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Cash palliative to vulnerable Nigerians shows hurdles facing epayment

The choice of cash instead of electronic transfers to cushion the economic impact of the coronavirus pandemic on vulnerable and indigent Nigerians has laid bare the many hurdles before electronic payment channels in the country.

Nigeria currently has 276 people that have tested positive to the coronavirus. While 6 have died, 44 people have survived and been discharged.

A bigger worry is that the virus continues to add more states almost on a daily basis. A breakdown of cases by states on the website of the National Centre for Disease Control (NCDC) shows that Lagos has 145; FCT- 54; Osun- 20; Oyo- 11; Edo- 12; Bauchi- 8; Akwa Ibom- 5; Kaduna- 5; Ogun- 4; Enugu- 2; Ekiti- 2; Rivers-2; Benue- 1; Ondo- 1; Kwara- 2; Delta -1; and Katsina -1.

As part of measures to ease the pressure the crisis is having on the income of many households, particularly the most vulnerable in the society, the Federal government through the Ministry of Humanitarian Affairs embarked on a Conditional Cash Transfer programme. The National Social Investment Programme (N-SIP), a department under the ministry, handles the cash transfers through its Household Uplifting Programme (HUP).

So far, the Federal Government has rolled out the Conditional Cash Transfer (CCT) palliative in Anambra, Katsina, Kogi, Plateau, Oyo, Kano, Cross River, Bauchi, Adamawa, and Nasarawa states.

In every state the programme has reached, it involved the expensive logistics of transporting bags of cash escorted by heavily armed security personnel to physical locations, long queues by residents and handing over of N20,000 by officials of HUP in the open. Apart from the security risks this portends, the programme has come under heavy criticism with some people alleging that the process of selecting beneficiaries and disbursement lacks transparency.

“Two days ago at the task force meeting, the Head of Service told me that the conditional cash transfer from the Federal Government would be N20,000 to people in 10 local government areas of Oyo State and I said, it is good, but this programme predates this administration and I have never been impressed for one day about the way they identified the poorest and the impact,” Seyi Makinde, governor of Oyo State said regarding the outcome of the programme in his state.

Electronic payment has relatively advanced in Nigeria in terms of the different channels now available. Financial institutions and financial technology firms have opened up the market with channels like debit cards, credit cards, electronic funds transfer, mobile money, and USSD.


Read more: Is Nigeria’s payment system ready for a coronavirus lockdown?


With about 40 million Nigerian adults without access to financial services, electronic payment channels like mobile money and USSD have been identified as the easiest way to reach this population. Hence, the Central Bank of Nigeria and its partnering institutions have been on the campaign to bridge the financial inclusion gap for many years.

Unfortunately, with the choice of physical locations for the conditional cash transfer programme Nigeria is losing an important opportunity to reach the population of financially excluded through digital payment channels which are safer and cost-effective.

“Longer-term, we run the risk of more Nigerians becoming financially excluded as a result of this crisis, at the exact moment when they as individuals and the overall economy would need their participation the most,” said Ashley Immanuel, head of Programmes at Enhancing Financial Innovation & Access (EFiNA) in an article on BusinessDay.

Also, a few fintech startups particularly those providing payment gateway services could have benefited as participants in the electronic transfers.

Given that electronic channels would have been the safest way to disburse the palliative, the reality is that mobile money and USSD is still very far from millions of Nigerians. Hence relying on electronic transfers could have proven problematic for the government which needed to immediately get the money to the families that need them.

The Nigerian Communications Commission (NCC) in February, during the Social Media Week Lagos, reiterated that there still exist about 200 communities in Nigeria which have no access to the internet or any form of mobile access. Although the NCC said it had started addressing the challenge with some private sector partners, the outbreak of the coronavirus is sure to delay and force an extension of the project.

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