Cash is Still King in Nigeria

By Paul Breloff and Amee Patel


As fintech futurists, we’re often cast in the role of cash killer and digital champion. But on our recent visit to West Africa, digital payments weren’t an option and we were forced back to old fashioned paper.

It started when we landed in Ghana without transit visas for our connecting flight to Lagos. We cajoled the kind airport staff to walk us through customs into the departure hall to try to buy new onward tickets from Accra to Lagos, so as to avoid a seven-hour layover. Success! An airline called Aero had our tickets…but no way to accept our credit cards. Out into the Ghanaian morning air we went, in search of an ATM. After one was out of order, we found another one and withdrew a wad of cedis too large to stuff in our pockets. Tickets procured, and we were off to Lagos.

In Lagos we had to buy a return flight, to get back home from Accra later that week. We were assured in Accra that Lagos would have a credit card machine, and initially, things were looking good – until we handed over our international cards and their faces changed to the “I-hate-to-give-bad-news” scrunch. Alas: while we saw point of sale (POS) terminals at many shops in Lagos, very few terminals seem to accept international cards. Back to an ATM, a wad of bills, and a good old fashioned paper ticket.

This theme continued all week. On our last night in Lagos, we ate a fantastic meal at a hip new restaurant called Nok. The cocktails and cuisine were world class, but the payments were still stuck in the past: we tried a total of five different credit cards on at least four different POS machines, and all of them failed. They debated whether to conscript us into labor as dishwashers to work off our tab, but ultimately let us return to our hotel, and planned to send someone to our hotel the next day to pick up cash. Of course, when we got to the hotel, the ATM was of course… out of order.

Our saga finally came to an end thanks to a tech-savvy entrepreneur who offered to give us nairas in exchange for a PayPal payment in dollars. Despite our best negotiating efforts, he sensed our desperation and got away with a pretty great exchange rate.


In many places we work, a digital payments infrastructure is emerging and functioning and increasingly widespread. Particularly for the neighborhoods, hotels and restaurants we spend the most time in, we can use our credit cards and debit cards seamlessly. In Nigeria, this simply wasn’t the case: the challenge of using digital financial services was real, and was clearly an issue for banked and unbanked alike.

So what did we take away from our experience?

First of all, it seems clear to us that some of the hype about Nigeria’s digital payments infrastructure is way ahead of the reality. According to KPMG, there are 170,000 POS terminals deployed in major cities in Nigeria in 2014 and growth of POS terminals is a primary objective of the Central Bank’s Cashless Nigeria initiative. Yet connectivity issues remain a key barrier to their use and reliability. While our experience is probably not reflective of the market, it does make us wonder about the impact that unreliable networks can have on usage long term. How much will customers put up with before ignoring their plastic and just sticking with cash?

Second, we were fascinated by the currency situation, with the Nigeria naira trading at very different rates officially (i.e., banks) and the black market. Our hotel would exchange our US dollars at a rate of $1 to 196 naira – but they were also willing to call a contact to come to the hotel “unofficially” and exchange for us at a rate of $1 to 315 naira. A lot has already been written about the Nigerian government’s currency policies, but the repercussions are significant and cause some inefficient behaviors – it not only massively chills foreign direct investment, but also leads to foreigners like us converting “unofficially” and paying for everything we can in cash, rather than digitally. And our challenges as visitors pale in comparison to the challenges faced by the thousands of small businesses who buy and selling goods in different currencies. This will get even worse as the naira further devalues.

For us, the challenges we faced reminded us that this stuff can actually be quite important in day to day life. It’s easy to take for granted the ability to  pay for things digitally, whether through credit/debit cards or mobile money, but when it’s gone, you miss it. We are now that much more excited to find and grow businesses tackling these problems and others in the financial inclusion space in West Africa.

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One Response to “Cash is Still King in Nigeria

  • Geraldine.
    2 years ago

    hmn…. an interesting submission about my dear country Nigeria. While I agree that we have a long way to go in achieving the so much “hyped” cashless society we so earnestly desire, it also boils down to me as “What goes around, comes around”. (Sarcasm not intended please).

    My point here is this, Technology and the desire to globalize the world originated from the west and fast being accepted by Africa and Africans, of course we don’t want to be left out of the global village. However, the rate of acceptance and globalization for us is being hindered by a lot of factors ranging from internal issues and politics, huge skills and knowledge gap, corruption and for me (and mainly why i’m expressing this comment) compromise, to the detriment of Africa.

    Back to the main topic, digital payment systems.
    Everything around digital payments is hugely imported except recently where ICT and solution development is quickly growing locally. On the hardware side, not much can be said of local manufacturers hence we still have to depend on the western world.
    In my opinion, while the western world has gone far in manufacturing high-tech hardware, terminals and corresponding software to enable hitch-free payments, its not the same with Africa. What we get from our western counterparts are mostly outdated versions of these hardware and terminals and due to internal currency issues or for whatever reasons I’m not aware of, newer versions don’t get to us on time; or where they do, come at highly priced amounts that make it difficult to transfer cost to end users hence really slowing down ROI in an economy where rising costs/inflation waits for no one.
    I’m an ambassador of digital payments and my experience too has been that of rejection from the western world due to many negative stories and experiences from our side but there are a few (many if I must say) good ones out here who integrity still matters to. Too many issues to fully enumerate here.
    The western world needs to understand that to successfully achieve the desired financial inclusion in Africa to ultimately benefit them, she must begin to treat Africans (there are many skilled and knowledgeable ones) with equality (mental) and introduce undiluted technology to match the ones operating in their domain and not compromise when our people propose or settle for less quality or outdated payment terminals and systems because it may just result in what you have experienced. Insist on global standard tech knowledge transfer and not deal if anything below standard is proposed. This is something to watch out for as we also internally preach world-class standards.
    No doubt, it is getting better and will surely get better so long as some of us do not relent in trying to fix Nigeria (and Africa at large) with innovations that will genuinely lead to the level of financial inclusion we so desire. Only time will get us there, but surely, we’d get there.

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