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Africa Jumps the Bandwagon: Race Towards a Cashless Economy

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Tuesday, June 12, 2018 03:30PM / Sponsored Post 
 

Countries all around the world are working towards removing cash from day-to-day transactions and turning towards a cashless society. This is largely due to the benefits of going cashless as it allows transactions to go smoothly while also reducing the risk. 

When blockchain was introduced, many thought it was time to make that big jump and bid adieu to cash, but that might not happen as we are too used to using cash as a medium of transaction. 

While countries like Germany and New Zealand have gone cashless to a large extent, many countries in Africa are also working towards jumping the bandwagon, which comes as a surprise to many financial experts as they expected a major resistance from African countries. 

Consider Somaliland where a large part of transactions are cashless, even at small stores. Somaliland, which is yet to be recognized internationally, broke away from Somalia about 17 years ago, and is making giant strides towards becoming the most recognized cashless state in the world. 

But, Somaliland is not the only country in Africa that is going cashless. Nigeria already has a cash problem, which is why the country is slowly moving to other options, including credit cards and even mobile payments. 

Nigeria is in a unique trouble. There are not enough banks or ATMs in the country, but many banks and startups are working hard to solve this problem by introducing different solutions. 

Many banks have introduced mobile apps that allow users to pay bills and even transfer money digitally. This removes the need to go to a bank or an ATM as all can be done online without involving any real cash. 

Nigeria is not the brightest country in Africa, despite being its largest economy, but it is sure making giant strides. In fact, Paga, one of country’s first digital payment platforms, already has over a million active users.  Tayo Oviosu, company’s chairman, says their next milestone is 5 million users and it does not look like a distant dream with how the company is growing. 

Moreover, banks in different African countries have also started to push people to turn to credit cards from traditional cash transactions. This is a bit difficult especially because of a lack of knowledge about the use of credit cards and a large population having no access to banks. 

Citi Rewards Card is a credit card that offers rewards to customers in order to lure them to use credit cards. Many such offers are now common in African countries for this shift to be a reality, but it is obviously going to take some time. 

It is a surprise in itself that such a thing is happening when more successful economies like India and Pakistan seem to be against going cashless. While India tried to go cashless, the move turned out to be a failure with backlash from the people and a fall in the economy. Even the World Bank cut down the country’s growth forecast. 

In such a scenario, Africa, to many, comes as a surprise. Currently, less than 5% of Sub-Saharan African adult population has a credit card with about 80% using no banking facilities. 

This is why African countries have little to no impact on global electronic payments, but governments in different African countries are trying to change that. 

Let’s talk about Nigeria again. About three-quarters of the country’s adult population have never used banking services. To change this, the country’s Central Bank recently brought changes to its policies to put limitations on cash payments to make Nigeria cashless. 

Kenya is also moving in a cashless direction with online wallet M-Pesa growing at a rapid pace with over 35 million users. 

The growth in the use of mobile phones in Africa is being credited for the success. The number of mobile connections doubled in the last two years reaching a high of 226 million. 

This proves that Africa is gradually moving towards a cashless society, but it will be a while before it is able to reach global standards. 

NB: This is a sponsored news article.

 

Proshare Nigeria Pvt. Ltd.

 

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 Proshare Nigeria Pvt. Ltd.

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