Nigeria's Cashless Policy Stabilizes Naira, Challenges Informal Sector

Nigeria's drive towards a cashless economy has brought about substantial changes, particularly impacting the informal sector. The cashless policy has led to a decrease in costs associated with cash handling, such as printing and transportation. This shift has made financial transactions more traceable, aiding in the reduction of corruption, vote buying, and illicit wealth accumulation. Additionally, the formalization of the informal economy is a notable benefit, as it integrates more businesses into the regulated financial system.

However, the transition to a cashless society presents its own set of challenges. Transaction charges have become a significant barrier for small and informal micro merchants. These charges can be prohibitive, making it difficult for small businesses to adopt digital payment systems. To address this issue, the introduction of Masterpass QR for Merchants aims to provide a fast, simple, and secure digital payment solution. This system is designed to be accessible to small and informal micro merchants, large corporates, and governments alike.

The cashless regime has also contributed to the stabilization of the naira. By reducing excess liquidity in circulation and limiting speculative activities, the cashless policy has helped in boosting the value of the naira. This stabilization is crucial for economic growth and development, as it provides a more stable financial environment for businesses to operate in.

In support of Nigeria's informal and contract-driven economy, financial institutions are offering contract finance and invoice discounting to vendors and contractors. This support is essential for the growth and sustainability of small businesses, as it provides them with the necessary financial resources to operate and expand.

Overall, the cost of going cashless in Nigeria's informal sector is a multifaceted issue. While the benefits of reduced cash-related costs, increased transparency, and economic stabilization are evident, the challenges posed by transaction charges and the need for accessible digital payment solutions cannot be overlooked. As Nigeria continues to move towards a cashless economy, it will be crucial to address these challenges to ensure that the informal sector can fully participate in and benefit from this transition.