By Omobayo Azeez
There is need for government to create an inclusive digital economy that will formalise the informal economy, boost growth and productivity, experts, including the president, sub-Saharan Africa at Mastercard, Raghav Prasad, have said.
Prasad, who expressed his position while making a presentation at the Nigerian Digital Economic Summit held in Abuja, also noted that digitalisation of Nigeria’s economy would accelerate the financial inclusion programme of the Federal Government.
Prasad also stressed the need for strategies that would leverage digital technology to fast-track economic growth in the country.
With Nigeria’s informal sector accounting for over 65 per cent of GDP, the MasterCard chief said digitisation would promote the growth of small businesses, adding that across Africa, and in Nigeria, more than 90 per cent of payments were still done in cash.
“The cash extracts has a heavy toll on the economy. Based on a research by MasterCard, the cost of handling cash was about 1.5 per cent of Nigeria’s Gross Domestic Product (GDP).
“This cost included the burden of printing the cash, storing it safely, transporting and providing the on and off ramps for cash to enter and leave the economy,” Prasad said.
He added, for example, that in 2018, over N64 billion was spent in printing notes in Nigeria.
He said, “We believe partnerships are the only way to make this real and we all need to come together to commit to a common outcome of creating inclusive digital growth in Nigeria.”
As the digital economy has a lot to do with flow of money in the system, the Central Bank Nigeria still contends with cost of printing naira denomination to lubricate exchange in the economy, despite introducing cashless policy about seven years ago.
According to data obtained from the CBN’s Currency Operations 2018 Annual report released a few days ago, the apex bank spent a whopping sum of N231.27 billion to print currency between 2013 and 2018.
Although, the Nigerian economy is still driven largely by cash, advancement in digital technology, broadband penetration, awareness and security against e-fraud, alongside adherence to the CBN’s cashless policy will engender inclusive digital economy and save the apex bank the fortune its spends to print and manage cash, analysts have said.