A report by Enhancing Financial Innovation and Access (EFInA) has established that current data costs in Nigeria remain too high for many lower and middle class Nigerians.

In the report entitled ‘Leveraging Technology for MSME Finance in Nigeria’EFInA said that the high cost of data prevents many MSMEs in Nigeria from using the Internet to promote their businesses and constitutes one of the main obstacles inhibiting the growth of small businesses in Nigeria.

The report, which identified several challenges faced by MSMEs in the country, also noted that the Nigerian economy has around 39.7 million MSMEs, but the sector has been unable to realize its potential due to several critical challenges.

Between smartphone and data: While noting that smartphone penetration in Nigeria is increasing, helped significantly by more affordable used phones, EFInA said in the report:

  • “However, data needs to be made more affordable to get more of our MSMEs consistently using their phones for micropayments and digital.
  • “Due to the cost of data, a fairly significant number of low-middle and low-income demographics in Nigeria would turn their WhatsApp connection off and only turn it on periodically.
  • “This suggests that data costs are high relative to income for low-income demographics in Nigeria and would limit continued use of digital payments even as smartphones become more affordable.”

The price of USSD is an obstacle: EFInA also identified the current Unstructured Supplementary Service Data (USSD) price per session of N6.98 as an obstacle for MSMEs to take advantage of mobile payment. According to the organization, this would be very expensive for millions of nanoenterprises and MSMEs and for those who wanted to pay them for very small payments or micropayments.

  • “It would constitute a disincentive to use the USSD platform which should normally offer inclusive payments as the USSD phone is the most accessible and affordable for millions of MSMEs and their customers.” added.

According to the report, if all the challenges facing the sector are addressed and properly nurtured and structured, Nigeria’s MSME sector has the potential to create jobs, increase productivity and income, and reduce poverty.