Recently, the National Bureau of Statistics (NBS) released selected banking sector data for Q4 2020. The report was on sectorial breakdown of credit, ePayment channels, and staff strength of Deposit Money Banks (DMBs) in Nigeria. The report showed, as of Q4 2020, transactions worth 3.46bn and N356.47tn were done through Electronic Payment Channels (EPC) in volume and value, respectively.
Online transfers constituted 64.1% of the total volume of transactions. Credit to the private sector grew 2.5% q/q to N20.37tn within the period of which Oil and Gas (N3.93tn), and Manufacturing (N3.19tn) sector took the major chunk of Bank credits (N20.37tn) to the private sector in Q4 2020. Non-performing loans were reported at 6.02% as of Q4 2020 from 6.41% in Q2.
In total, 5.55mn cheques were drawn on the bank for payments totalling N4.22tn, representing a respective volume and value growth of 10.72%q/q and 10.28%q/q on Q3 2020. Furthermore, Point of Sales (POS) transactions continued to grow on the back of limited transactions in the banking hall, hence, the growth in volume (32.1% q/q) and value (25.49% q/q) in Q4 2020.
Similarly, online transaction volumes were up 39.67% q/q while value was up 19.24% q/q. NEFT volume grew 18.41% q/q and value was up 25.48% q/q just as USSD volume grew 9.00% q/q and value was up 22.46% q/q. Mobile app volume grew 10.80% q/q while value grew 10.86% q/q.
The sustained growth in e-payments transaction volume and value in Nigeria evidence increased adoption of technology in payments and cash transfers by the Nigerian populace. This is driven by increasing internet & mobile penetration as well as investment by banks and other payment-based fintech in payment technology infrastructure.
Furthermore, the reduction to the fees payable on mobile and internet payments/transfers announced by the Central Bank of Nigeria (CBN) which came into effect in January 2020 had a mild impact on the increased usage of these platforms. In addition, with the onset of the pandemic, there was a reduction in the use of physical cash for settling payments. Thus, we think e-payments benefitted significantly from this.
Going forward, we expect the e-payments industry to continue to record significant growth even beyond the pandemic as many of the new methods of transacting remains. In our opinion, the e-payments sector of the fintech ecosystem is expected to serve as the growth frontier of the new decade in Nigeria as highlighted in our 2020 Nigeria Fintech Sector Report (See CSL Nigeria’s Fintech Industry 2020; Growth Frontier of the New Decade).
Consequently, we expect banks to continue to benefit significantly from the e-payments revolution.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.