Fakoyejo OlalekanThe value of electronic payment transactions grew by 298 per cent year-on-year in the first quarter of 2023, thanks to the Naira policy of the Central Bank of Nigeria (CBN), led by Godwin Emefiele.
According to the Nigeria Interbank Settlement System (NIBSS), commercial banks and other financial institutions generated N135.52 trillion from electronic payment transactions in Q1 this year.
The amount is a significant improvement, as it surpassed the N34.04 trillion the financial industry generated between January to March 2022.
Also, the financial companies saw a 984 per cent increase in the volume of e-payment transactions, recording 4.7 billion in transactions during the period in review, up from 433.4 million reported in the first quarter of 2022.
The Nigeria Interbank Settlement System stated that N42.42 trillion worth of e-payment transactions were made in January this year.
However, the value dropped in February by 4.3 per cent, as Nigerians transacted N40.6 trillion in electronic payments. March recorded the highest transaction, closing with N54.5 trillion.
Furthermore, the volume of electronic payment transactions rose from 1.12 billion in January to 2.13 billion in March, indicating a 46 per cent growth within the space of three months.
What led to the significant rise in electronic payment transactions?
The 298 per cent year-on-year increase in the value of electronic payment transactions and 984 per cent increase in volume were driven by the CBN’s Naira redesign policy.
Prime Business Africa had reported that the CBN’s Naira redesign policy resulted in the scarcity of Naira, forcing Nigerians to adopt digital transactions.
CBN implemented the Naira policy on 10 February 2023 to reduce the currency in circulation and compel Nigerians to reduce their reliance on cash during trading or transactions. Nigerians began to turn to their cards for payment, using less cash to trade.
The policy mopped over N982. 09 billion from circulation. In October 2022, when the CBN revealed its plan to reduce the circulation of the local banknotes, the apex bank said there are about N3.29 trillion in circulation as of the end of October of the same year.
Nigeria’s financial regulator recorded a 235.03 per cent drop after the implementation at the end of February. It achieved this feat by phasing out the old Naira notes and releasing insufficient new currencies to banks.
But confrontation from state governors against the policy led to the Supreme Court declaring on 3 March that the old Naira remains legal till December 2023 after the latter took the Federal Government to court.
The judgement was given following criticism from many Nigerians and governors. Also, international credit rating agencies said the policy, which grounded trading activities, would impact the country’s economic growth.
Consequently, the cash in circulation has began to rise. Prime Business Africa previously reported that cash in circulation is up N701.4 billion at the end of March, hitting N1.6 trillion.
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