By Prince Osuagwu & Richard Udofia
Nigeria may generally be known as a country whose economy stands on two pillars- oil and the economy. But recent developments suggest that other strong pillars exist which on their own are capable of perfectly sustaining the economy.
While investments in the oil and telecom sectors account for the mainstay of the economy, practitioners in the cards and payment sector have declared that theirs is a trillion Naira sector which the government must also protect to harness its full potentials.
Rising from a three-day confab on development of cards and payment systems, organised by Intermarc consulting Limited, in Lagos, some of the stakeholders who shared insights with Hi-Tech, said that considering the growth and potentials of the Nigerian electronic payment systems, the country should be ready to host hordes of investors who would soon be flooding the market.
Solid infrastructure They warned that Nigeria must build solid infrastructure, network backbone, and avoid poor regulation and other pitfalls that have limited other countries with similar potentials from recording meaningful progress.
Mr. Uche Elendu, Divisional Head, e-banking and payment at Appzone media, described the sector as a money spinner for those who know the act of spinning.
Elendu’s Appzone is a tech driven outfit with the objective of empowering people with unlimited access to quality financial and technology services, while enabling financial institutions to achieve reliable customer record keeping, accounting and reporting at a minimal cost.
For him, “the Nigeria e-market has improved, we have seen an increase in adoption of electronic payment system, thanks to new government policies like the cashless policy, which favour increase in the adoption of electronic means. That regulation alone has already created a lot of demand and driven the adoption of electronic payment system, overall, across the country.”
Benefits in abnormality
He added that Nigeria’s purchasing power may turn out to be the tonic to this new ecosystem.
”Currently Nigeria is known as a consumer nation. We spend hundreds of billions of naira here only on consumption. Now the benefit in this is that since electronic payment business is directly proportional to spending power, there is a huge market here.
This is basically the calculation needed by any investor in this business and with the massive population yearning to go cashless, in no time, investors would start flooding in.
”In my estimation, Nigeria is about one trillion naira e-market. If you calculate the level of adoption of e-payment in the formal sector business and add the about 60 percent informal sector which make up the large chunk of enterprise customers you can see this market as a one trillion market. And there’s no doubt, it’s a market that the potentials are barely being tapped.
Now, if the government protects this sector, sustains the policies in place at the moment by ensuring financial inclusion and prioritizing use of cards and electronic transactions, the sector will provide a strong pillar to complement gains from oil and telecom sectors”.
Elendu added that if the Nigerian economy must attract investors, ‘one thing that need to be considered is a framework for doing business in the sector. CBN basically has tried to chart the course. Actually a synergy with NIPSS is done in such a way that proper registration is put in place to support e-business and drive the adoption of electronic payment system.
So favourable regulation is needed.
Nigeria is a developing country, too many people do not use their cards for payment, but today that number is improving, it then means you have a vast market out there, a large number of people waiting to adopt that service. So there is a lot of potentials and that means there is a lot of work to do, educating the customers on the trends, market dynamics among others. Today, Nigeria market is bigger than any, in West Africa, at least.
The downside of this sector is that other technology frameworks and infrastructures needed to enable seemless access to electronic finance are not measuring up.
E-biz is technology driven, apart from the software, a robust network infrastructure is needed and that translates into simple internet data service. The reason why the POS business has been having challenges is due to poor network services and decayed infrastructure.
Today we have higher failure rate in the use of POS in making transactions because a lot of times when you try to initiate such transactions, there is poor data service, and they use normal Simcards.
But on the overall, I think the biggest challenge aside regulation and financial support would be robust network infrastruture. In that vein I support the call to classify telecoms infrastructure as critical national infrastructure.”
Besides having similar opinions to that of Elendu, Public Relations Manager of Secure ID, Mr. Kehinde Ajayi, added that proper orientation and massive public awareness should be sustained to keep the sector on its solid footing.
According to Ajayi, “People are now comfortable carrying cards, but yet the awareness level is not much, so if people understand the benefit of using cards and disadvantages of not using cards they will rush to card usage, that is for sure because it’s what I am seeing right now in the market.
Before now, we have people who when going to the East to buy goods, they strap cash and most times they get attacked by armed robbers but since informed of the importance of cards they quickly adjusted because they have seen the advantages themselves.
Today armed robberies of that nature have seized. They just do their transactions on their cards and the rest is history. The advantages are there but the awareness is still low. People need to know that beyond the ATM, they can do business online”.