According to a report by the Financial Derivatives Company Limited (FDC), electronic payment transactions in Nigeria recorded a decline of N79.85 trillion in April 2024, marking a decrease of 93.1% from N88.04 trillion recorded in the preceding month.
While Cheque transactions increased by 10.68 percent to N290.36 billion in April from N262.35 billion in March, the report revealed that NIBSS Instant Payment (NIP) transactions experienced a 9.31% decline to N75.32 trillion in April, down from N83.05 trillion in March.
Additionally, transactions via the Nigeria Interbank Settlement System Electronic Fund Transfer (NEFT) dropped by 9.07% to N3.42 trillion in April, compared to N3.76 trillion in the preceding month. Point of Sales (PoS) transactions also experienced a significant decline, falling by 15.35 percent to N811.77 billion compared to N958.99 billion in March.
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It is worth noting that the decline in April e-payment transactions is coming after consecutive increases in the first three months of this year. The consistent growth witnessed month-on-month underscored the burgeoning prominence of e-payment solutions in Nigeria’s financial landscape, signifying a shift towards greater digitalization and efficiency in financial transactions.
In the first quarter (Q1) of 2024, e-payment transactions surged to N234 trillion, marking an 89.3 percent increase from the N123.8 trillion recorded in the same month.
Meanwhile, experts note that the decline in e-payment transactions in April is attributed to reduced customer spending, as well as delayed discretionary purchases and consumers opting for lower-value transactions. Notably, the value of transactions is predicted to decline further in May, due to the reduction in consumer spending and business activities.
Small businesses and consumer goods firms are facing heavy disruption in their supply chain and operational costs due to inflation, currency risk, removal of fuel subsidies leading to a significant increase in energy costs, and scarcity of foreign exchange.
In recent times, revenues and business forecasts are set to suffer short-term pressures, declines, and low or no profits. Because the Nigerian economy is largely import-driven, the unstable foreign exchange rate continues to generate higher import bills for many of these companies.
This saw inflation reach 32 percent year-on-year in February 2024, driven mainly by food price inflation of 38 percent and loose financial conditions. Inflation has remained a major challenge for Nigerians and continues to worsen the operations of businesses in the country.
The International Monetary Fund (IMF) expects Nigeria’s inflationary pressure to ease to 26 percent this year. Daniel Leigh, division chief of the research department at IMF, said inflation in the country would drop alongside global inflationary pressures estimated to decline from 2.8 percent at the end of 2024 to 2.4 percent at the end of 2025. With continued monetary tightening, inflation is projected to gradually decline to 24 percent year-on-year at end-2024.