Following the implementation of the Central Bank of Nigeria’s (CBN) naira redesign policy in 2022, Nigeria’s financial ecosystem is undergoing a profound metamorphosis, with mobile payments taking center stage as a preferred mode of transaction.
Kaliba Bilala, founder of Tanabit, a financial data analytics company, remarked on the impact of the CBN’s policy shift, stating, “Since the naira redesign policy, I can now pay the person that helps with my shoe with transfers.” This sentiment underscores a broader trend among Nigerians towards embracing mobile payment platforms amidst the scarcity occasioned by the policy.
The CBN’s announcement in October 2022 to introduce redesigned naira denominations of N200, N500, and N1,000 by December 15, 2022, prompted a swift adaptation to alternative payment channels. Peter Adebiyi, creative director of Petroyal Apparel, noted, “90 percent of vendors will accept transfers today. But you have to be patient with them because about 80 percent of them will want to confirm receipt before you can go with the goods,” reflecting the adjustments made by merchants in response to the policy.
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Simultaneously, the CBN revised cash withdrawal limits, urging customers to utilize alternative banking channels. This paradigm shift resulted in a shortage of naira in circulation, with money supply plummeting to N982 billion in February 2023 from about N3.3 trillion in October 2022. Consequently, electronic payment activities surged, with cashless transactions rising by 44.84 percent to N126.73 trillion in the first quarter of 2023, escalating further to N237 trillion in Q1 2024.
Mobile money providers emerged as principal beneficiaries of the naira redesign policy, witnessing a meteoric rise in transaction volumes. According to data from the Nigeria Inter-Bank Settlement System, mobile transactions surged from N3.49 trillion in Q1 2022 to N9.07 trillion in Q1 2023 and further to N17.13 trillion in Q1 2024.
“If you look at 10 small businesses in the street, eight will conveniently accept transfers compared to previous years when some merchants prefer accepting cash,” noted financial analyst Ifeanyi Caleb, illustrating the widespread acceptance of digital payments among businesses.
The growth of mobile money operations has propelled financial inclusion, driving the Sub-Saharan Africa mobile money market to $912 billion in 2023, according to GSMA. Bolaji Akinboro, chairman of Voriancorelli and co-founder of Cellulant, attributed the surge in mobile transactions partly to the decline in ATM service quality since COVID-19 and the CBN’s cash policy of 2022. Akinboro predicted sustained growth fueled by the country’s increasing social acceptance of digital payments.
As Nigeria’s financial landscape continues to evolve in response to policy shifts and technological advancements, mobile payments are poised to reshape the way Nigerians conduct transactions, paving the way for a more inclusive and digitally-driven economy.
Credit: Businessday NG (Text Excluding Headline)
