Nigerians registered mobile transactions worth N2.37 trillion in January 2023, representing a staggering 125% increase compared to the corresponding period of the previous year amidst the sustained scarcity of cash in the country.
This is according to recent data released by the Nigeria Inter-Bank Settlement Systems (NIBSS). Also, the volume of mobile transactions in the largest African economy rose by 55% year-on-year to 108.1 million in contrast to 32.6 million transactions registered in January 2022.
Nigerians have endured massive cash scarcity in recent weeks following the decision of the apex bank to redesign higher naira denominations and phase the old notes out of the economy. The initial deadline for the usage of the old notes was 31st January 2023, which was later extended to 10th of February.
However, due to the limited new notes in circulation, cash transactions have been hard to come by in the country, as many had to endure long queues in banking halls, ATMs, and point of sale (POS) in other to get cash.
Others had to pay a premium of as much as 30% to withdraw from POS agents across the country. The cash drought in the country meant that Nigerians had to adopt other forms of banking transactions, like mobile banking, NIP, and the Point of Sale.
Specifically, the value of NIP (NIBSS Instant Payments) rose by 46% to N38.77 trillion in January 2023, from N26.65 trillion recorded in the corresponding period of 2022. It only declined marginally by 7.7% when compared to N42.03 trillion recorded in December 2022.
- Note that December is also known for increased spending due to the Christmas and New year festivities in most parts of the country.
- The volume of NIP transactions also rallied by 55% year-on-year to 541.65 million from 348.4 million recorded in January last year.
- POS transactions in the same vein increased by 41% to N807.16 billion in the review month. It stood at N573.7 billion in the corresponding period of 2022.
Banking infrastructure deficit: On the reverse side, the growth could have been more compared to what was recorded in January considering the need for Nigeria to complete transactions amid the lack of cash.
- However, the deficit in the banking sector has frustrated many Nigerians in the past two weeks, who have suffered huge pullbacks with their mobile transactions, some of whom experienced unsuccessful debited transfers, inability to access the bank mobile apps, and network failures amongst others.
- The recurrent downtime in bank applications was following the increased usage, as Nigerians had few choices but to pivot to alternative means of payments.
- However, most of the infrastructure of the banks and FinTechs are not sufficiently adequate to accommodate the level of traffic experienced in the past weeks.
These further limited the number of transactions that would have otherwise been recorded in January 2023. The current month also looks set to surpass the previous month, as the cash scarcity continues to linger.
Why this matter: The CBN has adopted a rather aggressive approach towards increasing the adoption of cashless transactions in the country, by reducing the volume of higher denominations in the economy, reducing the over-the-counter withdrawal limit and generally redesigning the new currency notes.
Hence, it is important to constantly track the adoption of alternate in Nigeria, to assess the success of the policy by the apex bank. It is however imperative for banks and other pseudo-banks to upscale and improves their infrastructure in other to accommodate more Nigerians who are willing to adopt cashless transactions.