Nigeria’s Cashless Catastrophe is Sinking Small Business
May 4, 2023
Nigeria’s cashless policy has hit small businesses hard, with customers unable to access cash and digital payments proving unreliable. Boluwatife Adedokun, a freelance journalist based in Nigeria, recently interviewed small traders to gain a personal perspective on the nationwide problem.
In October 2022, Nigeria’s Central Bank announced the country would be pursuing a cashless society, introducing measures such as limits on cash withdrawals, and new banknotes abruptly replacing those already in circulation. Citizens had until January 31 2023 to swap their banknotes for new ones, and banks were unable to keep up with demand.
We all have deposited our money and we thought we could receive new notes, but unfortunately, we were unable to. It has really put us in destitution.
Adedokun reports that Adeyemi Opeyemi had built a successful business selling fruit to support herself and her four children after the death of her husband, but the new policy has severely reduced her profits. For weeks after the banking turmoil began, she had few customers since people lacked cash to pay her. She tried offering payment via bank transfer, but her bank disabled the option after multiple failed transactions. Now, she has unsold inventory on which she is losing money.
The government should help us. They should not let us suffer. We are facing many challenges at banks every day despite the fact that we own our money. This policy is not helping.
People’s lack of access to their own money, the risk of financial fraud inherent in digital transactions and the high price of cashless options are all causes of considerable anger surrounding the government’s intent to make Nigeria cashless. In February, the BBC reported on the problem of fraudulent digital payments and financial cybercrime being exacerbated by people’s inability to withdraw their bank balances as cash.
Adedokun also spoke to Salami Aderonke, who sells garri (cassava root flour) and has also experienced fake bank transfers. Her goods are purchased on credit, and she must pay the wholesalers regardless of whether or not they sell. Right now, her customers do not have cash, and digital payments are a risk. A nearby vegetable seller, Abigael Aralade, is in the same position.
It affects me in so many ways because I couldn’t take transfers and people are not buying from me. The government should let the money be in circulation.
Emmanuel Kilaso, founder of the Securecycle Initiative that supports sustainable solutions by providing information and education, is sceptical about what is driving the government’s cashless policy. The stated goals are to curb currency fraud and help reduce inflation and crime (despite ample evidence that cash does not support crime). Kilaso suggests another motive, and points out that the fees around digital banking make it unappealing.
I think the aim of the government is a digital payment method so they can track transactions made by people, but business transactions can only continue if the government can look into the high charges required for internet banking.
Joachim MacEbong, a senior governance analyst at Nigerian intelligence company Stears, says the government’s present approach is negatively impacting people throughout Nigeria, with small and medium businesses from farming and market trade to transportation under pressure.
The cost of denying people access to cash far outweighs any benefits.