About 53 percent of payment through electronic channels was made by Nigerians living in five states, according to an April report by Nigerian Inter-Bank Settlement System (NIBSS).
Lagos State continues to dominate the market with 30 percent of total transactions initiated by its residents. The other four states to contribute the highest transaction volumes include the FCT (7%); Ogun (6%); Rivers (6%), and Oyo (5%).
Interestingly, the five states combined have about 34.7 million people residing in them. The population of Lagos is estimated by the National Bureau of Statistics (NBS) at 12.1 million; FCT has about 3.1 million people, Ogun has 5.02 million, Rivers has 7.02 million and Oyo a little over 7.5 million residents, making it a total of 34.7 million people. That means only about 15 percent of Nigeria’s population estimated at about 209 million is responsible for over half of e-payments in Nigeria.
One thing the states might have in common is the level of urbanisation, which would inform the level of adoption of e-payment. Also, Lagos, Oyo, Ogun, and Rivers are included in the list of richest states in Nigeria, based on GDP.
In an interview in 2020, Funke Opeke, CEO of MainOne, a telecoms’ company, told BusinessDay that more internet infrastructure was often deployed to urban centres where investors were sure to get users who could pay for the service.
The NIBSS report shows that Lagos has been dominating e-payment from inception. Apart from controlling 30 percent of the market on a consistent basis, transaction volumes in the state have been growing every year. For instance, while the volume of transactions made through electronic channels rose to 339 million in 2019, it nearly doubled in 2020, recording 561.51 million.
FCT Abuja, with a distant second position, accounted for 84.95 million transaction volume in 2019, which rose to 124.41 million in 2020. Ogun with 115.61 million transactions took the third position in 2020, displacing Rivers that had it in 2019. Rivers settled for the fourth position with 106.27 million while Oyo rounded off the top five with 96.29 million transactions, also displacing Delta State that came in at fifth in 2019.
The five states controlling 53 percent of e-payments could be a sign that adoption is still relatively low and Nigeria is not punching at the level it is expected. Apart from being the most populated country in Africa, Nigeria now has about 97 million mobile internet users, the most of any country in Africa. Smartphone penetration is still very low at 49.7 percent compared to peers.
Smartphone penetration in South Africa, the second-largest economy in Africa after Nigeria, reached over 90 percent in 2019 from 81.79 percent the previous year.
In the case of Nigeria, the urban states also make up the number of smartphone owners as well as the most active internet users. Lagos, FCT, Ogun, Oyo, Rivers and Delta are among the states with the most active internet users in Nigeria, according to the NBS.
Some of these states also have the largest concentration of telecoms infrastructure, which is critical to driving electronic banking. The networks are concentrated in major cities such as Lagos, Abuja, Port Harcourt, and within Edo, and Ogun states while other locations remain unserved and underserved.
A report by the Nigerian Communications Commission (NCC) shows that access to fibre networks within 5 kilometres of the population currently stands at an average of approximately 39 percent reach with a high of 85 percent in Lagos State and a low of 12 percent in Jigawa State.
Unsurprisingly, Jigawa continues to see the least electronic transaction volume in Nigeria with 6.35 million in 2020. With an estimated population of 5.6 million people, Jigawa has only 1.9 million active internet subscriptions as of 2020.
The other four states in the bottom five of e-payment transaction volume include Ebonyi (8.93m); Kebbi (7.67m); Yobe (7.45m), and Zamfara (7.35m).
Lagos, the commercial nerve centre of Nigeria, also beats every other state on transaction volume for use of the Point of Sale (PoS) channel, the NIBSS report noted.