Cash is still king in Nigeria

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 sell 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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