‘Failed e-Payments, Cash Crunch Weigh On Economic Activities’

United Capital Plc has said failed e-payments and lack of cash will weigh on economic activities in the first quarter (Q1), 2023.

The research firm in a report said: “most recent data from the Nigeria Inter-Bank Settlement System (NIBSS) revealed that the total value of cashless transactions in the Nigerian economy declined by 4.8 per cent in February 2023 to print at N37.7 trillion relative to N39.6 trillion recorded in January 2023.

“The key driver of the observed decline in the value of e-transactions was the increased failed payment experienced in February 2023, particularly owing to a short-fall in network infrastructure.

“The increasing traffic arising from customers’ e-transactions has led to infrastructural collapse as most transactions were left unexecuted, thereby leaving customers stranded. We observed that the 41.3 per cent increase in the use of e-payment gateways within the reviewed period could not translate into increment in the value of electronic transactions.”

It noted that the CBN’s currency redesign policy, which was announced on October 26, 2022 contributed to the ‘cash-crunch’ in the economy, saying, this could be true as customers were unable to access the new notes after the withdrawal of the N200, N500 and N1,000 from circulation.

“As a result of hardship suffered by Nigerians, three state governments (Kaduna, Kogi and Zamfara) had on February 3, 2023 sued the federal government at the Supreme Court for a reversal of the policy.”

“Sequel to the ruling of the Supreme Court on March 3, 2023, stating that the old N200, N500, and N1,000 notes remain legal tender, the CBN expressed compliance in its recent press release of March 13, 2022, directing that the select old Naira notes remain legal tender alongside the redesigned banknotes till December 31, 2023.”

United Capital said: “considering the flip side of the cashless policy as well as the currency redesign policy, we expect a decline in the total output for Q1, 2023. This may be hinge on the depressed economic activities emanating from the lack of cash and failed electronic transactions in the period under review.”

Also, director/CEO of Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf said: “the economy is gradually grinding to a halt because of the collapse of payment systems across all platforms.”

Yusuf noted that “digital platforms are performing sub-optimally because of congestion; physical cash is unavailable because the CBN has sucked away over 70 per cent of cash in the economy; and the expected relief from the supreme court judgement has not materialised.  The citizens are consequently left in a quandary.”