Nigeria’s private sector is a vibrant and dynamic force, comprising diverse large corporations, agile small and medium enterprises, and a thriving informal economy. Today, this sector contributes approximately 85 per cent to the nation’s gross domestic product and employs around 75 per cent of the workforce, making it a cornerstone of the nation’s economy.
Despite its dominance, persistent operational challenges such as high transaction costs, forex volatility, and inefficient payment systems hinder its full growth potential.
From my vantage point as country director of the cross-border payments platform, Verto, and one who has worked across various verticals within the financial ecosystem, I have witnessed firsthand the financial strain businesses face in navigating these hurdles. Among other factors, one of the most urgent priorities is enabling an advanced and reliable payment infrastructure—crucial for trade, supplier access, and market expansion.
Traditionally, businesses in Nigeria have relied on banks for international transactions, but these systems are often slow, expensive, and in many cases burdened with bureaucracy. For example, fees for wire transfers and foreign exchange transactions can be as high as 5-10 per cent of the transaction value, significantly eroding profit margins or even resulting in losses worth millions of naira. Additionally, lengthy settlement time further disrupts operations, destabilising supply chains, creating cash flow problems, and even jeopardising business relationships.
It doesn’t have to be this way. Integrating digital cross-border payment platforms can revolutionise how businesses operate, allowing them to send and receive payments almost instantly while cutting transaction costs by up to 40 per cent. This efficiency boosts profit margins and frees up capital that can be reinvested in growth areas.
Moreover, a smoother and more efficient cross-border payment system unlocks new markets by enabling businesses to sell their products and services beyond Nigeria, enhancing revenue and increasing market share. The message is clear: for businesses in Nigeria to flourish and compete globally, embracing modern and innovative financial solutions is not just advisable-it is imperative.
Another pressing issue affecting Nigeria’s private sector in recent months is the worsening shortage of forex. In 2024, the naira depreciated by approximately 41 per cent. To stabilise the currency and meet foreign debt obligations during such turbulent times, the Central Bank of Nigeria often introduces new regulations and policies, such as imposing restrictions on the amount of foreign exchange available to commercial banks for distribution. While these measures are designed to effectively address important macroeconomic priorities, they can sometimes have a spillover effect, creating challenges for businesses’ access to forex. As a result, many businesses may find themselves turning to the parallel market, where exchange rates can be less favourable. Consequently, sourcing essential currencies like USD, EUR, and GBP for imports and international trade becomes more difficult.
Forward-thinking fintech platforms are bridging this gap and providing critical alternatives. By offering businesses access to competitive forex rates and seamless conversion options, they help companies remain resilient despite currency volatility and economic uncertainty. Platforms like Verto, for example, help businesses connect with over 300 liquidity providers, banks, and counterparties in over 170 countries, aggregating liquidity and allowing businesses to access much-needed foreign currency, with 50 currencies available for exchange, at better exchange rates. This includes hard-to-trade currencies like the Nigerian naira, Kenyan shilling, Ghanaian cedi, and Tanzanian shilling. This capability ensures uninterrupted trade, stable supply chains, and greater financial resilience even in volatile markets.
While it’s easy to assume that cross-border payment challenges mainly affect large enterprises, in many cases, SMEs face the greatest hurdles. Without easy access to traditional banking due to complex onboarding requirements, they’re often excluded from the financial services they need to operate and grow. Fintech platforms are helping bridge this gap by offering streamlined, compliant solutions designed with smaller businesses in mind. SMEs are a cornerstone of economic expansion—empowering them means strengthening the economy.
Nigeria’s private sector is the engine of its economic transformation. For it to remain competitive and thrive, adopting efficient, secure, and affordable payment solutions is essential. The cross-border payments sector is playing a pivotal role in enabling businesses to optimise operations, cut costs, access foreign currency, and expand their market reach. By adopting the right financial infrastructure, Nigeria’s businesses can not only survive economic uncertainties but also thrive, paving the way for long-term economic stability and growth.
Dr Austin Okpagu is the Nigeria Country Director of Verto
