In July 2024, Nigerians paid a record N89.5 trillion through electronic channels, making it the biggest monthly transaction value ever recorded on the NIBSS Instant Payment (NIP) platform, according to a study released by the Nigeria Inter-Bank Settlement Systems (NIBSS).
By comparison, this amount is 89% higher annually than the N47.4 trillion that was recorded in July 2023. With five months left in the year, the total value of electronic transactions in Nigeria from January to July 2024 reached N566.3 trillion thanks to this rise, almost matching the N600 trillion recorded for the entire year of 2023.
Furthermore, there was a 22% year-over-year increase in the number of NIP transactions processed by NIBSS, which increased from 743 million in July 2023 to 907 million in July 2024. Industry insiders credit the recent nationwide cash shortage and the Central Bank of Nigeria’s (CBN) cashless strategy for the steady increase in e-payment transactions in Nigeria.
As part of the nation’s goal to rank among the top 20 economies by 2020, the CBN revealed in 2012 that it intended to start the shift to a cashless economy.
According to the Central Bank of Nigeria’s statement: “Our economy uses too much cash for transactions for goods and services, especially for buying and selling. This is not how it is done in other progressive countries of the world where there are other payment options like debit and credit cards, bank transfers, bank direct debits, Automated Teller Machines (ATMs), and even mobile phone money.”
The CBN specifically stated that the cashless policy will reduce the cost of credit and other banking services, promote financial inclusion by offering more effective transaction options and a wider reach, and enhance the efficiency of monetary policy in controlling inflation and promoting economic growth.
In 2023, individuals and corporate entities were required to withdraw a maximum of N500,000 and N5 million every week, respectively, beginning on January 9. This was in contrast to the N100,000 and N500,000 that were previously stated on December 6, 2022, BrandSpur banking and finance news reports.
When requests for cash withdrawals surpass the restrictions necessary for justifiable reasons due to exceptional circumstances, there is a processing fee of 3 percent for individuals and 5 percent for corporate entities.
Without question, the cashless policy has contributed to both a more stable exchange rate regime and a slower inflation increase.
However, companies will benefit from the policy’s quicker access to capital, lower revenue leakage, and lower expenses associated with handling cash, while the government will see higher tax revenues, more financial inclusion, and stronger economic growth.
