Digital payment drops to N38.77tn in Nigeria amid Naira scarcity

Instant electronic payment dropped to N38.77 trillion in January 2023 despite the Central Bank of Nigeria (CBN) hoping the Naira redesign policy would push digital transactions up.

The electronic payment fell by -7.75 per cent month-on-month from N42.03 trillion recorded in December 2022 to N38.77 trillion, according to data from the Nigeria Inter-Bank Settlement System (NIBSS).

Drop in digital transactions occurred amid a struggle among Nigerians to withdraw from commercial banks after the Naira redesign policy of the CBN led to a scarcity of the country’s currency.

Recall that in October 2022, the Central Bank announced it will redesign the N200, N500 and N1,000 notes in order to mop up N2.7 trillion cash in circulation.

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The apex bank said it will disburse fewer Naira notes of the same denominations after recovering the cash in circulation. It advised Nigerians to embrace a cashless society by adopting digital payment methods rather than relying on cash.

CBN released the new Naira notes in December and fixed January 31, 2023, as the deadline for the old banknotes to cease being legal, however, days before the deadline, commercial banks were complaining that the new Naira notes were insufficient. The deadline was later extended to February 10, 2023.

So as Nigerians were depositing their old banknotes, they were finding it difficult to withdraw new currencies. This triggered chaos as many couldn’t access money to fund their daily lives and banks’ digital payment platforms broke down.

So according to the Instant electronic payment data, Nigerians had less interest in digital payment methods in January 2023 when compared to December 2022.

Although, the drop could be linked to the yuletide period, as December often records high usage of digital payments due to the Christmas period.

But when compared on a year-on-year basis, the Instant electronic payment rose by 45.52 per cent from N26.65 trillion as of January 2022 to N38.77 trillion in January 2023.