Ahead of the July 1 nationwide implementation of the cash-less policy in consonance with government mandates, Nigeria’s huge infrastructure deficit, accentuated by recent declaration by some telecommunications companies in the country that electronic payment is putting tremendous pressure on their respective networks, constitutes a major drawback to the overall success of the scheme.
The Central Bank of Nigeria’s (CBN) cashless initiative is expected to enhance the integration of the country’s economy as presently 78.8 percent of the nation’s rural populations are largely unbanked. The CBN says the cashless policy, when fully implemented therefore, will help the financial services industry capture Nigerian’s huge informal economy which is driven by small scale farmers, traders, craftsmen and other types of small and medium sized business and consequently integrate it into the formal economy.
This goal, according to industry insiders, will remain unattainable unless the underlying telecommunications infrastructure needed to drive adoption and boost confidence are strengthened. Industry insiders told BusinessDay that poor Automated Teller Machine (ATM) and Point of Sale (PoS) terminal penetration, slow mobile money growth, and poor internet connectivity are some of the sore points that reinforces earlier claims by industry stakeholders that the nation is not ripe for a nationwide implementation.
But this cureent situation still represents a massive investment opportunity especially in the area of infrastructure deployment, according to industry watchers. “By next month, nationwide cashless initiative will begin. “There would be a deluge of data flowing through our networks. Are operators prepared for this? We are still struggling to meet quality of service (QoS) mandates of the regulator.
“The initiative only puts more pressure on our networks”, says a director at one of the leading operators told BusinessDay. Echoing the views of the mobile operator, Stephen A. Bello, principal partner, Kayafas Konsult Limited, says electronic payments are currently putting tremendous amounts of pressure on the mobile networks and infrastructure, consequently leading to deteriorating QoS levels. The effect of extra data traffic imposed on the existing mobile networks poses serious degradation in QoS, said Bello at a recent industry forum.
Speaking with BusinessDay in an interview recently, Amafonye Richard, chief information officer at Skye Bank Plc, notes, “If we cannot guarantee that bank customers can use our electronic channels whenever and wherever they go, then the objective of the cashless policy cannot be attained.” According to him, service availability will make or mar the initiative.
“Connectivity is not so bad, but it could be better. “I do know that telecoms companies are constantly upgrading and improving their networks”, he added. Omokehinde Ojomuyide, vice president and area business head at Mastercard, says poor infrastructure has stalled the cashless initiative.
“There is need for widespread deployment of infrastructure on which electronic transactions ride upon”, she said, in a report. Even with the widespread usage and adoption of ATMs, the population of ATMs has been stuck at the 11,000 mark for the past six years, resulting in an average of 11.39 machines per 100,000 adults, according to latest industry findings.
A World Bank report, however, shows that adults in the country account for about 56 percent (95.2 million) of the total population (I67 million).
Ben Uzor Jr
