As Nigeria is moving closer to its general election, Naira and fuel scarcity continue to dominate the news.
While it remains to be seen what the final impact of the cashless policy will be on the Nigerian economy, it has severely affected vulnerable street children, mendicants and hawkers. It has been a struggle to get access to cash and therefore, no cash to hand out either. Microbusinesses are also suffering from the lack of liquidity.
A similar policy in India, implemented in November 2016, had comparable results. When reviewed in 2018, it seems that in a largely informal economy where the most vulnerable people still have no access to digital payments, demonetization without capital was a draconian measure. It did contribute to a further digitalization of payments, but had lesser impact on tax collection and other macro-economic objectives were only partly reached at a high cost.
According to the Nigeria Inter-Bank Settlement System Plc (NIBSS) PoS transaction grew by 40% and e-payment hits N39.58tn. “Naira’s scarcity as a result of the Central Bank of Nigeria’s redesign and cash withdrawal policy has pushed Point of Sales transactions to N807.16bn in January 2023.
This is a 40.69 per cent year-on-year increase from the N573.72bn transactions that was done in January 2022. According to new data from the Nigeria Inter-Bank Settlement System, total cashless transactions in Nigeria rose by 45.41 per cent year on year to N39.58tn in January 2023.
The NIBSS monitors cashless transactions through the Nigeria Instant Payment System and Point of Sales terminals. Total NIP transactions for the period rose by 45.52 per cent y-o-y from N26.65tn as of January 2022 to N38.77tn as of January 2023.
In 2022, the CBN announced a Naira redesign policy, withdrawal limits and encouraged Nigerians to adopt electronic forms of transactions. According to the CBN, the use of case payments will reduce in the country by 2025. It explained that by then, the country will have a cashless and efficient electronic payment system infrastructure to service all the sectors of the economy.