Deposit money banks in the country cleared cheques valued at N842.84 billion in the first quarter of this year, latest report released by Nigeria Interbank Settlement System Plc (NIBSS) shows. The figure is N245.13 billion (29.08 per cent) below the value of cheques (N1.09 trillion) cleared by DMBs in the corresponding period of 2019.
Similarly, at 1.24 million in Q1’21, the volume of cheque transactions was 31.12 per cent below the 1.80 million recorded in the first quarter of the previous year. However, an analysis of the NIBSS’ data indicates that the value of cheque transactions maintained an upward trajectory in the first three months of this year.
Specifically, from N248.21 billion in January, the value of cheque transactions rose to N277.45 billion and N317.18 billion in February and March respectively. Also, further review of data obtained from NIBSS’ website reveals that after plunging to N103 billion in April 2020 due to COVID-19-induced shutdown of the economy, the value of cheque transactions steadily increased to hit N283.55 billion in September last year. Still, a breakdown of NIBSS’ figures shows that the value of cheque transactions has been on the decline in the last five years.
For instance, it fell from N511.215 billion in March 2017 to N440.73 billion in March 2018, declining to N377.17 billion in March 2019 and dropping further to N361.72 billion and N317.19 billion in March 2020 and March 2021 respectively. Analysts attribute the decline in cheque usage, not only in Nigeria, but globally, to the widespread adoption of electronic payment channels. In South Africa, which has the continent’s biggest lenders, major banks such as Nedbank, FNB and Absa, last year, announced plans to discontinue the use of cheque payments beginning from January this year.
The Payments Association of South Africa (PASA), which said it anticipated that even more banks would take a similar action, said the decline in cheque usage was being exacerbated by coronavirus outbreak. It said: “Following the pandemic, the physical contact required to issue, collect and process cheques makes it a less desirable method of payment for consumers and businesses alike. Since the start of the pandemic in South Africa, there has been a massive decline in cheque usage.” Particularly for Nigeria, analysts trace the decline of cheques in the country to 2014 when the Central Bank of Nigeria (CBN), in line with its cashless policy, released a fresh policy on cheque transactions. The policy placed a ban on payment of value above N10 million through cheques and directed that such payment should be made through electronic channels.
In fact, following the sharp decline in cheque usage triggered by the cashless policy, NIBSS predicted in a report in 2016 that “we might witness the end of the cheque book by the year 2050.” It also noted in a more recent report that the decline in cheque transactions has become a global phenomenon. “Globally, as the market share of cheques decline in the wake of increased adoption of contactless and real-time payments, a duopoly may likely develop in the non-cash market with cards and credit transfer (instant payments) dominating across most geographies.
“For instance, in the Asian- Pacific (APAC), China, South Korea and Australia recorded a 20 per cent drop in cheque usage, although India recorded a 10.1 per cent increase in usage due majorly to her government’s demonetisation policy,” the company said. NIBSS added that in the United States, cheque usage remained a governmentbacked phenomenon as it contributed a whopping 73.5 per cent of global cheque volume. “In Nigeria, cheque transactions have continued a downward spiral from its peak volume of 15.3 million in 2014 to nine million in 2018.
This is a -10 per cent CAGR over the five-year period; with a growth rate of -17 per cent when compared to 2017. “Although, the volume of cheque transaction is decreasing, it is fair to say that its use is still relevant, especially amongst larger value transactions, bill payments and payroll transactions,” it stated. Findings by New Telegraph show that Nigerian analysts believe that the country’s banks will continue to accept cheques for some time to come.
The analysts cite the implementation of the Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) Version 2, which commenced on April 1, 2021, as evidence that cheques are not about to disappear in the country anytime soon. In a chat with New Telegraph, a financial analyst, Mr. Emeka Agu, stated: “It is true that more Nigerians are embracing electronic payment channels. However, many corporate bodies in this country still use cheques because they believe that this will make it less likely for them to be defrauded by cybercriminals.”