How Nigeria’s Digital Payment Shift Leaves Manufacturers Behind

Nigeria’s digital payment initiatives have transformed domestic payments, particularly for retail transactions, yet these systems have their challenges, writes Omolabake Fasogbon

For years, foreign exchange (forex) access and cross-border payments have remained a major constraint for Nigerian manufacturers, whether paying for inputs or receiving payments for exports.  The impact of this runs deep, especially in an economy heavily reliant on imported raw materials.

Despite recent reforms, including the Electronic Foreign Exchange Matching System (EFEMS) and the unification of forex windows, up to 49 percent of manufacturers’ forex requests through official channels remained unmet in Q3 2025, according to the Manufacturers Association of Nigeria (MAN)’s 2025 CEOs Confidence Index (MCCI).

Cross-border transaction frictions further compound these challenges, which are primarily driven by forex constraints and high operating costs. At a G-24 Technical Group meeting in Abuja this February, Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso acknowledged inefficiencies, ranging from settlement delays and fragmented systems to high forex charges and high remittance costs. 

World Bank data show remittance costs to Sub-Saharan Africa hover around 8–9 percent, the highest globally and far above global average of 6.49 percent and the G20’s three percent target for 2027.

Informal channels can be costlier, reaching up to 12 percent per transaction, according to Kenyan news platform, Citizen Digital. The consequences have been severe, and are worsening amid global economic tensions.

Haunted by Operators’ Payment Nightmares, Adeyemi Pauses Expansion

In 2022, the collapse of Kenfrancis Farms, founded by Ifeanyi Okereke, spotlighted the human cost. His six-year-old agribusiness folded after persistent shortages crippled its ability to source raw materials.

“Cost of production continues to rise when we pay heavily for energy, water, logistics, port demurrage and then sourcing foreign exchange from the black market at high rates,” he lamented. 

Four years on, those conditions have not eased; they have intensified even after reforms. 

For industry veterans like Executive Director, Universal Luggage Limited, and a past Chair of MAN, Apapa, Lagos, Frank Ike Onyebu, even digital payment rails fall short of his international demands. 

Onyebu said he often resorts to third-party intermediaries and informal swaps to effect foreign payments.

“For Instance, if I’m buying from China and there’s a Chinese trader here who needs naira, I pay him locally and he pays on my behalf. The exchange rates are unfavorable and the process isn’t ideal, but business must move, I know of many people who do same”, he said. 

MD/CEO of FAE Limited, Funlayo Bakare-Okeowo, still carries the frustration of waiting six weeks for an export payment from Cotonou. By the time the money dropped, inflation had made it worthless, she said.

“At first, I suspected the customer, but it was a failure of the bank transfer system,” she explained. “These delays stifle our cash flow, disrupt operations, and strain client relationships. International payment remains incredibly cumbersome. I must say”

The above experiences killed Femi Adeyemi’s morale. Adeyemi, who runs a mid-scale textile business in Itori, Abeokuta Ogun State, had desperately considered expanding into regional markets.  But harrowing stories from close allies snuffed out this dream, denying both him and Nigeria the chance for greater revenue and growth.

“I’ve heard and seen shipments stall, suppliers walking away after delayed payments, and contracts collapsing under sudden exchange rate spikes and complex banking processes. These scare me a lot. I’ll reconsider scaling abroad only when these narratives change,” he said. 

Many others share Adeyemi fears. The National Bureau of Statistics (NBS) reported that foreign investment in the sector fell by approximately 46% in 2025, dropping from $1.43 billion in 2024 to $773 million in 2025.

Again, MAN reported that 335 manufacturing companies became distressed and 767 shut down in 2023, with over 800 company closures recorded in 2024. In 2025 alone, the sector lost 18,935 jobs, up from 10,891 in the same period in 2024, driven by soaring input costs and limited forex access.

Recent data signals no relief. Nearly half of manufacturers now source forex outside the CBN’s official window at higher rates, echoing the pressures that forced businesses like Okereke’s to close.

Beyond shutdowns, reliance on informal forex markets exposes firms to volatile costs, fraud risks, and uncertain payment timelines.

