Deposit money banks in the country cleared cheques valued at N269.37 billion in September this year, latest data released by the Nigeria Interbank Settlement System Plc (NIBSS) shows. The figure is N3.92 billion above the value of cheques (N265.44 billion) cleared by the lenders in the previous month. New Telegraph’s analysis of the NIBSS’ numbers indicates that apart from the month of July when it headed south, dropping to N248.57 billion, the value of cheques cleared by DMBs has maintained an upward trajectory since April. Thus, it increased from N243.70 billion in April to N246.62 billion and N263.66 billion in May and June respectively. Further analysis of the data, however, reveals that the value of cheques cleared by lenders in September 2021 is N14.18 billion less than the N283.55 billion value of cheques cleared in the corresponding period of last year.
In fact, with the exception of the months of April, May and June last year when COVID- 19-induced lockdown of the economy led to a sharp decline in cheque usage, the value of cheque transactions for the first nine months of last year, according to the NIBSS numbers, is generally lower than the figure recorded for the same period of 2021. New Telegraph’s findings also show that even before the onset of COVID-19, the value of cheque transactions has been steadily falling in recent years. For instance, NIBSS’ data shows that the value of cheque transactions fell from N399. 09 billion in September 2017 to N370.86 billion in September 2018, declining further to N351.38billion and N283.55 billion in September 2019 and September 2020 respectively.
Analysts note that the decline in cheque usage is not peculiar to Nigeria, but a global phenomenon which is being driven by the widespread adop-tion of electronic payment channels. Indeed, 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 that it anticipates that even more banks will take a similar action, noted that the decline in cheque usage is being exacerbated by the coronavirus outbreak.
In a statement, the association noted: “Following the COVID-19 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.” In Nigeria’s case, 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 new 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 payment channels. Commenting on the sharp decline in cheque usage triggered by the cashless policy, NIBSS, in a report released in 2016, predicted that “we might witness the end of the cheque book by the year 2050.”
The company stated: “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. “In Nigeria, cheque transactions have continued on a downward spiral from its peak volume of 15.3 million in 2014 to 9 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.” But while cheque usage is on the decline in Nigeria, financial experts do not expect cheques to become extinct in these parts anytime soon. A top official of a Tier 2 bank told New Telegraph on condition of anonymity that “although e-payments are growing rapidly, many corporate bodies in this country still prefer to use cheques because they believe that this gives them some sort of protection from cybercriminals.”