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Transforming Trade: CBN’s Cashless Policy in Nigeria

Transforming Trade: CBN’s Cashless Policy in Nigeria

By August 9, 2025 Articles 0 Comments

A Shift for Informal Traders

Nigeria’s informal economy, from market stalls in Kano to roadside vendors in Lagos, thrives on cash. The Central Bank of Nigeria’s (CBN) cashless policy pushes digital transactions, aiming to modernize this sector. For traders, this shift brings opportunities and challenges. This article explores how the CBN’s cashless policy impacts Nigeria’s informal economy, its benefits for traders, hurdles to adoption, and strategies to ensure success.

Why the Cashless Policy Matters

Nigeria’s informal economy employs millions, from tailors to food vendors. Cash dominates these transactions, but it carries risks like theft and loss. The CBN’s cashless policy encourages digital payments to boost efficiency and security.

In markets like Onitsha, traders use POS terminals and mobile apps for sales. Rural vendors in Sokoto benefit from reduced cash handling, aligning with Nigeria’s economic goals.

The policy supports financial inclusion, bringing unbanked traders into the formal system. This helps Nigeria track transactions, increasing transparency and tax revenue.

How the Cashless Policy Works

The CBN’s cashless policy promotes digital payments through cards, mobile apps, and USSD codes. It limits cash withdrawals and encourages electronic transactions. Here’s how it impacts the informal economy.

Promoting Digital Payments

The policy incentivizes POS and mobile app use. A trader in Aba can accept card payments, reducing cash risks and attracting tech-savvy customers.

Low-fee transactions make digital payments affordable. Vendors in Enugu save money compared to handling large cash volumes.

Reducing Cash Withdrawal Limits

The CBN caps daily cash withdrawals, pushing traders to digital channels. A vendor in Kano must use apps for large transactions, streamlining operations.

This reduces cash circulation, curbing fraud and theft. Traders in Port Harcourt benefit from safer transactions in busy markets.

Encouraging Financial Inclusion

The policy requires bank accounts for digital payments, bringing traders into the banking system. A fruit seller in Jigawa can open an account via USSD, joining the formal economy.

Banks offer incentives like zero-fee accounts to attract traders. This helps rural vendors access loans and savings, boosting their businesses.

Supporting Tax Compliance

Digital transactions are trackable, aiding tax collection. A tailor in Ibadan using mobile payments contributes to government revenue, supporting public services.

Traders benefit from a transparent economy, as digital records build creditworthiness for loans. This strengthens Nigeria’s informal sector.

Benefits for Traders

The cashless policy delivers practical advantages, transforming how traders operate in Nigeria’s informal economy.

Enhanced Security

Digital payments reduce cash theft risks. A trader in Lagos can store earnings in a mobile wallet, safer than carrying cash home.

Fewer cash transactions mean less exposure to robbery. Vendors in Onitsha feel more secure serving customers digitally.

Increased Efficiency

Digital payments speed up transactions. A food vendor in Abuja serves more customers using POS, boosting daily sales.

Apps track sales automatically, simplifying record-keeping. Traders in Enugu can focus on selling rather than managing cash.

Access to Financial Services

The policy encourages traders to open bank accounts, unlocking loans and savings. A cloth seller in Kaduna can borrow to expand her stall.

Women traders, often unbanked, benefit most. The policy empowers them to save and grow businesses in Oyo markets.

Improved Customer Reach

Digital payments attract urban customers who prefer cards. A tech vendor in Port Harcourt gains sales by offering app-based payments.

Traders can compete with larger businesses, expanding their market. This supports Nigeria’s economic growth.

Challenges of the Cashless Policy

Despite its benefits, the policy faces hurdles in Nigeria’s informal economy.

Poor Network Connectivity

Rural areas like Zamfara have weak networks, disrupting digital payments. A farmer selling crops may struggle to use POS during outages.

Urban congestion in Lagos slows transactions. Traders need reliable networks to adopt the policy fully.

High Transaction Fees

Some POS and app transactions carry fees, cutting into profits. A vendor in Gboko may avoid digital payments to save costs.

Small transactions, common in informal markets, face high relative fees. This discourages traders from going cashless.

Limited Digital Literacy

Many traders lack skills to use apps or POS. A seller in Taraba may rely on agents, increasing costs and risks.

Women traders face greater literacy barriers, limiting adoption. Training is needed to bridge this gap.

Resistance to Change

Cash remains trusted in markets like Ogbete. Traders may resist digital payments, fearing fraud or complexity.

Lack of awareness about benefits slows adoption. Rural traders in Sokoto need education to embrace the policy.

Success Stories

Real-world examples show the policy’s impact on Nigeria’s informal economy.

Kano Market Traders

Traders in Kano use POS terminals to accept payments, reducing cash risks. A spice seller serves more customers daily, boosting income.

The policy’s low-fee accounts help traders save. This model could expand to other northern markets.

Lagos Street Vendors

Street vendors in Lagos adopt mobile apps like Paga for sales. A food seller processes payments quickly, improving efficiency.

Digital records help vendors access loans, supporting business growth in urban centers.

Strategies to Enhance Impact

Nigeria can strengthen the cashless policy’s success for traders.

Improving Connectivity

Telecoms should expand 4G coverage in rural areas like Yobe. Reliable networks ensure traders can use POS and apps seamlessly.

Subsidized data plans can lower costs, encouraging digital adoption in markets like Aba.

Reducing Fees

Banks should offer zero-fee transactions for small amounts. Traders in Enugu would embrace digital payments if costs were lower.

CBN incentives can encourage banks to reduce POS fees, benefiting small vendors.

Boosting Literacy

Training programs in markets like Onitsha can teach traders to use digital tools. Women traders in Ogun need targeted workshops.

Schools should include digital payment education, preparing youths for a cashless future.

Raising Awareness

Campaigns on the policy’s benefits can reduce resistance. Radio ads in Sokoto can educate rural traders about digital safety.

Banks should partner with market leaders to promote adoption, building trust in digital payments.

Building a Cashless Nigeria

The CBN’s cashless policy is transforming Nigeria’s informal economy, empowering traders in Kano and Lagos with secure, efficient digital payments. By reducing cash risks and boosting financial inclusion, it drives economic growth. Challenges like connectivity and fees must be addressed to maximize impact. Through better networks, lower costs, literacy programs, and awareness, Nigeria can ensure the policy’s success. A thriving cashless economy is key to modernizing trade and uplifting Nigerian communities.

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