A report by the Enhancing Financial Innovation and Access (EFInA) has established that the current costs of data in Nigeria are still very expensive for many Nigerians in the middle and lower-income classes.
In the report titled ‘Leveraging Technology for MSME Financing in Nigeria’, EFInA said the high cost of data is preventing many MSMEs in Nigeria from using the internet to promote their businesses and constitutes one of the major obstacles inhibiting the growth of small businesses in Nigeria.
The report, which identified various challenges facing MSMEs in the country, also noted that the Nigerian economy has about 39.7 million MSMEs but the sector has not been able to deliver on its potential due to several critical challenges.
Between smartphone and data: While noting that smartphone penetration in Nigeria is increasing, helped significantly by more affordable pre-owned phones, EFInA in the report said:
- “Data, however, needs to be more affordable to get more of our MSMEs to consistently use their phones for digital and micropayments.
- “Because of expensive data, quite a significant number of lower middle- and lower-income demographics in Nigeria would switch off their WhatsApp connection and only turn it on periodically.
- “This suggests that data costs are expensive relative to the income of lower-income demographics in Nigeria and would constrain the consistent use of digital payments even as smartphones get more affordable.”
USSD pricing is a hindrance: EFInA also identified the current Unstructured Supplementary Service Data (USSD) pricing per session of N6.98 as a hindrance to MSMEs leveraging mobile payment. According to the organisation, this would be very expensive for millions of nano-enterprises and MSMEs and those who might want to pay them for very small or micro-payments.
- “It would constitute a disincentive for the usage of the USSD platform that should be ordinarily offering inclusive payments given that the USSD phone is the most accessible and affordable for millions of MSMEs and their customers,” it added.
According to the report, if all the challenges confronting the sector are addressed and it is well nurtured and structured appropriately, the Nigerian MSME sector has the potential to create jobs, increase productivity and income, and reduce poverty.
