Infrastructural deficits threaten FG cashless policy

By Oghale Mafuru

Following the cashless policy of the Federal Government which aims to enhance financial inclusion in Nigeria and the inability of Nigerians to access new naira notes over the counter, the sudden increase in mobile transfers has put a strain on the technology infrastructure of commercial banks in the country leading to massive failed, unreversed bank transactions.

This has further aggravated the confusion and despair of Nigerians whose only possible means of making payment for goods and services is through card transactions, online or internet banking, or the use of USSD codes.

Commenting on this, Promise Oduh, Associate Director, MediaReach OMD Nigeria, stated that the massive failed transactions experienced by most Nigerians is as a result of the overwhelming number of transactions carried out simultaneously which exceeds the capacity of the technological infrastructures of the banks.

“It is about service to ordinary Nigeria. The ordinary Nigerian is not getting service today because the government felt that the banks should drive mobile money when they don’t have the infrastructure to make that happen. How many of the banks have very robust units that have the capacity for digitalization? The banks are not responding to the increase in the number of customers. The banks didn’t bother expanding their infrastructure. A lot of them didn’t invest in digital infrastructure until now that it has dawned on everyone that we are migrating to digital transactions”.

“Also, the backbone that the banks have cannot support the level of customers that they have. They have more customers than their backbones are able to carry. So, it’s like you have an infrastructure that is meant for 50,000 people, and that infrastructure is now carrying 200,000 people. Of course, there will be down times because of the volume of transactions happening at the same time. And the banks are slow in expanding their infrastructure to carry the number of customers that they have” he added.

He also identified low broadband infrastructure as  one of the contributory factors for the setbacks being witnessed in the e-payment industry.

“One major challenge in Nigeria is that broadband penetration in Nigeria is low. If you have low broadband penetration, of course it will slow down your internet speed. The level of transactions through digital technology will be very slow and the scrambling that happens as a result of these complexities that I am talking about will lead to where you make payments, you are debited but the recipient will not receive the money.

According to the Nigerian Communications Commission, NCC, broadband penetration in Nigeria as at December 2022 was at 47.36 percent with expectations that it will rise to 70 percent by 2025.

Prof. Umar Danbatta, the executive Vice-Chairman and Chief Executive Officer (EVC/CEO) of the Nigerian Communications Commission said with the technological advancements anticipated in the coming years, it is expected that there will be a proliferation of devices in the industry.

Meanwhile, the Nigeria Inter-Bank Settlement System (NIBSS) in its latest report stated that Nigeria’s e-Payment transactions surged to 5.2 billion in 2022.

The report added that the volume of mobile transfers increased by 151.4 percent to 715.1 million in 2022 from 284.5 million in 2021. Its value also rose by 139.5 percent to 19.4 trillion.

PoS also followed the same trend as its volume increased by 22 percent to 1.2 billion from 982.7 million in the 2021. In terms of value, it recorded an increase rate of 31.3 percent year-on-year from N6.4 trillion to N8.4 trillion.


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