The Nigeria Inter-Bank Settlement Systems (NIBSS) in a report has disclosed that Nigerians spent a record N89.5 trillion through electronic channels in July 2024, marking the highest monthly transaction value ever recorded on the NIBSS Instant Payment (NIP) platform.
This figure represents an 89% year-on-year increase compared to the N47.4 trillion recorded in July 2023. With this surge, the total value of electronic transactions in Nigeria from January to July 2024 reached N566.3 trillion, nearly matching the N600 trillion recorded for the entire year of 2023, with five months still remaining in the year.
Additionally, the volume of NIP transactions processed by NIBSS rose from 743 million in July 2023 to 907 million in July 2024, indicating a 22% year-on-year growth.
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With the continuous rise in e-payment transactions in Nigeria, industry experts attribute the surge to the Central Bank of Nigeria’s (CBN) cashless policy and the recent cash scarcity experienced across the country.
Recall In 2012, the CBN disclosed its plans to begin a transition to a cashless economy as part of the country’s ambition to become one of the best 20 economies before the year 2020.
According to the Central Bank of Nigeria, it stated,
“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.”
Specifically, the CBN noted that the cashless policy will cut the cost of banking services including the cost of credit, and drive financial inclusion by providing more efficient transaction options and greater reach; improve the effectiveness of monetary policy in managing inflation and driving economic growth.
Fast forward to 2023, effective January 9, individuals and corporate entities were mandated to withdraw a maximum of N500,000 and N5 million respectively on a weekly basis compared to N100,000 and N500,000 which was previously announced on December 6, 2022. In the event of compelling circumstances where cash withdrawal exceeds the limits required for legitimate purposes, such requests attract a processing fee of 3 percent and 5 percent for individuals and corporate organizations, respectively.
No doubt, the cashless policy has helped to achieve slower growth in inflation as well as a more stable exchange rate regime in the economy. For corporations, the policy will create faster access to capital, and reduce revenue leakage, and cash handling costs while the government will enjoy increased tax collections, greater financial inclusion, and increased economic development.