For the economy, it means reduced foreign direct investment, stunted formal sector growth, and a substantial loss in tax revenue, experts noted. 

Traditional payment rails hurt, digital ones still sting

Not a few international payment hurdles spring from lapses in traditional banking rails. Despite new solutions, restrictions tied to the banking system persist. Operators still grapple with unpredictable costs, complex documentation, currency volatility, and opaque multi-layered structures where banks and regulators control access even after funds are committed.

A key strength of digital payment is ‘speed’, but it usually does not translate to certainty. 

Multiple studies, including those by the Financial Action Task Force (FATF) and the Bank for International Settlements (BIS) highlight lapses in digital rails. Findings by these studies show that while digital rails speed up initiation, settlement delays persist as payments move through traditional banking systems, where compliance checks and jurisdictional rules often flag or stall transactions particularly across African corridors.

For manufacturers, these lapses translate into delayed production, strained supplier ties, missed shipping deadlines, and heightened FX exposure. Collectively, they weaken productivity and cost Nigeria billions annually, which CBN Governor, Cardoso warned is excluding millions from global commerce.

The disputed $2.4 billion forex forward backlog with the CBN further highlights foreign exchange liquidity constraints.

Analysts note that Nigeria’s traditional banking system, with its complex layers, often introduces fees and delays that raise costs for manufacturers in trade finance.

The Director General of MAN, Segun Ajayi- Kadir hinted that completed import and production cycles as far back as 2024 remain trapped, causing players to face naira liabilities estimated between N30 billion and N50 billion. 

Chief Executive Officer of Verto,Ola Oyetayo argued the way forward lies in an integrated financial system, such that combines  modern technology, harmonised regulation, and interoperability. 

How digital payment corridor sidelines B2B transactions, manufacturers

Stakeholders, including banking regulators, have touted modern digital payment rails as the cure for cross-border inefficiencies, positioning them as the next frontier for global competitiveness. 

Indeed, Nigeria has embraced this shift, launching several digital initiatives to streamline payment such as: the Nigeria Inter Bank Settlement System (NIBSS), NIBSS Instant Payments (NIPs), National Payment Stack and the Pan African Payment and Settlement System (PAPSS), and eNaira adoption among others.

But experts contend these innovations, particularly NIBSS and NIPs, remain limited for cross-border and large-scale trade use cases. 

At its core, DPI rests on interoperability, inclusivity, open access, and trust frameworks which when properly implemented, enable payment systems that are faster, predictable and scalable across borders. While NIBSS and NIP have improved domestic payment access, their limited cross-border functionality highlights a gap in fully realising DPI’s potential for interoperability and scalability across borders.

Drawing on nearly a decade’s experience of leading Verto, a fintech focused on forex and cross-border payments in Africa, Oyetayo noted that domestic payment systems remain fragmented and largely skewed toward consumers.

“NIBSS and NIP primarily facilitate consumer to business and person to person transactions,” he said, urging integration of rails for business to business payments, trade finance, and supply chain management at the scale manufacturers require”, he said. 

A 2026 International Trade & Research Centre(ITRC) report titled ‘Cross-border Digital Payments and Identity in Nigeria under the AfCFTA’  reinforced his concern, warning that Nigeria’s underdeveloped B2B cross border payment systems are undermining Nigeria’s ability to fully leverage AfCFTA, particularly in interoperability, automated verification, and seamless trade flows.

Ajayi-Kadir added that while fintech solutions have improved forex transactions, existing infrastructure still struggles with manufacturers’ high volumes, urging stronger regulatory support.

Globally, interoperable payment solutions have delivered results. Examples from India’s Unified Payments Interface  (UPI) and Brazil’s Pix, as cited by CBN Governor, Cardoso showed how government mandating interoperability and open access can lower costs and expand access and improve payment efficiency. 

Both countries are now global benchmarks, with UPI processing over 21 billion transactions monthly, according to National Payments Corporation of India (NPCI) and PIX nearing eight billion, according to a 2025 study by Brazilian payments firm, EBANX. 

