The Unbanked Angle

Across most African countries trade is mainly conducted using physical currency due to factors such as low literacy and digital adoption rates, and as a result of this, any changes to the currency of their countries have far-reaching implications for farmers.

At the turn of the year, Coamana’s Amana Market has seen a significant decline in transactions within its partner communities in Nigeria due to the change in currency implemented by the Central Bank of Nigeria. Late last year the Central Bank of Nigeria announced a design change for the 3 highest denominations of the Nigerian currency with a January 31st deadline to deposit old notes as they would no longer be considered legal tender, which meant that all the old notes in circulation had to be taken to banks and exchanged for the new notes, however despite the deadline most banks had very limited volumes of the new notes which meant that each customer only has access to withdraw a limited amount. The consequence of this was that the unbanked population had little to no chances of exchanging the old notes as they needed to have access to banking services.

Traders in markets became unwilling to buy produce for fear of being unable to sell them off because their customers do not have the cash to pay and because a large number of these traders do not have bank accounts they are unable to accept online payments. On the other hand, farmers have farm produce wasting as they cannot sell them because they could not accept the old notes for fear that they would be unable to exchange them before the deadline due to them encountering difficulties in exchanging the cash they already have at hand because they do not have bank accounts.

This situation has essentially shed a spotlight on the major flaw in systems that transacts entirely outside the digital space. Looking towards the future it is important for technological systems that support the underserved to be developed and implemented. We understand the various difficulties around the adaptation of technology however through this crisis being faced by traders and farmers we have been able to support those onboarded on Amana Market to continue transacting and that alone has been worth the struggle.