# AfriGo Pay

AfriGo Pay (portmanteau of Africa and Go) is Africa's first national domestic card scheme introduced by the Central Bank of Nigeria (CBN) to revolutionize the payment landscape within Nigeria. Launched on January 26, 2023, by former CBN Governor Godwin Emefiele in collaboration with the Nigeria Inter-Bank Settlement System (NIBSS), this initiative signifies the Central Bank's foray into the card payment scheme market, aimed to enhance the cashless economy and promote financial inclusion for Nigerians. AfriGo now joins the ranks as the fourth contender in the card payment landscape, vying for market share alongside well-established entities like Mastercard, Visa, and the Nigerian-owned Verve. In a statement, Emefiele highlighted that "International card schemes would not be restricted in Nigeria. Instead, AfriGO aims to offer additional options for domestic consumers while promoting service delivery that is more innovative, cost-effective, and competitive".
AfriGopay Financial Services Ltd, an affiliate of NIBSS, is licensed by the CBN to deploy and manage the card scheme. Since its establishment in 2023, AfriGo has introduced various products, including debit cards, credit Cards, prepaid cards as well as virtual cards. There are currently over 3 million cards that already have been ordered and available.
As of March 2024, the federal government of Nigeria has announced plans to introduce a payment-integrated ID card utilizing Afrigo's infrastructure, aiming to enhance the provision of social and financial services.

## Background

Prior to AfriGo's emergence, Nigeria's payment system landscape was predominantly dominated by Mastercard, Visa, and Verve, enabling transactions within a country boasting a population of 218 million. Despite the companies serving a substantial portion of the population, Nigeria's payments landscape was seen was still seen to be riddled with issues. Some of the issues identified by the central bank of Nigeria include:

### Low financial inclusion

The Nigerian government and other organisations such as the Enhancing Financial Innovation and Access(EFInA) recognized a significant deficiency in financial inclusion within the country. The issue of low financial inclusion refers to the limited accessibility and availability of financial services to individuals and businesses, particularly those who are unbanked or underbanked. This problem arises due to various factors such as limited access to banking services, high transaction costs, lack of financial literacy, barriers to documentation, geographical constraints, lack of trust in formal financial institutions, and regulatory barriers
In response, the Central Bank of Nigeria aligned itself with global policy initiatives by signing the "Maya Declaration" in 2010, aimed to decrease financial exclusion in Nigeria to 20% by 2020. Subsequently, this commitment spurred the development of a National Financial Inclusion Strategy (NFIS) in 2012, with the objective of attaining an 80% adult financial inclusion rate by 2020 Over the years, the CBN has adjusted its approach to accommodate the evolving financial terrain through initiatives like NFIS 2.0 (2018-2020). Nevertheless, the CBN's forecast for the subsequent four years (2019-2024) underscores a financial inclusion rate of 64.1%, which falls shy of the targeted 80% by the close of 2020. Upon closer examination of the data, it becomes apparent that the payments, savings, credit, insurance, pensions, and formally served segments have all lagged by an average of 30%.

#### Low payment card penetration

Concurrent with Nigeria's low financial inclusion, the country grapples with limited payment card usage. As of 2022, Nigeria stands at 75th globally in terms of debit card ownership per capita, with just 32% of adults possessing a debit card. Additionally, its credit card ownership ranks 114th, with only 3% of the population owning one. This can be attributed Nigeria generally being a low-trust society and physical cash is preferred. The ramifications of this low payment card penetration include constrained access to financial services, heightened dependence on cash, and inadequate tracking of financial transactions, all of which impede the nation's economic development.

#### FX issue

In recent years, Nigerians have been confronted with one of the most severe economic crises, driven by escalating inflation rates resulting from monetary policies that have precipitated Niara's unprecedented decline against the dollar. Furthermore, the reliance of the payment industry on dollar-based transactions in the domestic market, particularly with international payment card schemes, has considerably exacerbated Nigeria's foreign exchange (FX) challenges. Firstly, these payment network's facilitation of transactions in dollars has heightened demand for the currency domestically, straining the nation's already limited foreign exchange reserves and contributing to the devaluation of the Naira. Secondly, as Nigerians utilize their cards for international or online transactions with foreign vendors, it exacerbates the drain on foreign currency reserves, further compounding FX scarcity. Thirdly, this reliance on dollar transactions contributes to exchange rate volatility, impacting transaction costs and affecting both consumers and businesses. Additionally, the depreciation of the Naira makes dollar-denominated transactions more expensive for Nigerians, consequently raising the overall cost of living and conducting business activities.

#### Data sovereignty

Concurrent with the FX challenges, the Nigerian government has expressed concerns about data sovereignty related to international payment schemes. These concerns revolve around safeguarding the personal and financial data of Nigerian citizens managed by these global payment networks. Key issues include worries about data localization, as Nigerian authorities are unsettled by the storage and processing of sensitive financial data beyond the country's jurisdiction. Additionally, there are concerns about data security, as potential breaches pose risks to individuals' and nations' privacy and financial security.

