Nigeria Tops List of Countries With Most Cash-dominant Economy in the World in 2023

• Data has shown that Nigeria, with 55% of financial and commercial transactions in cash, is the most cash-dominant in the world in 2023
• Additionally, Nigerians are shifting to electronic payment methods, which will decline cash use from 2023 to 2027
• Digital wallets however surpassed cash as the most popular payment method worldwide in 2023, making about 16% of all transactions

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

With 55% of financial and commercial transactions completed in cash in 2023, Nigeria is rated to be the country with the most cash dominance globally. On the other hand, Norway, with 4.0%, falls at the bottom of the list.

The Worldpay report "Global Payments Report 2024: How Consumer Choice is Changing Commerce" highlights that cash accounted for a double-digit percentage in 30 of the 40 markets examined.

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More people embrace digital wallet

In 2023, digital wallets overtook cash as the preferred payment method globally, accounting for 16% ($6 trillion) of global transaction value, according to a This Day report.

It said,

“In 2023, wallets accounted for 50 per cent of global e-com spend of more than $3.1 trillion and 30 per cent of global POS spend of more than $10.8 trillion.”

Additionally, the report predicted that in 2027, wallets would account for over $25 trillion in worldwide transaction value, or roughly 49% of all payments, and continue to expand at the quickest rate.

Payment in Nigeria

In Nigeria, the report said that cash continued to be the clear favourite option for Nigerian customers and that it would account for the most significant portion of the POS transaction value (55%) of 2023.

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Although it predicted that cash would retain supremacy through 2027 with 42 per cent share of POS spend, it also noted that Nigerians are turning to digital payments, which would result in a "decline in the use of cash at -4 per cent CAGR from 2023 to 2027."

The report also said that “efforts by the Central Bank of Nigeria (CBN) to implement digital cash have proved challenging. A May 2023 IMF working paper assessed Nigeria’s Central Bank Digital Currency (CBDC) e-Naira as ‘disappointingly low.’ Launched in October 2021, e-Naira has yet to reach even 1.0 per cent of Nigeria’s consumers.”

Projection for 2027

Additionally, the survey noted that in 12 of the 40 markets it examined in 2023, cash was the most popular payment option for point-of-sale transactions. However, it was predicted that by 2027, cash would only be the primary method in five nations.

The Philippines, Peru, Argentina, Colombia, Japan, Malaysia, Mexico, Nigeria, Poland, Spain, Thailand, and Vietnam are these 12 markets.

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But the repor projected that by 2027, cash will remain the leading payment method in just five markets: Colombia, Mexico, Nigeria, Peru and Spain.

Cash is still a necessary payment method for billions of people globally, nonetheless, as it is mostly utilized by individuals with lower incomes and those who are underbanked or unbanked.

“In 2023, cash accounted for less than 10 per cent of POS transaction value in one quarter of the markets covered in this report, namely Australia, Canada, China, Denmark, Finland, Hong Kong, Netherlands, New Zealand, Norway and Sweden.

“By 2027, we project five additional countries will fall below the 10 per cent transaction value threshold for cash, especially France, Singapore, South Korea, the United Kingdom and the United State of America.”

According to the report, the global payments landscape has throughout history been shaped most decisively by the technologies of the day.

Additionally, the research made clear that people's decisions will shape the payment landscape going forward rather than technology.

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Cash scarcity hits

Legit.ng reported that according to a new CBN estimate, by the end of May 2024, there will be N3.97 trillion in money in circulation, up 1.07% from the previous month.

Furthermore, the CBN said that the money supply was N96.97 trillion as of April 2024.

The Central Bank of Nigeria website reports that from N3.87 trillion in March to N3.92 trillion in April, the amount of money in circulation has climbed steadily.

Source: Legit.ng