Well, I think Nigeria is in a very unique, positive position. Frankly, an economy of 200 million people is the biggest economy in Africa. And the wonderful thing is, like most Africans, Nigerians are very tech savvy. They understand they're natively digital, they're natively technical. They understand the power of technology. And you know, as Jack Mark was saying, the real opportunity for Africa is to become the continent of technology.

So at MasterCard, we believe very strongly in Nigeria and the future of Nigeria and in supporting the growth of the digital economy in Nigeria. We've invested in people; we have a very significant presence here as you know. We also work with every possible stakeholder in Nigeria. Whether it is the banks, whether it is the microfinance institutions, whether it is the government.

We believe that actually there is a significant opportunity that exists for Nigeria and for the African continent overall, in driving that digitization.

The cost of cash is very high. For Nigeria, we believe that cost could be anywhere between $4 to $6 billion a year.

Now, this is coming at a time the federal government, for instance, is looking at increasing taxes for PoS, and we have heard about increase on internet transactions coming up next year. Don't these have implication on the growth of the digital economy?

All I will say is that the growth of the digital economy will drive revenue growth for everybody. It will drive revenue growth for governments because businesses will become bigger and there will be more tax revenue.

So, I would say we are looking at a, let us say, growth rate, a GDP growth rate of between one to two percent. As the economy digitises, we believe that growth rate can jump quite dramatically. The other advantage to governments of digitisation also is reducing their costs. If you think about the government's balance sheet or PNL, they get tax revenues, and then they have to spend that and provide services.

So, if you can find a way to make that process more efficient, cheaper, more effective, then that benefits the government and the citizens. So I think the long term view that we have of Nigeria and indeed of Africa is that there will be accelerated growth. The growth will leverage digital and connected devices and that will drive better tax revenue for the government as well.

You have spoken a bit about what MasterCard is doing. Can you be more specific? What are you looking at in the now or long term?

Let me give you an example of how we are bringing new digital technologies to drive the digitisation of cash. Last year in Tanzania, MasterCard launched something called MasterCard QR payments, which is QR code-based payments. In seven months, we enabled 23 million people to use QR payments. If you think about the fact that in Tanzania there are only eight million bank accounts. So we have actually enabled people who are not in the formal banking sector to be able to do transactions; to participate in the actual financial ecosystem.

We are already at the point where we are starting to see transactions not just in the tens or hundreds but in the millions coming through. And the people who are using this are people who don't have bank accounts, who wouldn't be given bank accounts.

What are the challenges to all of these, particularly towards the policy of government, in terms of improving digital economy or a sort of private sector/government kind of collaboration?

I think the important challenge really is one of thinking about what are the right policy frameworks to put in place to actively encourage this. I will give you an example. There are a number of markets where we are seeing governments think about creating closed payment programmes, closed loop programmes where there are requirements or transactions should only stay within the country. Your transactions should only be done in a particular way.

While I can understand the logic of the mix, but if you really take a step back, the real advantage of a digital economy comes only when you can get scale and when you can get scale of investment, you can get scale of expertise.

Does it relate to infrastructure, cost of data, or a lot of ATM machines breaking down; all of these, should they be counted as part of the challenges?

Sure. Look, the reality is infrastructure evolves over a period of time. I'm originally from India, what you're describing was infrastructure in India a few years ago. And I have lived through that. But today, the infrastructure is very different.

So I don't see that as a challenge, I see that more as a part of the progression. I think the infrastructure will improve. The advantage of not being locked into old infrastructure means that countries like Nigeria can go to the next level of infrastructure quite quickly and easily.

Many banks here do agency banking, where you can go to an agent and you can take out cash, you don't need an ATM. That is an interesting way to solve that problem. So, I think the question really is how fast can that happen? And to make that happen, I think people have to realise that actually, you no longer need a very expensive ATM machine; you no longer need a $200 terminal.

There are new technologies, new payment capabilities that can allow digital payments to happen between individuals, between individuals and merchants, between government and individuals and between businesses without requiring expensive infrastructure. So actually, the real infrastructure that is needed is obviously bandwidth, you know, internet connectivity, capability, speed, and then platforms on which people can build digital products.

Cybercrime has been a serious issue particularly in Africa. Banks lose lots of cash. How can we work together to address that problem? You spoke a bit about the level of investment you are putting into security similar to your products. So, how can we work together, the private sector and government?

I think you've asked a very significant question. And really, making digital payments secure is in many ways, the most basic requirement because if they're not secure, then consumers will not feel confident to use them. And therefore, digital payments will never take off.

So, I think it is for all of us in the industry - the banks, merchants, its players like us, who are the technology backbone and indeed the government - to commit to work together on this. A place like us can obviously provide the infrastructure and the expertise needed to be able to support that, you know, governments' central banks can set the right policies, can require the participating banks to invest in cyber security.

You spoke about the cost of cash. I want to know how this actually works in a layman's language. So, if you tell me traditionally, the society is used to cash and you're saying cash is costing a lot of money. How do you explain that?

It is a paradox isn't it. Everybody seems to think cash is very cheap. In fact, people think cash has no cost. But if we think about the fact that last year, the government of Nigeria spent N64bn just printing notes; that is part of the cost of cash. These notes then have to be stored in vaults.

You have to build the vaults, you have to do the security; that too is part of the cost of cash. Merchants have to hold on to the cash, they have to look after it in their shops all day. They have to go in the evening and run to the bank and deposit, which means they can't look after their shops, that is part of the cost of cash. You and I walk around with cash in our pockets which we don't want to get picked; that is part of the cost of cash. So that is one level of the cost of cash, which I think people tend to forget.

Just the physical currency has a cost, the cost to print it, transport it, safe keep it, all of that is expensive. And then cash also has a second cost on the economy, which is the fact that because the transactions happen in cash, they're not recorded. And therefore, the government isn't able to get legitimately the tax that it should get, which we can then invest in the development of the economy.

So, if that tax is not being garnered by the government, that is costing you and me as citizens, because our services cannot be improved by the government because they don't have the cash.

So what is your advice to the Nigerian government, and Africa, on how to move the digital economy forward?

I would not be so bold as to offer advice to the government. What I will say is that the digital economy is the engine for the transformative growth of Nigeria and indeed of the African continent. Therefore the focus should be on building the power support for growth of digital economy. From our perspective, it should be on building policies that support the digitisation of cash.

I will give you an example. We recently had the government of Uganda, the Central Bank of Uganda has just issued a notification saying that no longer can merchants surcharge. You know, because you go to merchants and they say, we will charge you two percent or more, you pay by a card, that has been banned in Uganda.

It is those kinds of progressive policies that are required. I think there is a lot the government can do. The government can overnight mandate the need, or the requirement for digital payments. It's those kinds of bold policies that I think will make a big difference.

There is a broader piece; bringing down the cost of access to the Internet, and improving the quality of the internet access that people can get is critical.

© Pakistan Press International, source Asianet-Pakistan