Cash’s no longer king

Nigeria's electronic payment transactions hit ₦1.07 quadrillion ($702.6 billion) in 2024, up 79.6% from 2023, with active bank accounts rising to 311.6 million.

Electronic payment transactions in Nigeria surged to an all-time high of ₦1.07 quadrillion ($702.6 billion) in 2024, marking a 79.6% increase from ₦600 trillion in 2023, according to NIBSS. This is about $702.6 billion based on the closing exchange rate of ₦1,535/$1 on 31 December 2024. December recorded the highest transactions at ₦115.1 trillion. The volume of e-payments also grew by 15.5% to 11.2 billion transactions. Additionally, active bank accounts in Nigeria rose from 202.6 million in 2023 to 311.6 million in December 2024, reflecting 106 million new or reactivated accounts.

Several factors can account for the increase in e-payment transactions in Nigeria.  First, Nigerians have increased the adoption of e-payment platforms, which in part has been fuelled by the entry of new players into the space. This is supported by data from Enhancing Financial Innovation & Access (EFInA), which shows a steady increase in the use of digital financial services in recent years.  For instance, their 2020 survey revealed that 45% of Nigerian adults were banked, up from 40% in 2018, indicating a growing trust and familiarity with formal financial services.  This is a significant step towards financial inclusion, which, according to EFInA, aims to provide access to financial services for all adult Nigerians.

Second, the difficulty in accessing cash from bank ATMs and banking halls means that most people have to rely on POS operators to source cash at a fee or just make do with the convenience of mobile payment apps. The Central Bank of Nigeria (CBN) has been actively promoting cashless transactions, and this push, combined with the practical challenges of cash access, has further driven the adoption of e-payments.  This is particularly important in a country where EFInA's 2020 data shows that only 27% of Nigerian adults are considered financially healthy, highlighting the need for accessible and convenient financial solutions.

Thirdly, the galloping inflation experienced over the last few years means that more money is being spent to acquire similar quantities of goods and services.  This increase in transaction values naturally leads to a rise in e-payment transaction volumes.  According to the National Bureau of Statistics, Nigeria's inflation rate has fluctuated significantly in recent years, impacting purchasing power and likely contributing to the shift towards digital transactions.

Overall, this is a plus for financial inclusion, as fewer unbanked Nigerians exist.  While significant progress has been made, challenges remain. EFInA's 2020 survey also revealed that 36% of Nigerian adults are still financially excluded, emphasising the need for continued efforts to bridge the gap.  Furthermore, issues like digital literacy, infrastructure limitations, and security concerns need to be addressed to ensure that the benefits of e-payments are accessible to all Nigerians, particularly those in rural areas and marginalised communities.  The CBN's ongoing initiatives, such as the Framework for Advancing Women's Financial Inclusion, are crucial to creating a more inclusive financial landscape.