Nigeria Proposes Pan-African Payment Card To Reduce Dollar Dependence

• The federal government has unveiled plans for a pan-African payment card that will allow direct transactions between African currencies
• Finance Minister Taiwo Oyedele said the initiative, developed with support from Mastercard
• The government also urged Mastercard to expand consumer credit access in Nigeria

Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.

The federal government has announced plans to develop a continent-wide payment card which would enable direct transfers between currencies of African countries, eliminating the need for intermediary currencies like the US dollar.

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, disclosed the plan when he met with a Mastercard delegation in Abuja on Tuesday, June 23.

FG advocates for a new payment system

According to Oyedele, Africa has the opportunity to revolutionise its payment infrastructure to enable direct settlement between its currencies and reduce the cost of transactions across the continent, Tribune reports.

He said:

“Africa has a unique opportunity to modernise its payment infrastructure; we need to stop depending on foreign currencies as an intermediary for making payments”.

He explained that the government intends to introduce a payment card which would facilitate transactions directly from one African currency to another, such as from Naira to Kenyan Shilling or Rand, without involving the dollar.

Under the present system, many transactions between African countries are often carried out using the US dollar, meaning a transaction from, say, Ghana to Egypt might involve converting the local currency to US dollars, then to US dollars again before conversion to Egyptian Pounds, often resulting in additional costs and currency exchange risks.

The envisaged pan-African payment card is expected to make cross-border payments much cheaper and efficient, facilitating easier intra-African trade and business operations.

This initiative is consistent with Nigeria’s goals to boost economic integration under the African Continental Free Trade Area (AfCFTA).

Oyedele believes firms like Mastercard could help make the vision of a payment card a reality and better link Africa from a payment and financial perspective, Punch reports.

He added:

“I can assure you if we work together, we can make that African payment card a reality, and also deepen consumer finance."

Consumer credit access in Nigeria

In addition to cross-border payments, Oyedele also implored for better consumer credit access in Nigeria, noting low credit card expansion for the scale of the nation's economy.

The minister said:

“Consumer credit usage remains too low, especially with respect to credit cards, for an economy of our size, and again with our growing population. We will encourage Mastercard to work with relevant stakeholders to grow consumer finance in Nigeria”.

Oyedele also emphasised Nigeria’s role as a hub for fintech innovation in Africa, highlighting the presence of five of the nine African fintech unicorns.

“Our fintech sector is quite developed, but we know that we can do much better. We can be much bigger, and the government is ready to continue the create investment conducive ecosystem."

CBN moves to protect bank customers

Earlier, Legit.ng reported that the Central Bank of Nigeria has directed banks and other financial institutions to begin submitting monthly reports on failed electronic transactions across all digital platforms.

Under the new requirement, Chief Compliance Officers and Heads of Information Technology across financial institutions are mandated to jointly compile and submit electronic reports detailing all failed transactions originating from or terminating within their systems.

Source: Legit.ng