Nigeria's Central Bank in Drive to Push Payment Cards in Favour of Cash

Cape Times (South Africa), March 20, 2014 | Go to article overview

Nigeria's Central Bank in Drive to Push Payment Cards in Favour of Cash


BYLINE: Chris Kay

It was really nothing more than a routine afternoon stroll in a Lagos shopping mall. Equity analyst Abiola Rasaq took some friends to lunch at KFC and bought a few shirts.

What made the outing unusual was how he paid. In a country where all but 2 percent of transactions are carried out in cash, Rasaq pulled out a debit card, dispensing with the wads of notes that Nigerians have grown used to stuffing in pockets after a decade of inflation averaging 11.9 percent.

"You didn't have such experiences in the past," said Rasaq, the head of research at Lagos-based UBA Capital. "I have issued fewer cheques in the last 12 months and have paid for most of my shopping at formal stores with cards."

Two years into a push by policymakers to wean Nigeria off its cash dependency, Nigerians are starting to change their habits. Shaking off scepticism about a payment method associated with theft and fraud and plagued by faulty communications networks, some see it as a way to cut costs, counter corruption and bring more Nigerians into a financial fold that the central bank estimates has left out 46 percent of the 170 million strong population.

As electronic payments gain ground, the number of connected card readers has risen to about 158 000 from 5 000 before 2012, according to the Central Bank of Nigeria. The value of transactions rose 26 percent to 1.4 trillion naira (R91.4 billion) in the first half of last year from the year-earlier period.

The central bank aimed at 375 000 readers by the end of next year, said deputy governor Kingsley Moghalu, who heads financial system stability.

"It will help the central bank to also make monetary policy more efficient because you can monitor more the movement of money," Moghalu said.

The rise of online-shopping websites, such as Jumia and Konga.com, the local equivalents of Amazon.com, has also spurred Nigerians to consider electronic payments. The value of online retail transactions, estimated at 62bn naira in 2011, may rise to 150bn naira this year, according to Euromonitor International.

Turning Nigerians away from their reliance on cash goes hand in hand with efforts to diversify the economy beyond oil by boosting other industries such as agriculture. …

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