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Nigeria’s e-payment transactions surge by over 50% in 2023

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By Sodiq Adelakun

In a remarkable leap forward for Nigeria’s digital economy, the latest figures from the Nigeria Interbank Settlement System (NIBSS) indicate a significant 54.55 percent increase in electronic payment transactions, reaching a total of N611.06 trillion in 2023.

This substantial growth from the previous year’s N395.38 trillion highlights the country’s accelerating shift towards a cashless society.

The data revealed that Nigerians are embracing digital payment methods with unprecedented enthusiasm, as evidenced by the 11.05 billion electronic payment transactions recorded in 2023, marking a 75.96 percent rise from the 6.28 billion transactions in 2022.

The NIBSS, which monitors cashless transactions through the Nigeria Instant Payment System and Point of Sales terminals, noted that the total value of instant payments for the year stood at N600.36 trillion, while transactions via PoS terminals accounted for N10.7 trillion.

The surge in instant payment channels, which include mobile payments, reached a staggering 9.67 billion transactions, while PoS terminals saw 1.38 billion uses.

This growth in cashless transactions has been partly attributed to the Central Bank of Nigeria’s (CBN) short-lived naira redesign policy and the imposition of withdrawal limits that began in December 2022.

In response to the policy changes, the CBN had urged the public to adopt alternative banking channels such as Internet banking, mobile banking apps, USSD, cards/POS, eNaira, and others, to carry out their financial transactions.

The move was seen as a push to reduce reliance on physical cash and to bolster the digital payment infrastructure. The current statistics not only reflect the success of these initiatives but also underscore the potential for further expansion of digital payment systems in Nigeria, as the nation continues to embrace technology-driven financial services.

Despite the hardship this policy caused in the first quarter of 2023, the CBN in its ‘Payments Vision 2025’ document argued that the use of cash payment will naturally reduce in 2025. It said by 2025, the country aspired to have a cashless and efficient electronic payment system infrastructure.

“The use of cash will naturally slow with the ‘mobile first generation,’ which will be economically active by 2025, hence one of the focuses of the PSV 2025 is enhancing the cashless policy of the CBN,” the apex bank highlighted.

“As we implement the PSV 2025 agenda, the CBN will continue to ensure that the Nigerian payments system is widely utilised domestically, supports government’s financial inclusion objectives, and meets international standards while contributing to overall national economic growth and development of Nigeria,” it added in its document.

Cashless transactions continue to pale behind cash-based transactions. Chief Executive Officer, Mobile Money, Usoro Usoro recently noted that about 90 percent of all transactions in the country are cash-based.

Growing online payments is dependent on digital-enabled businesses, Osaretin Victor Asemota, growth partner at AnD Ventures and Africa partner for Alta Global Ventures, recently noted.

“Online payments depend on businesses that are digitally enabled. If you do not have enough of them, the market is much smaller than we think.

“The market for fintech in Nigeria is not the consumers; it is the merchants and billers. Without a place for you to spend digital money, there is not going to be adoption. Which is why I kept shouting that the PoS agent model was a temporary aberration. We need more PoS merchants,” he said.

As more Nigerians go online, fraud will increase. 78,584 online fraud cases were recorded between the second quarter of 2022 and the second quarter of 2023.

In its ‘Reports on Frauds and Forgeries in Nigerian Banks,’ FITC disclosed that the growth of electronic payment has given room for the surge in online fraud.

Despite the country’s weak digital infrastructure and ongoing issues with failed transactions, there has been a significant increase in cashless transactions.

The World Bank has acknowledged the lack of sufficient digital and financial infrastructure to support a smooth transition to a cashless economy.

During a recent visit to Nigeria, Wally Adeyemo, the US Deputy Secretary of Treasury, emphasised the importance of improving both physical and digital infrastructure to enable Nigeria to fully benefit from entrepreneurial activities and economic creativity.

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FG urges NIPSS members on creative solutions to national challenge

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The Minister of Budget and Economic Planning, Atiku Bagudu, has urged members of the National Institute for Policy and Strategic Studies (NIPSS), to devise creative solutions to Nigeria’s social and economic challenges.

