By Onome Amuge.
Experts and stakeholders in the Nigerian digital space have highlighted the critical role of multifaceted collaboration to fortify the nation’s payment systems and improve electronic payment service delivery for wider financial inclusion.
Reports have shown that electronic payments have attracted substantial global investments and have exhibited the highest returns and growth within the sector over the past decade. According to business consulting firm, Grand View Research, the global digital payment market size was valued at $81.03 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 20.8 per cent from 2023 to 2030.
In an assessment of the potential within the sector, Olayinka Arewa, the group chief financial officer of Parthian Partners,Nigeria’s premier interdealer brokerage company, noted that in 2022, Nigeria unlocked $3.2 billion in additional economic output through the development and utilization of electronic payments, particularly real-time payment services.
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Arewa pointed out that as one of Africa’s largest economies, Nigeria is well-positioned to harness the potential within this sector, but requires stronger collaboration to tackle challenges facing the country’s e-payment system.
Speaking at the 2023 annual conference of the Finance Correspondent Association of Nigeria held recently in Lagos and themed “Strengthening Digital Infrastructure for Efficient Innovative Payment Systems in Nigeria,” the financial expert underscored the need for synergy across multiple levels to drive innovation and efficiency in Nigeria’s evolving payment landscape.
“Electronic payments offer manifold benefits to our economy. According to a recent McKinsey report, FinTech activity in Nigeria, initially centered around payments, has expanded into various sectors. Presently, payment solutions constitute approximately 15% of banking revenue pools in the country, a testament to the growing popularity of electronic transactions,” he said.
Despite the significant growth in the sector, Arewa identified the lack of operational telecommunications facilities and an unstable power supply as persistent challenges facing the sector.
Thus, the Parthian Partners emphasised partnerships among stakeholders, including financial institutions, fintech companies, government entities, and regulatory bodies to tackle the issues. He also contended that policy, regulation, and collaboration are pivotal elements in the success of innovative solutions in the Nigerian financial services sector.
Arewa explained that collaboration among stakeholders, including financial institutions, fintech companies, government entities, and regulatory bodies, plays a pivotal role in ensuring the success of innovative payment solutions.
“This alignment will boost technology and infrastructure, expedite the adoption of digital payments, and further enhance financial inclusion in Nigeria. Ultimately, it boils down to policy, regulation, and collaboration. If parties are inclined to collaborate, many of the frictions currently experienced in the Nigerian financial service sector can be mitigated,” he affirmed.
Speaking in the same vein,Umar Danbatta, the vice chairman of the Nigerian Communications Commission (NCC), underscored the significance of collaboration, investment, and adaptability in achieving a robust and inclusive digital payment ecosystem that benefits citizens and drives economic growth.
Danbatta, who was represented by Anthony Ikemefuna, a deputy director at the NCC, stressed the long-term commitment required to enhance digital infrastructure for an innovative payment system.
The NCC vice chairman emphasised the need for closer cooperation between the NCC and financial regulators, such as the Central Bank of Nigeria (CBN), to ensure effective coordination of policies and regulations related to digital payments and telecommunications. He explained that this coordinated approach is essential in creating a conducive regulatory environment for innovation and growth.
In addition, Danbatta encouraged financial institutions, telecom operators, and fintech companies to develop and deliver innovative digital payment solutions. He also encouraged telecom operators to collaborate with banks and fintech companies to offer mobile banking and payment services, particularly targeting unbanked and under-banked populations.
On his part, Olukayode Olubiyi,head of digital banking at United Bank for Africa (UBA), highlighted the challenges posed by inadequate infrastructure, operational facilities, and unstable power supply to Nigeria’s electronic payment systems.
Olubiyi emphasised the critical role of collaboration among stakeholders, including financial institutions, fintech companies, government entities, and regulatory bodies, in ensuring the success of innovative payment solutions.