The Federal Government of Nigeria has taken a significant step toward strengthening intra-African trade by launching a high-level report titled “Cross-Border Digital Payments and Identity in Nigeria under the AfCFTA.” The initiative is aimed at empowering Micro, Small, and Medium Enterprises (MSMEs), to effectively participate in the $3.5 trillion market created by the African Continental Free Trade Area.
The report underscores Nigeria’s ambition to lead Africa’s digital trade transformation while addressing long-standing barriers that hinder seamless cross-border transactions.
Background and Context
The AfCFTA represents one of the largest free trade zones in the world, designed to promote economic integration across African countries by reducing trade barriers.
For Nigeria, whose economy is heavily driven by MSMEs, unlocking access to this market is critical for:
- Expanding export opportunities
- Enhancing regional competitiveness
- Driving inclusive economic growth
However, inefficient cross-border payment systems, lack of trust, and weak identity frameworks have historically limited participation, especially for small businesses.
Launch of the Report
The report was officially unveiled in Abuja by Ibrahim Hassan Hadejia, Deputy Chief of Staff to the President, on behalf of the Office of the Vice President. It was developed in collaboration with ODI Global under the Supporting Investment and Trade in Africa (SITA), programme.
The launch reflects a coordinated effort involving multiple government agencies, development partners, and private sector stakeholders.
Key Objectives of the Report
The report focuses on addressing structural barriers and unlocking opportunities for MSMEs through:
1. Improving Cross-Border Payment Systems
- Promotes faster, cheaper, and more reliable digital payment solutions
- Highlights the importance of interoperability across African financial systems
2. Strengthening Digital Identity Infrastructure
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Advocates for broader adoption of systems such as:
- Bank Verification Number (BVN)
- National Identification Number (NIN)
- Emphasizes trust and verification as critical enablers of digital trade
3. Enhancing MSME Participation in AfCFTA
- Seeks to integrate small businesses into continental value chains
- Encourages the use of e-commerce and digital platforms
Government’s Strategic Position
According to Hadejia, the report is both timely and strategic, aligning with Nigeria’s broader digital trade agenda.
He noted that:
- Nigeria is positioning itself as a continental leader in digital trade policy
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Previous milestones include:
- Nigeria’s Digital Trade Strategy
- Capacity-building programmes for subnational governments
He emphasized that enabling MSMEs to conduct seamless cross-border transactions is essential for:
- Economic growth
- Job creation
- Industrial revitalization
Role of Digital Payment Platforms
The report identifies the Pan-African Payment and Settlement System (PAPSS), as a critical platform for facilitating cross-border payments.
Additionally, Nigerian fintech companies such as:
- PalmPay
- Moniepoint
are expected to play a pivotal role due to their large user bases and technological capabilities. These platforms can drive adoption by providing accessible and scalable financial services to MSMEs.
Key Challenges Identified
Despite the opportunities, the report highlights several persistent challenges:
1. Informal Payment Systems
- Cross-border transactions are often conducted outside formal channels
- Leads to inefficiencies, high costs, and lack of transparency
2. Trust and Identity Issues
- Weak identity verification systems hinder secure transactions
- Limits participation in digital trade
3. Logistics and Infrastructure Gaps
- Poor logistics networks affect delivery and supply chains
- Limits scalability of MSMEs beyond domestic markets
Policy and Institutional Support
The initiative is strongly backed by the Federal Government under President Bola Ahmed Tinubu’s Renewed Hope Agenda, which prioritises:
- Digital economic inclusion
- MSME development
- Job creation
Key government stakeholders involved include:
- National Information Technology Development Agency (NITDA)
- National Identity Management Commission (NIMC)
- Federal Competition and Consumer Protection Commission (FCCPC)
These institutions are expected to play roles in regulatory reform, digital infrastructure development, and consumer protection.
Implications for MSMEs
The successful implementation of the report’s recommendations could transform the MSME landscape by:
- Enabling seamless cross-border trade
- Reducing transaction costs
- Increasing access to new markets
- Enhing competitiveness and scalability
As noted by Temitola Adekunle-Johnson, the initiative could significantly strengthen the MSME ecosystem by transitioning from informal to formal, digitalised trade systems.
Conclusion
The launch of the Cross-Border Digital Payments and Identity report marks a critical milestone in Nigeria’s efforts to harness the full potential of the AfCFTA. By addressing key barriers such as inefficient payments, weak identity systems, and infrastructure gaps, the Federal Government aims to position Nigerian MSMEs at the forefront of intra-African trade.
If effectively implemented, the initiative could unlock the vast $3.5 trillion AfCFTA market, transforming small businesses into major drivers of economic growth and regional integration across Africa.
