64% of all payments in Nigeria are cash based, with about 60% of the population (age 15+) without a bank account, which means they are unbanked. Among those with a bank account, many are considered “underbanked” with limited access to financial services or face barriers to using their bank accounts, such as high fees or a lack of trust in digital payments and formal financial institutions.
Use of credit card and debit cards
The use of credit cards is not very common in Nigeria, and as of 2021, less than 1% of the population has a credit card. However, the use of debit cards is more widespread. According to the Central Bank of Nigeria (CBN), there were over 145 million active bank accounts linked to debit cards in the country. The ownership and use of debit cards may vary across different demographic groups, such as by age, income, and location.
2023 Naira redesign policy and cash restrictions
In 2023, CBN issued a circular imposing restrictions on the amount of cash that could be withdrawn by individuals and businesses in Nigeria. The circular aimed to promote a cashless economy and reduce the amount of cash in circulation.
The cash restrictions imposed include: A daily limit of 20,000 naira (about 26 USD) for cash withdrawals.
These restrictions do not apply to electronic transactions, such as transfers, card payments, and mobile money transfers, which are encouraged as a safer and more efficient alternative to cash transactions.
Impact on food exports
Many farmers and traders engaged in agricultural production and exports in Nigeria rely heavily on cash transactions to conduct their business. With the cash restrictions in place, these businesses may find it more difficult to access cash to pay for their expenses and to pay their workers. Therefore, cannot fund their produce exports.
It’s important to note that farmers and food commodity traders who adopt electronic payment systems may still be able to conduct their business and access funds more easily.
Mbariket is a U.S. agribusiness, producer, and supplier of Nigerian food commodities to global clients and end-customers. Through our consulting division, we provide risk mitigation strategies for companies interested in importing food from Nigeria.