Scoping study on payment services in Nigeria: demand & supply side - Aug 2010

The poor need to conduct a host of financial transactions, which are mostly cash based. In addition, they use a variety of informal channels such as friends or family members; recharge cards; and taxi/bus drivers for receiving/transferring money.

The formal financial services footprint in Nigeria remains limited. The infrastructure required has not kept pace with the transaction needs of the population. Despite aggressive growth strategies by some of the deposit money banks, including branch roll-out, the majority of Nigerians remain outside the formal financial sector and the cash economy is still dominant. 

In order to attract the low income population, financial providers must ensure that service points for conducting transactions are within easy reach of such customers. Given the cost of extending branch networks, financial institutions are now seeking branchless banking solutions such as partnerships with post offices or retail stores; or using mobile phone technology. The EFInA Access to Financial Services in Nigeria 2008 survey showed that: 

  • Of the 18 million adults that were banked, 80% of them used public transport to get to a bank branch
  • Only 14% of adults live within close proximity of a post office
  • More than 50% of adults have access to a mobile phone, which implies that there is a huge opportunity for using mobile phones to extend financial services in Nigeria, especially to the low income population

The payments infrastructure of a country provides the foundation for the delivery of formal financial services. EFInA therefore decided to undertake a comprehensive scoping study of the payment services market in Nigeria to identify:

  • The demand and supply of payment services in Nigeria
  • The potential new business models that can be adopted to  significantly expand payment services in Nigeria

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Scoping study on payment services in Nigeria: demand side

Scoping study on payment services in Nigeria: supply side