Fintech use surges in Nigeria as volatility hits local currency
There has been an increase in adoption and use of mobile money and other Fintech platforms in Nigeria as the West African country struggles to achieve currency stability.
In 2022 the Nigerian Reserve Bank announced that old 200, 500 & 1,000 Naira notes would be replaced with new versions. However, Nigerians are struggling to access the new Naira notes, leaving many stranded, with long queues forming outside banks.
The situation, exacerbated by shortage in foreign currency and rising inflation, has forced many to switch to mobile money platforms and services provided by telcos including MTN and Airtel.
For the October to December period, about two months after the Reserve Bank’s announcement, the value of mobile-money transactions jumped by 25% to 2.5-trillion Naira.
This translates to about US$5.4-billion in mobile money transaction value, according to data from the Nigeria Interbank Settlement System.
Point of sale transactions have also spiked by as much as 40% during the period under review.
Additional data from the Nigerian national payments system shows that overall cashless transactions across the country strengthened by 45.4% in January 2023 alone, on a year-on-year basis to around US$85-billion.
The Central Bank of Nigeria (CBN) last year set “the maximum weekly limit for cash withdrawals across all channels by individuals and corporate organisations at N500,000 and N5m respectively” in cash notes.
It encouraged “customers to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.)" for settlement of transactions.
Nigeria’s central bank digital currency, the eNaira is struggling to gain traction. However, economists and financial authorities are adamant the eNaira presents a solution to the current payments crisis.
A court ruling this month against the phasing out of the old notes has provided some reprieve, although the federal government of Nigeria is set to appeal the judgment.
In January this year, the CBN launched a domestic card scheme for Nigeria.
Godwin Emefiele, Governor of the CBN, said "The domestic card scheme is expected to strengthen the national payments system and deepen the usage of electronic platforms" in Nigeria.