from OKORO CHINEDU in Lagos, Nigeria
Nigeria Bureau
LAGOS, (CAJ News) – THE Central Bank of Nigeria’s (CBN’s) naira re-design policy has brought mixed fortunes to the e-payments sector in Africa’s largest economy.
On a positive note, it is one of various initiatives, aimed at driving a cashless society, that have supported the adoption of e-based payment channels.
Data from the Nigeria Inter-Bank Settlement System (NIBSS) shows that the total value of transactions recorded under the NIBSS Instant Payments (NIP) platform increased by 46 percent year on year (y/y) to N38,8 trillion (US$84,38 billion) in January 2023.
This compares with a 39 percent y/y growth in December 2022.
The year-on-year growth in the value of transactions was aided by a 55 percent y/y increase in the volume of electronic transactions, to 542 million.
FBN Quest noted the NIP platform has become one of the most preferred methods of payment due to the rising penetration of mobile telephony across the country.
However, a major challenge facing e-payment channels is the banks’ payment infrastructure lacking adequate capacity to handle the recent surge in electronic transactions caused by the scarcity of naira.
“This has resulted in increased incidents of failed transactions across all e-payment platforms,” FBN Quest stated.
Nigeria has in recent weeks faced shortages of the higher denominations of the local currency after CBN launched new N200 ($0,46), N500 ($1,15) and N1 000 naira ($2,30) notes in November.
This was to promote a cashless economy by limiting the amount of the new banknotes that can be withdrawn, eliminate hoarding as well as curb crimes like kidnapping and terrorism and illicit financial transactions.
CBN has brought into circulation fewer of the new notes than the old ones it mopped up, resulting in a cash crunch.
To alleviate the crisis, CBN this week said it would comply with court orders directing that the old banknotes remain legal tender alongside the redesigned notes until December 31.
– CAJ News