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Covid-19: Cashless, Cash, and Future of Social Benefits in Nigeria


“On prime-time television, we watched the scene of bales of naira notes on display and a minister of the Federal Republic was in charge of the distribution of the naira notes to various beneficiaries. But government could and ought to have used this moment to encourage Nigerians to open bank accounts.

“A more transparent means of giving out the money would have been to ask each Nigerian to forward his or her Bank Verification Number (BVN) and government would have transferred the money into the various bank accounts.  Apart from the fact that it would have encouraged more Nigerians to open bank accounts, it would have made it possible for the federal government to reconcile every naira notes doled out.”

These were the lamentations of Anthony Olubunmi Okogie, a Nigerian Cardinal Priest and formerly Archbishop Emeritus of Lagos in the Roman Catholic Church.

It is beyond rationality that the Federal Government’s Conditional Cash Transfer scheme has been not automated after three and a half years in operations.

The Conditional Cash Transfer supports the poor and vulnerable people with N5,000 (Five Thousand Naira) per month to improve consumption, with the aim of reducing poverty, preventing the vulnerable households from falling further down the poverty line and building their resilience to withstand shocks.

Sources at the National Cash Transfer Office (NCTO) informed Fintech Africa that all efforts to automate the process by payment service providers contracted by NCTO were frustrated by the civil servants who are profiting from the brick and mortar handling arrangement.

At one of the meeting primarily convened to consider cashless option for cash transfer, sources informed that one of the top civil servants argued that, “What the World Bank asked us to do is to give cash and not cashless to poor Nigerians. Therefore, it would be illegal for us to adopt another strategy to pay them.”

However, NCTO have listed electronic end-to-end payment as one of the options of identifying the beneficiaries during payment. Each beneficiary is also expected to be issued a unique identifier encoded in barcode that would be used for the cash out.

Interestingly, the end-to-end payment journey for all the beneficiaries has already commenced with all of them enrolled on the BVN platform. With the BVN, NCTO can direct its payment service providers to open tier-one accounts for all the beneficiaries.

Besides, the card scheme owners would be ready to issue one million cards without cost to all the beneficiaries. For electronic cash out, the bank agents across the country are readily available to help the beneficiaries.

With over 700,000 agents, Nigeria has emerged as the fastest growing agent banking country in Africa in 2020.

This should not be a rocket science and we have lessons from several African countries to look up to for inspiration.

South Africa

By simply moving all grant payments from largely cash payments, which were costly, cumbersome and riddled with inefficiencies to electronic payments, the new system has already saved South African Social Security Agency (SASSA) a considerable amount in grant administration costs.

Before March 2012, it cost SASSA on average R33 (US$3.33) per grant to pay beneficiaries. Under the new system, disbursement costs have been capped at R16.44 (US$1.66) per payment.

Mastercard worked in partnership with Net1 and Grindrod Bank and SASSA to introduce a biometrically enabled debit Mastercard to efficiently and securely provide these important benefits. This new approach rapidly and radically transformed social benefits distribution; dramatically reducing costs and improving benefits for the citizens.


Kenyan government is issuing  Huduma Card, a prepaid card with chip and PIN technology that connect all Kenyans to the formal financial sector by providing a secure, reliable and flexible payment option.

The Huduma Card, powered by Mastercard, is currently being issued by Commercial Bank of Africa (CBA), Diamond Trust Bank (DTB), Equity Bank and Kenya Commercial Bank (KCB) with no bank charges being allocated to citizens when registering for the smart card.

Kenyans will pay for an array of government services including the National Hospital Insurance Fund (NHIF), National Social Security Fund (NSSF) amongst others. Citizens issued with the smart prepaid card will automatically be enrolled in vital government services such as the National Social Security Fund and the National Hospital Insurance Fund, ensuring all Kenyans benefit from these initiatives.

Once funds are loaded on the prepaid card, cardholders can use their Huduma Card to pay for goods and services in-store, online, by phone or to withdraw cash from ATMs and anywhere Mastercard is accepted locally or at millions of locations worldwide.

The prepaid card ensures flexibility, convenience and security and is easily obtained from one of the issuing banks. Applicants do not need a credit cheque or a bank account to apply.

Nigeria can adopt any of the above card schemes in order to initiate a sure future for social benefits in Nigeria.