Nigerians are increasingly feeling the weight of unfavorable economic conditions as dwindling purchasing power drives them into a state of hopelessness regarding the country’s financial future.
The widespread cut in spending in response to these challenging circumstances has resulted in a noticeable decline in the value of electronic payment transactions.
Since the introduction of the cashless initiative by the Central Bank of Nigeria (CBN), the volume and value of e-payment transactions have seen a steady increase.
However, recent findings from Financial Vanguard reveal a concerning trend: the value of electronic transactions dropped month-on-month (MoM) by 5.7% in June 2024, marking the second consecutive decline in three months.
Analysts, including members of the CBN’s Monetary Policy Committee (MPC), attribute this downturn to reduced consumer spending, which has constrained businesses’ ability to expand production.
The shift in consumer behavior reflects a broader economic malaise, with many Nigerians tightening their belts as inflation and rising costs continue to erode household budgets.
According to data from the Nigeria Inter-Bank Settlement System (NIBSS), the total value of e-payment transactions fell to N87.45 trillion in June from N92.8 trillion in May.
This decline was driven primarily by decreases in NIBSS Instant Payment (NIP) transactions and cheque payments.
Specifically, NIP transactions saw a significant 9.0% drop, falling to N79.58 trillion in June from N87.48 trillion in May. Cheque transactions fared even worse, plummeting by 27% MoM to N226 billion from N308.72 billion in the previous month.
Despite the overall decline, there were some bright spots in the electronic payments landscape. Transactions via Point of Sale (PoS) terminals and the Nigeria Electronic Funds Transfer (NEFT) system experienced substantial growth.
PoS transactions increased by 7.4% MoM, reaching N930.76 billion in June, up from N868.56 billion in May. Meanwhile, NEFT transactions surged by 62% MoM, climbing to N6.7 trillion from N4.14 trillion.
The contrasting trends within electronic payment methods highlight a shifting consumer preference as individuals and businesses adapt to economic realities.
The growth in PoS and NEFT transactions suggests that while overall spending may be down, certain sectors of the payment landscape are benefiting from increased usage as Nigerians seek more efficient ways to manage their finances.
As the economic outlook remains uncertain, the implications of declining electronic transaction values are significant. Reduced consumer spending not only hampers individual purchasing power but also poses challenges for businesses that rely on transaction volume for growth.
Policymakers and economic analysts will be closely monitoring these trends as they seek solutions to stimulate economic recovery and restore confidence among consumers and investors alike.
In the face of rising costs and tightening budgets, the call for robust economic policies that address inflation and support consumer purchasing power has never been more urgent.
As Nigeria navigates these turbulent economic waters, the resilience of its citizens and businesses will be tested, underscoring the need for strategic interventions aimed at fostering stability and growth in the financial sector.
This article was created using automation technology and was thoroughly edited and fact-checked by one of our editorial staff members
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