The World Bank Office in Nigeria, Abuja, has warned that the sufferings being experienced by Nigerians as a result of gasoline scarcity and the naira redesign policy could exacerbate tensions in Africa's largest economy in the run-up to the general elections.
According to an internal paper dated February 2, the bank stated that the deadline of February 10 for the phasing out of outdated naira notes may produce a cash constraint, potentially causing economic and social harm to vulnerable individuals in Nigeria.
"The cash shortfall exacerbates fuel shortages that have been persisting for months," the bank added.
"There is a substantial threat that cash scarcity could generate difficulty and dissatisfaction, escalating social tensions, particularly in a volatile political environment ahead of elections on February 25 (presidential and parliamentary) and March 11 (gubernatorial)."
Prior to the implementation of the new note policy, the World Bank claimed that just 45% of Nigerian adults had a bank account, 34% reported sending or receiving money digitally in the previous year, and only 9% made an in-store payment via digital means.
Based on this, it suggested that Nigerian authorities consider extending the implementation period beyond February 10.
According to the bank, Nigeria is highly unlikely to accomplish a rapid increase in digital payments to compensate for the country's ongoing shortages of fresh notes by the deadline.
The World Bank advised Nigerian authorities to evaluate the extent of merchant acceptance of digital payments and uptake of in-store payments in the country when determining the timeframe of policy implementation.
According to the report, the degree of digital payments remains quite low in comparison to peer countries, limiting the number of digital use cases for most people's daily transactions.
"Differences in account ownership between urban and rural locations should also be considered, as the account ownership level and distribution of access points tend to differ," the bank stated.
When pushing a swift move to digital payments, the bank stated that data on the scale of the informal economy should be considered, as informal enterprises may encounter issues digitising their payment acceptance without going through a formalisation process.
"Digital infrastructure gaps (like, weak connectivity, limited national ID coverage, among others.) and the payment system's operational reliability to absorb a sharp increase in cash-to-digital transactions in a short period of time should be considered," the bank noted.
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