The North-East region of Nigeria, a predominantly agricultural area significantly impacted by protracted conflict, is experiencing a notable shift towards digital financial inclusion. A recent study by Moniepoint Inc. reveals a growing adoption of digital payment systems among traders, driven by the need for enhanced security and simplified accounting practices. This digital transformation is particularly significant in the context of the region’s economic recovery and its crucial role in Nigeria’s food security. The adoption of tools like mobile transfers and POS systems has empowered traders to mitigate risks associated with cash-based transactions, particularly in the wake of Nigeria’s 2023 cash crunch. This transition offers a promising pathway towards greater economic stability and growth within the region.
The informal market remains the primary driver of agricultural trade in the North-East, with Borno State playing a pivotal role as a major hub for the distribution of livestock, grains, vegetables, and agrochemicals. Over half of the traders surveyed source their goods from Maiduguri, the state capital, highlighting its strategic importance in the regional and national food supply chain. While the agricultural sector contributes significantly to Nigeria’s GDP, a substantial portion of transactions within this sector still occur outside formal banking structures. The Moniepoint study sheds light on the prevailing reliance on informal credit systems, in-person payments, and rudimentary record-keeping methods. This underscores the potential for digital solutions to revolutionize the sector by introducing greater transparency, efficiency, and financial security.
The transition to digital payments represents a significant departure from traditional practices and underscores the increasing awareness among traders of the benefits offered by technology. Over 45% of traders in Borno State now embrace digital payment methods, with mobile transfers accounting for a significant portion of these transactions. This shift not only addresses security concerns but also simplifies accounting processes, enabling better financial management and potentially facilitating access to formal financial services. The increasing adoption of digital tools also reflects the growing accessibility of these technologies and their adaptability to the specific needs of the region’s trading communities.
The study further highlights the resilience and experience within the North-East’s agricultural sector, with nearly 37% of food chain actors having been in business for over a decade. This deep-rooted expertise combined with the adoption of digital tools presents a unique opportunity to catalyze economic growth and strengthen the region’s food security. The diversity in transportation methods employed by traders, ranging from shared trucks to motorcycles and tricycles, reflects the adaptability and resourcefulness of the sector. This flexibility allows them to navigate the complexities of the region’s infrastructure and security challenges while ensuring the efficient movement of goods.
Moniepoint CEO, Tosin Eniolorunda, emphasizes that financial inclusion goes beyond mere access to financial services and encompasses ensuring dignity and enabling individuals to transact on their own terms. He highlights the significance of the North-East’s transition to digital payments as a crucial step towards creating a more inclusive economy where everyone can participate, regardless of their location or background. Empowering farmers and traders with secure and reliable digital tools de-risks their operations and integrates them into the broader national economy, ultimately accelerating socio-economic development.
The Moniepoint study builds upon previous research on various segments of the Nigerian economy, including family-owned businesses, Onitsha Market, community pharmacies, and women-owned businesses, demonstrating the transformative potential of digital payment solutions across diverse sectors. This growing body of evidence underscores the ongoing digitization of Nigeria’s commercial landscape and the positive impact of technology in fostering financial inclusion, enhancing efficiency, and promoting economic growth. The study’s findings provide valuable insights into the specific challenges and opportunities within the North-East region, informing the development of targeted interventions and tailored solutions to further empower this vital sector of the Nigerian economy.