Bagudu received  participants of the Senior Executive Course 46 of the institute in his office on Monday in Abuja.

According to him, some of the issues confronting Nigeria  as a nation might require out of the box solutions.

“The NIPSS was created in the wisdom of our forefathers, to train senior management personnel that can bring unusual solutions to problems confronting us,” he said.

He urged the participants to eschew self-interest and make decisions that can assist the nation to make better choices.

Bagudu  said that the national planning function of the ministry comes from the National Planning Commission.

He said that the digital economy is one area that the ministry was looking at for mass youth engagement and economic prosperity.

“Digital economy is an evolving process.which the country will have to leverage digital for overall growth and development.

“It is a new reality. Today trading platforms are closing shop and increasingly going digital.

“Nigeria needs to respond positively and reap benefits from the digital economy. But we have to make the space safe through effective regulation.

“Some countries have data protection laws which enable them to check and regulate excesses in the digital space,” he said.

The Minister commended the law enforcement agencies for promptly going after digital platforms like Binance, which was used to disrupt the foreign exchange market and to weaken the Naira.

He also commended the Governor of the Central Bank of Nigeria (CBN), Yemi Cardoso, for his various monetary policy decisions that restored confidence in the Nigerian economy.

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Cardoso to speaks at IMF meeting on FX reforms

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The Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso will speak on foreign exchange (FX) market reforms at the ongoing International Monetary Fund (IMF) Spring Meetings on Wednesday in Washington D.C.

The meetings of the Boards of Governors of the IMF and the World Bank Group (WBG) bring together central bankers, ministers of finance and development, parliamentarians, private sector executives, representatives from civil society organisations and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.

Also featured are seminars, regional briefings, press conferences, and many other events focused on the global economy, international development, and the world’s financial system

Cardoso assumed office as the Governor of the CBN in September 2023. Since then he has introduced some new FX policies and adjusted some existing ones to ensure the stability of the naira.

According to Cardoso, the exchange rate in Nigeria has increased/depreciated due to the simultaneous occurrence of two factors: a decline in the supply of US Dollars coinciding with a surge in the demand for US dollars.

He said in February 2023 that the foreign exchange market is currently facing increased demand pressures, causing a continuous decline in the value of the naira. Factors contributing to this situation include speculative forex demand, inadequate forex supply due to non-remittance of crude oil earnings to the CBN, increased capital outflows, and excess liquidity from fiscal activities.

To address exchange rate volatility, he said a comprehensive strategy has been initiated to enhance liquidity in the FX markets.

This includes unifying FX market segments, clearing outstanding FX obligations, introducing new operational mechanisms for BDCs, enforcing the Net Open Position limit, and adjusting the remunerable Standing Deposit Facility cap.

As part of measures to control inflation and stabilise the naira, the CBN last month raised its benchmark interest rate, known as the Monetary Policy Rate (MPR) by 200 basis points to 24.75 percent from 22.75 percent in February 2024.

In her second term message, Kristalina Georgieva, IMF managing director, who was recently reappointed by the executive board of the IMF, said, “I am deeply grateful for the trust and support of the Fund’s Executive Board, representing our 190 members, and honoured to continue to lead the IMF as managing director for a second five-year term.”

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PenCom recovers N12.45bn from erring employers

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The National Pension Commission (PenCom) said it has recovered N12.45 billion from employers that failed to contribute towards their employees retirement.

The recovery would indeed help in wealth creation for the workers, thereby securing them against old age poverty in retirement.

PenCom in its 4th quarter 2024 report, said it has maintained the services of Recovery Agents (RAs) for the recovery of unremitted pension contributions and penalties from defaulting employers.

It submitted that during the quarter, the sum of N319,468,587.45 comprising principal contributions N128,176,029.95 and penalties N191,292,557.50 was recovered from 32 defaulting employers.

It noted that meanwhile, the Commission Secretariat/Legal Advisory Services Department had been requested to take legal action against 4 defaulting employers.

The pension industry regulator maintained that from the commencement of the recovery exercise in June 2012 to 31 December 2023, a total sum of N25,447,085,186.71 comprising of principal contributions N12,929,415,445.52 and penalties N12,517,669,741.19 was recovered from defaulting employers.

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