However, Cardoso cautioned that without local coordination, digital payment systems risk fragmentation across jurisdictions, a lapse Oyetayo said is already evident, with businesses still facing delays and transaction limits.

FG’s solutions scratch surface, ignore root

Following the barrage of payment related issues due to Nigeria’s heavy dependence on imports,   Oyetayo stressed that urgently fixing payment infrastructure to seamlessly connect players to the global economy is non-negotiable.

In the first half of 2025 alone, Nigeria spent N3.53 trillion importing raw materials, according to RMRDC’s Prof. Nnanyelugo Ike Munonso.

President of Chartered Institute of Bankers of Nigeria, CIBN, Pius Olarenwaju added inefficiencies in cross border payments cost Africa an estimated $5 billion annually. 

Oyetayo argued that a more integrated payment system offers foundational solutions, yet FG’s new industrial policy to address sector’s fallout ignores this, relying on insufficient payment corridors.

Formally unveiled in February 2026, the Nigeria Industrial Policy (NIP) 2025 aims to raise manufacturing’s GDP share to 20–25% by 2030 and boost export volumes by 30% by 2028.

 But Oyetayo maintained the policy lacks tailored financing for SMEs and fails to address forex and cross border payment access.

“Even exports depend on reliable, cost-effective access to international suppliers and buyers,” he said, adding that the policy sets output targets without addressing how manufacturers will access forex, settle supplier invoices, or receive export proceeds.

He stressed the need for integrated financial infrastructure that embeds real time trade finance, automated invoice matching, and rich-data messaging directly into the national stack. 

“This enables efficient global procurement, optimises working capital, and supports rapid scaling through seamless international trade and treasury management”, he asserted. 

DPI as Fix for cross- border trade frictions

By integrating verifiable identity, data exchange and payment rails, DPI replaces sluggish, paper-bound legacy systems with a real-time, automated trade engine. 

This aligns with Oyetayo’s push for a borderless African corridor, where every manufacturer, regardless of size can leverage instant, transparent, and low-cost cross-border payments to compete on the global stage.

He explained that this pathway to shared progress becomes achievable when regulators prioritise open APIs that allow fintech platforms to integrate seamlessly with existing banking infrastructure.

“This enables local manufacturing more sustainable, protects unit costs, stabilises pricing, and improves operational speed through real time payments”, he stated. 

A report by Miden on ‘State of Business Payments in Nigeria and Africa 2025’ highlights a demand for payment solutions that integrate natively with Enterprise Resource Planning (ERP) and accounting suites. 

Corroborating Oyetayo’s stance, the fintech infrastructure provider advocates for expanded global supplier payment options and seamless API-led integrations.

The CBN’s digital payment drive has already lifted remittance inflows to about $600 million monthly, with a $1 billion target in sight, according to Cardoso.

A 2025 study titled “Digital Payments and GDP Growth: A Behavioural Quantitative Analysis,” published in Research in International Business and Finance finds that each percentage-point increase in digital payment adoption can boost GDP growth by 6–8% of its current rate.

Oyetayo stressed that reforming payment infrastructure is an important enabler to achieving these goals, insisting on risk-based regulations that encourage competition rather than entrench incumbents.

“Clear rules can promote innovation and protect consumers. Investment in digital ID infrastructure will expand inclusive access and support industrial growth,” he explained. 

He also called for stronger collaboration among fintechs, banks, and regulators, citing Verto’s exchange contracts that let firms lock in rates for long term planning despite macroeconomic volatility.

“This improves cash flow by accelerating transaction speeds and minimising float time,” he said.

Government, he added, can use incentives like tax breaks or expedited processing to shift manufacturers from informal FX channels to transparent digital platforms.

“The CBN should strengthen KYC and compliance standards to allow capital to move seamlessly,” he asserted.

With robust payment infrastructure that cuts costs and delays, Oyetayo said manufacturers can source raw materials faster, disburse payroll in real time, and scale operations more efficiently.

“Firms are able to manage cash flow better, invest in capacity, and grow sustainably,” he affirmed.