The governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has risen to the defence of the introduction of charges on cash deposits and withdrawals from banks under the reinvigorated cashless policy.
Emefiele said that apart from being in the public interest, the policy would promote an efficient payment system in the country.
He added that the measure would lead to the reduction in cash processing costs which are punitive and often passed on to bank customers and the non-proliferation of e-channels for lifestyles.
The CBN governor further said that the policy which was first introduced in 2012 but suspended in 2014 was reintroduced to show to members of the Inter-Governmental Action Group against Money Laundering in West Africa (GIABA) that Nigeria conforms with their practices as enshrined in their anti-money laundry and CFA laws.
GIABA is a specialised institution of the Economic Community of West African States responsible for facilitating the adoption and implementation of Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) in West Africa. Its members are expected in Nigeria on Monday, September 23 to access the rate at which Nigeria has embraced anti-money laundry and CFT regime.
“This is a strategic timing of these actions because on Monday, September 23, the mutual evaluation by GIABA on the country’s anti-money laundry and CFT regime will begin. Passing the mutual evaluation position, Nigerian as a state will be a safe and credible destination for financial transaction across the world,” Emefiele told journalists at the end of the Monetary Policy Committee (MPC) meeting in Abuja yesterday.
Members of the House of Representative had asked the apex bank to suspend the implementation of the policy because it would have negative impacts on small and medium enterprises (SMEs).
But Emefiele said that failure to ensure such cashless and anti-money laundry laws could result in the regional body scoring Nigeria negative. He said that when that happens, “even your so-called cards that you carry abroad, you will not be able to use them. It is in our best interest that we are seen to be working in line with best global practices so that we can have a comfortable and convenient life in future.”
Emefiele who sympathised with the banking public and regretted the inconvenience that the charges were causing bank customers, said that currency management cost had continued to increase year-on-year at an average annual growth rate of 33 per cent, blaming it on the proliferation of cash in the country.
He, however, noted that electronic transactions had increased within the economy, adding that “we have provided alternative channels and people have embraced them.”
In like manner, the MPC has endorsed the federal government’s planned increase of Value Added Tax (VAT) from 5 to 7.5 per cent. Emefiele said that the action would enable government to generate more revenue to fund its obligations to Nigerians.
While recalling that government debt service ratio is the high side, Emefiele said that “if we say government should not borrow, then, government must raise revenue. If government must raise revenue and we think this is one way government can raise revenue to meet its obligation, it calls for rational thinking and what we are saying is that it is the right decision that government has to increase VAT from 5 to 7.5 per cent.”
The governor, who admitted that the planned VAT hike would be painful, however, urged Nigerians to support the government because it has obligations to meet.
Meanwhile, the MPC at the end of its 126th meeting called on the federal government to urgently adopt what it termed a “Big Bang” approach towards building fiscal buffers by purposefully freeing-up redundant public assets through an efficient, effective and transparent privatisation process.
The MPC opined that privatising the public assets would raise significant revenue for the government and resuscitate the redundant assets to generate employment and contribute to national economic growth.
The committee also announced the retention of the Monetary Policy Rate (MPR) at 13.5 per cent and to hold all other policy parameters constant.
In that regard, the MPC retained the asymmetric corridor of +200/-500 basis points around the MPR; retain the CRR at 22.5 per cent; and the Liquidity Ratio at 30 per cent.