Nigeria’s digital economy experienced a remarkable surge in 2024, with the value of electronic transactions soaring by 79% to a record-breaking N1.08 quadrillion, according to data from the Nigeria Inter-Bank Settlement System (NIBSS). This unprecedented growth, primarily driven by the NIBSS Instant Payments (NIP) platform, signals a transformative shift in the nation’s financial landscape. The NIP system, launched in 2011, facilitates real-time inter-bank payments, ensuring instant value transfer for beneficiaries. This robust infrastructure has played a pivotal role in fostering trust and adoption of digital payment methods. The data reveals a consistent upward trajectory in transaction values throughout 2024, commencing at N72.11 trillion in January and culminating in a remarkable N115.12 trillion by December. Significantly, even the lowest monthly value in January surpassed the figures from the entire preceding year, underscoring the growing embrace of digital transactions across the nation.
The volume of electronic transactions also witnessed a substantial increase, rising by 13.69% to reach 13.92 billion by the end of 2024. While May recorded the highest volume at 1.02 billion transactions, June experienced the lowest at 871.66 million. This fluctuation in transaction volume throughout the year highlights the dynamic nature of the digital economy and the influence of various factors, including seasonal trends and economic conditions. The surge in electronic transactions aligns with the Central Bank of Nigeria’s (CBN) strategic push towards a cashless economy. In January 2023, the CBN revised its cash withdrawal policy, imposing limits on withdrawals for both individuals and corporations.
The CBN’s cashless policy aims to curb the circulation of physical cash, incentivize electronic payments, and reap numerous benefits. These include reduced banking costs, improved financial inclusion, enhanced effectiveness of monetary policy, greater convenience for consumers, and mitigation of cash-related crimes such as banditry and terrorism financing. The policy also seeks to promote wider access to credit and foster economic growth by streamlining transactions and reducing reliance on cash. The success of this policy is reflected in the substantial growth of electronic transactions and the increasing adoption of digital payment methods across various sectors of the economy.
The impact of the CBN’s policy is evident in the rising financial inclusion rates. The EFInA Access to Finance Survey reveals a significant increase in the number of Nigerians integrated into the formal banking system, with financial inclusion rising from 68% in 2020 to 74% in 2023. While a notable 26% of the population remains financially excluded, the upward trend indicates positive progress toward broader financial access. This growth is attributed to several factors, including the expansion of agent networks that reach remote areas, providing financial services to the previously unbanked population. Agent banking has become a crucial conduit for digital transactions, enabling individuals and businesses, particularly in underserved communities, to participate in the digital economy.
Experts and stakeholders in the financial sector have lauded the growth of electronic transactions as a positive development. Sarafadeen Fasasi, President of the Association of Mobile Money and Bank Agents in Nigeria, emphasizes the role of agents in driving financial inclusion and digital adoption, particularly among petty traders who now rely on agents for digital payments. He also highlights the improved reliability and reduced downtime of the NIBSS platform, boosting user trust and encouraging greater utilization of electronic channels. Marcel Okeke, an economist and sustainability expert, acknowledges the progress towards a cashless economy but also cautions about the need for robust cybersecurity measures to protect against cyber threats. He recognizes that no system is entirely foolproof and stresses the importance of continuous efforts to enhance security and mitigate risks associated with electronic transactions.
Rotimi Fakayejo, an economic and financial analyst, highlights the remarkable effectiveness of Nigeria’s e-payment system, comparing it favorably to even developed economies like the US. He attributes the high volume of electronic transactions in Nigeria to frequent purchases, even for small amounts, and the increased trust in electronic payments following the 2023 naira redesign initiative, which heightened awareness and adoption of digital channels. The confluence of factors, including regulatory policies, technological advancements, and changing consumer behavior, has propelled Nigeria’s digital economy forward, creating a more inclusive and efficient financial landscape. While challenges remain, the significant progress made in expanding electronic transactions sets the stage for continued growth and transformation in the years to come.