### Domestic payment schemes

A card scheme facilitates the infrastructure necessary for users to execute transactions utilizing their debit, credit, or prepaid cards at automated teller machines (ATMs) or point-of-sale (POS) terminals. Consequently, commercial banks utilize these card schemes to issue cards to their customers.
A domestic payment scheme is a system established within a particular country to facilitate electronic transactions, typically involving payments made within that country's borders. These schemes are often regulated by the government or a designated authority and may involve collaboration between banks, financial institutions, and other stakeholders within the country. Domestic payment schemes provide infrastructure and standards for processing transactions such as card payments, bank transfers, and other electronic payments, tailored to the specific needs and regulations of the country in which they operate.
Each domestic payment scheme establishes its own card scheme, to facilitate electronic transactions using debit, credit, virtual, or prepaid cards issued by local financial institutions. These schemes typically operate independently or in collaboration with international card schemes. They serve a pivotal role in facilitating transactions within the country's borders by providing the infrastructure required for card issuance, authorization, settlement, and clearing processes.
Over the last few years, these schemes have flourished. Some of the most prominent ones are the following:
* Cartes Bancaires: France's local card scheme that handles 60% of all card transactions within the country. To enable their cards for worldwide usage, they have partnered with either Visa or Mastercard for co-branding.
* Verve: Owned by Interswitch Group, Verve is a Nigerian Pan-African card. It is Africa's largest domestic card scheme with more than 19 million cards activated on its network.
* Rupay: Launched by the National Payment Corporation of India (NPCI) to propel India towards a ‘Less Cash’ economy with a low-cost debit/credit card. In 2012, Rupay partnered with Discover Financial Services, to bring international services to Indians. As of November 2020, 603.6 million Rupay cards have been issued by nearly 1,158 banks.
* Nets: The Network for Electronic Transfers (NETS) was established in 1985 by Singapore's three largest banks: DBS, OCBC, and UOB. NETS runs Singapore's primary debit scheme, allowing customers from major banks to conduct transactions using physical or contactless ATM cards, along with mobile devices. Participating banks comprise DBS Bank/POSB, HSBC, Maybank, OCBC Bank, Standard Chartered Bank, and UOB.
* Other notable domestic Card payment schemes include: Troy (Turkey), Meeza (Egypt), Mada (KSA), Mir (Russia), Elo(Brazil), PromptPay (Thailand), Swish (Sweden), iDEAL (Netherlands), IPP(UAE).

### The AfriGo Domestic Card Scheme

In view of the pre-existing payments landscape: Poor financial inclusion, a cash reliant economy, low debit/credit cards to population ratio, high USD denomintaed transaction fees, poor data sovereignty, high reliance on the Dollar, and extreme pressure on foreign exchange.
On the 26th of January 2023, the AfriGo domestic card scheme was launched by Godwin Emefiele, the former Governor of the CBN, in collaboration with the Nigeria Inter-Bank Settlement System (NIBSS). AfriGo has subsequently established the payment infrastructure, approved three card manufacturers, established a testing laboratory, and introduced a range of products. This product lineup includes contactless debit, credit, virtual, and prepaid cards, all designed to address the longstanding challenges within Nigeria. Locals can benefit from the following features of the AfriGO cards:
* Cheaper Cards: CBN asserts that the card scheme will provide a more economical option compared to current cards available in the country. It is reasonable to anticipate that the card will be priced at less than ₦1,000, which is the typical cost of obtaining a debit card at most commercial banks in Nigeria.
* Reduction in operating fees: As per the CBN, AfriGo is expected to decrease the operational expenses associated with cards in the country. For instance, 100% of the fees for the cards will be settled in naira, eliminating vulnerability to fluctuations in the dollar exchange rate.
* Reduce pressure on Forex Reserve and Exchange: Prior to the introduction of the AfriGO scheme, all Nigerians encountered significant challenges accessing foreign exchange for both personal and business transactions. The main reason for this was the limited availability of the dollar. However, by conducting all transactions in Naira, there would be an increased availability of the dollar, consequently alleviating pressure on the forex reserves and exchange rates.
* Data Sovereignty: AfriGo will ensure that the valuable and sensitive data generated from financial transactions will remain within Nigeria, contrasting with the current outflow of data managed by Visa and Mastercard. This will empower AfriGo to improve the safeguarding and understanding of the country's payment ecosystem.
* Greater Financial Inclusion: Offering a more affordable card, lowering operating fees, and simplifying the process of obtaining it, the CBN anticipates a wider adoption of the card across the nation. This aligns with the CBN's goal of achieving financial inclusion, as outlined in 2012.