The volume of mobile transfers in Africa’s biggest economy, has risen year-on-year by 230.6 percent in January 2023, according to government data and experts say the Central bank of Nigeria (CBN)’s cashless drive is having an impact.
Data from the Nigeria Interbank Settlement System (NIBSS) indicates that transaction volume rose to 108.1 million as at January this year from 32.7 million in the same period of 2022. The value grew by 118.2 percent from N1.1 trillion as at January last year to N2.4 trillion in the same period of 2023.
“From mid-January till the end of the month, people became more concerned about holding on to cash because of the deadline,” Gbolahan Ologunro, portfolio manager at FBNQuest said.
He said a large number of customers deposited cash at the bank and began embracing electronic payment channels.
Last October, the CBN announced that higher denominations of the naira including N200, N500 and N1, 000 would be redesigned and introduced into the economy from December 15, 2022. The apex bank also directed commercial banks to return existing denominations.
The bank said the deadline for the collection of the old naira notes was January 31, 2023. But it was extended till February 10.
Last week, the Supreme Court of Nigeria issued an interim order directing the CBN to halt its deadline for the end of use of the old naira note until February 15 when the parties would be heard.
Apart from the redesign of the notes, the CBN also reduced over-the-counter cash withdrawals for individuals and corporate entities to N500, 000 and five million naira, respectively, per week which commenced from January, 9.
Temitope Omosuyi, investment strategy manager at Afrinvest Limited, said the currency redesign and the fact that there was a deadline for the collection of the old notes led to a rapid surge in mobile transfers in both rural and urban areas.
“Worse still, the cash withdrawal limit of N20, 000 per day at the Automatic Teller Machines (ATMs) also accentuated the dire condition of limited access to cash,” he said.
Omosuyi added that this has led to a significant surge in mobile transfers in rural areas, where financial inclusion and internet penetration are on the back foot.
Financial transactions performed through mobile devices such as smartphones and tablets are the most common channels for electronic payments systems.
Data from the Nigerian Communications Commission shows that mobile network operators, comprising MTN, Airtel, Globacom, and 9mobile recorded a 13.9 percent increase in active subscriptions to 222.6 million in December 2022 from 195.5 million in December 2021.
“If you look at the telecommunications subscription, data subscription and usage, you will see that there is an increased usage of mobile phones,” Johnson Chukwu, chief executive officer at Cowry Asset Management Limited, said.
Higher adoption of mobile money is driving the growth of account ownership in financial institutions particularly in Sub-Saharan Africa (SSA) countries like Nigeria, according to the latest Global Findex report by the World Bank.
The report showed that the country’s banked population increased by 15.6 percentage points to 45.3 percent in 2021, the highest in 10 years from 29.7 percent in 2011.
“Mobile money has become an important enabler of financial inclusion in SSA especially for women as a driver of account ownership and of account usage through mobile payments, saving, and borrowing,” it said.
Point of Sales (PoS) also followed the same trend of mobile transfers as its volume in January 2023 amounted to 96.4 million, a 6.9 percent increase from what was recorded in the same period of 2022 at 90.1 million.
In terms of value, it recorded an increase rate of 40.7 percent year-on-year from N573.7 billion to N807.2 billion.
Likewise, the volume of Nigeria Instant Payment (NIP) platform transactions rose to 541.7 million in January, showing a 55.5 percent increase from 348.4 million recorded in the same period of last year. Its value increased by 45.3 percent
Correspondingly, from the NIBSS data, the volume of cheque transactions declined by 76.1 percent to 5.1 million from 21.3 million over the same period.