failing economy
The dwindling economic situation has seen young Nigerians lose their jobs mostly by being laid off by their employers. Fresh graduates litter the whole place seeking to be absorbed into a crashing labour market as the business environment presently reflects so much unfriendliness to operators within the sector.
The dismal gross domestic products (GDP) and job reports, besides the current high inflation levels (13.7 per cent) clearly show that the government’s economic policies are not effective and require an urgent review to avoid further plunge in economic activities, analysts have warned.
The National Bureau of Statistics (NBS) has released the nation’s economic scorecard for the first quarter of the year – GDP and Unemployment Reports. The GDP report depicts that the nation’s economy plunged into negative territory with a decline of 0.36 per cent year-on-year (y/y) in real terms. The growth rate is 2.47 per cent and 4.32 per cent lower than what was achieved in the last quarter of 2014 and corresponding period of 2015 respectively. In nominal terms, the total value of the nation’s economy was put at N22.26 trillion in the first three months of the year.
Assessing the Q1 GDP number, analysts at Eczellon Capital Limited stated that the first quarter figures have set the tone for the nation to enter into an economic recession by the end of the first half of the year as the weaknesses in the non-oil sector (Manufacturing & Financial services) are still inherent.
This bleak perspective confronting the Nation’s dominant workforce has seen youths within the country seek greener pastures beyond the borders of Nigeria. Thanks to modern day technology, the world is now a global village. People are not particularly restricted by space and time anymore. Citizens do not need to be physically present to become employees of cross-border companies.
A factor which plays an important role though is the cost of acquiring value for work inputs. Bank charges and charges from different methods of transfer have left beneficiaries unsatisfied when they know how much they may be losing over a given period of time.
The cost of money
The president of Bitwage, Jonathan Chester tells Cointelegraph that the average cost of sending a $200 payment to Nigeria from the US is over 5%. According to him, for example, with Western Union, an online payment has a 3% hidden exchange rate fee on top of all the other flat fees.
“I unfortunately do not know the breakdown of high skilled vs low skilled workers who do offshoring work in Nigeria, but I do know that while engineers all have bank accounts, only about 33% of the adult population have bank accounts.”
This means, Chester explains, that only 33% of the population have ways to receive wages in a relatively fast and cheap (we’re talking 3% + $2 at the cheapest with up to a 5-day wait for transfers) mechanism in comparison to the unbanked population.
Blockchain to the rescue
According to Chester, when leveraging the Bitcoin blockchain, you can address problems with both of these demographics at once, banked and unbanked. For the banked, the fees can be brought closer to 1%, and more importantly, the usual 5-day process is reduced to a reliable next day process.
Unlike bank transfers, where it may take up to 5 days for you to realize that a payment was sent to the wrong place, making a transfer delayed for up to 10 business days, the blockchain makes it fast and easy to know where your funds are and when they arrived.
Next day payments help with cash flow issues as well as reduce the stress involved in waiting for a payment.
Chester continued by saying that, leveraging the Bitcoin blockchain, you are removing intermediaries, who do not have a direct relationship with the customers on either side and have incentives to delay the sending of payments in order to make money on idle balances, thereby increasing speeds and decreasing costs.
“The worker in Nigeria can receive their wages in Bitcoin or in the value of US dollars (among many other currencies) through our cloud-saving solution. No bank account is required for them. They can do this by outsourcing to any clients within the US or within the EuroZone Area without requiring the employers to sign up, meaning they have one simple solution for all of their outsourcing wage payment needs.”