In Nigeria, cash is still king despite concerted efforts to entrench digital payments
The Central Bank of Nigeria (CBN) said there was a 4.6% increase in the amount of naira notes that circulated in the economy two months ago.
Specifically, the sum of $7.3 billion (N3 trillion) was in circulation in October, up from the amount circulated in September this year.
Apparently, the surge in cash demand simply points to the fact that Nigeria’s efforts to digitise payments haven’t really yielded much results.
It should be recalled that Nigerian fintechs led the digital revolution, followed by banks and then the CBN through the launch of the eNaira in October this year.
Interestingly, a lot of these digital drive are concentrated in the urban centres, even as rural dwellers still rely mainly on cash for their daily transactions.
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Note that this increase in money circulation also meant that there was a jump in money supply during that period under review. And as Bloomberg rightly pointed out, this “raises the risk of inflation, which at 15.99% has exceeded the central bank’s single-digit target for six years… The regulator has kept the policy rate unchanged at 11.5% since last year in a bid to rein in price rises.”
In the meantime, Africa’s biggest economy is continuing the drive for digitisation of financial transactions on the continent.
Aside being the first African country and one of the few in the world to launch a digital currency, the country also has a slew of financial technology (fintech) startups such as Paga, Flutterwave and Paystack who are helping to facilitate the digital transformation.
The apex bank also recently granted mobile money and payment service bank (PSB) licenses to some of the country’s leading telecom service providers such as MTN and Airtel Africa.
MTN is specifically targeting customers in the rural communities. The company had announced earlier in the year that it would invest a whooping $1.6 billion in Nigeria to scale up its infrastructural base in rural areas.
