Key questions this article answers:
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The CBN recently announced the launch of another cashless economy policy—a domestic card scheme called “AfriGo”. How would this work?
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The CBN also aims to use AfriGo to reduce demand for foreign exchange. Will things work out the way the CBN intends?
The Central Bank of Nigeria (CBN), led by Godwin Emefiele, might as well adopt DJ Khlaled's famous song intro "Another one!!" with their back-to-back cashless policy roll-out.
From the launch of Africa's first central bank digital currency (CBDC), eNaira, in 2021, to the naira redesign and cash withdrawal limits in 2022, Emefiele sure has enough hit singles in his cashless policy album.
The latest hit is the launch of Africa's first domestic card scheme—AfriGo, in late January 2023. Another one!!
In conjunction with the Nigeria Inter-Bank Settlement Systems (NIBSS) Plc (they own the infrastructure that enables funds transfer), the CBN hopes to promote financial inclusion by offering a home-grown card scheme to rival foreign card schemes like Mastercard and Visa.
While existing Mastercard and Visa cards will still be operational, the CBN states that "domesticating our card scheme enhances data sovereignty, enables the development of locally relevant products and reduces demand for foreign exchange".
AfriGo has its positives, e.g. lower transaction costs for banks since fees will be billed in naira (versus foreign currency billed by Mastercard etc.). Also, think of how Russia was able to survive on "Mir" (its domestic card scheme) following global sanctions that led to the exit of Mastercard and Visa and it (Russia) being kicked out of SWIFT (the Society for Worldwide Interbank Financial Telecommunication; basically a global NIBSS).
While these benefits are all good, one of the objectives of AfriGo the CBN stated stood out to me, i.e. "reduces the demand
