The drive towards a cashless society has been a topic of debate in the global financial economy. Cashless societies have slowly gained recognition and application in most developing and underdeveloped countries in the world, largely due to their significant relevance in some advanced countries of the world.
COVID-19 brought a public health challenge to Nigeria, but it also resulted in an economic downturn on the back of a pandemic-induced recession.
The pandemic highlighted the need to diversify the economy to develop a wide range of growth industries and sectors in addition to the more traditional ones such as oil and gas.
The growth of the digital technology sector in Nigeria is an indication that the sector can serve as a catalyst for advancing the digital economy while enabling economic recovery and growth.
According to a report by NBS, the ICT sector played a major role as it was the leading driver in the non-oil sector that led to GDP growth and economic recovery in 2020.
The World Bank’s Nigeria Digital Economy Diagnostic Report highlights that Nigeria is uniquely positioned to reap the benefits of the digital economy as the country accounts for 47% of West Africa’s population, and half of the country’s 200 million people are under the age of 30.
This report goes on to acknowledge Nigeria as the largest mobile market in Sub-Saharan Africa, supported by a strong mobile broadband infrastructure.
At the same time, minimal fixed infrastructure and connectivity in rural areas can leave the most marginalized people behind.
Partnerships with government, fintech players, telecom companies, and other strategic partners to provide digital solutions and support the cashless economy, offer the greatest potential to overcome infrastructure barriers to accelerate financial inclusion and drive economic growth across multiple sectors.
Digital innovations are key to advancing financial inclusion. They are the big equalizers, enabling and spearheading financial inclusion for people and small businesses alike. The foundation to enable payment technologies for a robust digital economy is being laid one regulation at a time.
Recent frameworks issued by the Central Bank of Nigeria on Sandbox, QR, Open Banking and others, are expected to galvanize and accelerate the digital economy agenda by allowing more innovation. Creating certainty in other areas such as contactless payments can energize the industry even further.
Some companies have been providing digital payments to foster a cashless economy like Mastercard.
Mastercard, a leader in global payments is driving growth in digital financial services by making it easier for people to accept electronic payments, along with greater access to credit to grow and scale.
This will be achieved through digital partnerships, solutions, and technology, aimed at connecting 1 billion people to the digital economy by 2025, including 50 million micro and small businesses, with a direct focus on 25 million women entrepreneurs.
Mastercard has already started this process, an example of this is its recent partnership with MTN which enables millions of consumers in 16 countries across Africa to make global e-commerce payments safely and securely, with or without a bank account.
Last year, Mastercard launched a Pay-on-Demand mobile platform in Uganda with Samsung, Airtel, and Asante Financial Services Group which provides end consumers and MSMEs with asset financing to access smart handsets at a low upfront cost while making affordable payments over time.
In addition, Mastercard and Airtel’s digital partnership will enable access for over 100 million mobile phone users in 14 African countries to virtual card numbers (VCN) and QR Payment capability – even though they don’t have a bank account.
Mastercard also aims to onboard over 40K SMEs as merchants on QR. The partnership has made Airtel one of the largest offline-to-online digital payment networks in Africa.
Why this matters
- Mastercard solutions have assisted businesses and consumers to thrive in the digital economy by utilizing safe and secure digital payment channels, especially during the pandemic.
- They have also assisted countries and stakeholders to digitize economies and develop successful, interoperable payment ecosystems that can support sustainable growth and wider financial inclusion.
- Cashless policy will significantly improve the payment system in Nigeria by reducing the number of cash-based transactions in the economy
The growing reach of mobile technology creates a tremendous opportunity for the payments and technology industries to bring more people and businesses into the formal economy. Through partnerships, we can achieve a digital payments economy that includes everyone, mitigates the costs of cash, and achieves the sustainable economic growth and inclusive well-being that we want for Nigeria.
