The World Bank has said Nigeria lack adequate digital and financial infrastructure to support smooth transition to a cashless economy.
The PUNCH report claimed that the bank stated that the inadequate infrastructure was one of the reasons the Central Bank of Nigeria’s naira redesign policy failed. It disclosed this in its ‘Nigeria Development Update (JUNE 2023): Seizing the opportunity’ report. It affirmed that the policy led to a scarcity of cash and negatively impacted economic activity in the early months of 2023.
The bank maintained that, “The short transition period of the naira redesign was insufficient for the CBN to replace the demonetized old notes with new ones, leading to a cash scarcity.
“The lack of adequate digital and financial infrastructure and processes to support a swift transition to a cashless economy— coupled with the fact that only 40 per cent of adults have a bank account—further exacerbated the situation. The cash shortage resulted in a black market for new notes, inflating overall transaction costs.
“Firms reported that the inability to secure regular funding and operating cash for expenditures, combined with rising prices and fuel shortages, led to a decline in demand.”