Nigeria’s attempt to modernize its economy by banning cash withdrawals from government accounts has been a “massive hindrance” to the growth of business-to-business (B2B) payments in the country, says Yele Oyekola, CEO and co-founder of B2B FinTech company Duplo, based in Lagos.
“[The government and central bank] didn’t take their time — we just went from zero to a hundred. They didn’t give citizens enough time to adjust to the sudden change, which has now had a negative effect on payments entirely,” Oyekola told in an interview.
The Central Bank of Nigeria (CBN) currency redesign policy launched earlier this year to control inflation and prevent people from hoarding cash, including over 23 trillion naira (about $50 million) that was not captured by the banks, according to Oyekola.
However, in cash-based businesses like fast-moving consumer goods (FMCG), logistics, and manufacturing, some enterprises have been unable to pay their cash-loving suppliers and buy things to sell.
He also said that Nigeria’s financial services infrastructure wasn’t ready for digital payments due to the country’s weak banking system, resulting in fewer online transactions.
“We’ve seen businesses die over the last few months because they can’t transact, they can’t get customers and they can’t continue to grow their businesses.”
Finally, although agency banking has gained popularity in the West African nation and helped close the financial inclusion gap, especially in remote areas where banking is nonexistent, Oyekola said that the scarcity of cash has caused agent banking fees to rise, hurting the B2B market and economy.
These problems are why Duplo, which started in January 2022, exists today, he said, pointing to the more than $100 million in payments they’ve already processed to show how they help merchants, aggregators, and distributors in the cash-heavy emerging market streamline and digitize payment flows.
He added the CBN ruling can speed up B2B digital payment adoption, comparable to how the pandemic spurred firms to adopt new digital practices faster than usual.
The firm’s buy now, pay later (BNPL) approach, which Oyekola detailed in a prior interview, has also helped SMBs fill their working capital gaps.
In fact, he said that the product “has been the most effective way to drive an increase in digital payment, because many businesses in Nigeria operate on credit,” which shows that growth in this area is likely to be good.
Duplo would need to raise awareness and educate businesses to become Nigeria’s top B2B company, he said.
“Trust is a big thing for B2B payments to ensure that systems are scalable, stable, and that payments go through and don’t fail.”
