The rise of digital payments in Nigeria has seen a significant development, revolutionizing the way transactions are conducted. However, the widespread issue of banks’ poor network connectivity continues to impede the growth of instant payment systems, frustrating users and hindering economic progress.
Victor Onuoha, a seasoned trader from the South East, recently visited the bustling Alaba International Market in Lagos to stock up on electronics. After selecting his desired products, he attempted to make an instant payment using his mobile banking app.
Despite multiple attempts, the transaction failed due to persistent network errors. Frustrated and time-pressed, Victor was forced to seek alternative payment methods, ultimately delaying his business operations.
Similarly, Opeyemi Lawal, a budding entrepreneur, lost a significant business deal due to network-related delays. A potential client, impatient with the slow payment process, withdrew their offer, leaving Opeyemi to grapple with the consequences of unreliable connectivity.
The experiences of Victor and Opeyemi are not isolated incidents. Across Nigeria, countless individuals and businesses face similar challenges due to persistent network glitches and unreliable connectivity.
For instance, recently, freight forwarding practitioners under the aegis of the Association of Registered Freight Forwarders of Nigeria (AREFFN), voiced concerns over the persistent network failures crippling operations in the sector.
The national public relations officer for AREFFN, Taiwo Fatomilola, expressed frustration over the ongoing situation, which has left freight agents unable to process essential tasks and make payments.
Fatomilola said the ripple effect of these disruptions was far-reaching and severely impacting the revenue generated by customs, which the government relies on.
“When the government is so much concerned about revenue, how do you generate revenue when there is no network to pay the bank or access customer portals? The lack of network connectivity has led to significant economic losses, with estimates suggesting that Nigeria loses nearly N6.3 billion daily due to these failures,” he stated.
These experiences highlight the pervasive issue of poor network connectivity, which undermines the efficiency and reliability of instant payment systems in Nigeria. Experts attribute this problem to a combination of factors, including inadequate infrastructure, poor maintenance, disruptions of telecom infrastructures, multiple taxation and insufficient investment in network expansion due to financial loss as a result of high operating cost and so on.
The chief finance officer of Parthian Partners, Mr. Olayinka Arewa, argued that despite the huge revenue being generated from the digital/instant payment space, a mirage of challenges has dwarfed its growth potential.
According to Arewa, in 2022, Nigeria unlocked $3.2bn in additional economic output through the development and utilisation of electronic payments, particularly real-time payment services.
He noted that currently, payment solutions constituted approximately 15 per cent of banking revenue polls in the country, a testament to the growing popularity of instant payment transactions.
“Electronic payments continue to attract substantial global investments and have anticipated the highest growth return within the sector by the past decade. As one of Africa’s largest economies, Nigeria is well-positioned to harness the potential within this sector.
“Indeed, Nigeria has witnessed a remarkable digital transformation with over a hundred million active mobile phone users. This statistic signals the advent of a fully digitised financial services sector,” he said.
He mentioned that the lack of collaboration among stakeholders in the digital payment ecosystem had stunted its growth.
The telcos have said Nigerians might continue to experience poor telecommunication services as long as social problems such as willful damage to telecommunications infrastructure and epileptic power supply are still lingering in the country.
The Association of Licensed Telecommunications Operators of Nigeria (ALTON) appealed to federal and state governments to assist them in ending the issue of poor services in the industry.
The association’s chairman, Gbenga Adebayo, told Daily Sun that challenges in telecommunications should not be left for the operators alone.
Adebayo said the operating environment was not conducive enough to maintain uninterrupted services, adding that the federal and state governments should synergise and come to their aid in solving the issues of multiple taxation and regulations affecting the growth of the industry.
He said no business would thrive in an environment where resources that could have been used in network upgrading were diverted to the repairs of damaged telecommunications infrastructure in violence-prone areas.
He said: “In countries where those parameters are set, power supply, security and free access to sites are guaranteed with no interference from different government agencies.
“We must constantly remind ourselves that our networks have not been fully built and consolidated, hence, the issue of poor service will linger on as long as we are on the path that we are now.”
Meanwhile, Ralph Mupita, CEO of MTN Group, while speaking at the CEO Forum recently, disclosed that Nigeria needed between $12bn and $15bn of infrastructure investment in the next five years, to overcome the challenges of persistent poor network quality, to increase the speed of internet connectivity, and digital inclusion expansion.
However. Adewale Adedeji, a telecommunications expert, emphasized the need for significant investment in network infrastructure, particularly in rural and underserved areas. He also stressed the importance of regular maintenance and the deployment of advanced technologies to improve network reliability.
Adedeji further emphasized the importance of redundancy and backup systems. “By implementing redundant systems, telcos can minimize disruptions and ensure uninterrupted service, even in the event of unforeseen circumstances.”
Prof. Olufemi Oguntoyinbo, an economist, highlighted the economic implications of network disruptions: “Network outages and glitches have significant economic consequences. They hinder productivity, disrupt businesses, and erode consumer confidence. It is imperative for policymakers and industry stakeholders to collaborate to improve network reliability and resilience.”
Engr. Chioma Nwafor, a network engineer, stressed the importance of redundancy and backup systems: “By implementing redundant systems, telcos can minimize disruptions and ensure uninterrupted service, even in the event of unforeseen circumstances. This proactive approach is crucial for maintaining network reliability and mitigating the impact of potential failures.”
To further propel the growth of instant payment systems and strengthen the overall digital economy, stakeholders are advocating for significant investments in network infrastructure, particularly in underserved rural areas.
According to Adedeji, “Telcos must prioritize investments in network infrastructure to expand coverage and improve connectivity. This will not only enhance the user experience of instant payment services but also drive economic growth and financial inclusion.”
In addition to infrastructure upgrades, stakeholders are emphasizing the importance of regular network maintenance and the implementation of robust redunr.dancy and backup systems.
“Routine maintenance of network equipment is crucial to prevent outages and ensure optimal performance.”
Regulatory oversight is also seen as a key factor in ensuring the reliability of instant payment systems. Oguntoyinbo urged regulatory authorities to “strengthen oversight of telcos to ensure adherence to service quality standards.”
Furthermore, stakeholders highlighted the need for increased consumer awareness about the importance of network reliability. They emphasized that “educating consumers about the importance of network reliability and encouraging them to report issues can help drive improvements.”
By addressing these challenges and implementing the recommended solutions, Nigeria can unlock the full potential of digital payments and accelerate economic growth.
