Recently, the Central Bank of Nigeria (CBN) reintroduced its cashless policy which stipulates a cash handling charge on daily cash withdrawals that exceed N500, 000 for individuals and N3m for corporate bodies. The new policy on cash-based transactions in banks, according to the apex bank, is aimed at reducing the amount of physical cash circulating in the economy as well as encouraging more electronic-based transactions.
A cashless economy is an environment in which money is spent without being physically carried from one place to another. This system employs the use of electronic devices through the use of information technology as means of payments. It is apt to say that without an optimal use of information technology, no country can attain a speedy socio-economic growth and development. Information technology can help to reduce transaction costs for banks, which will translate to lower prices for services to customers.
The apex bank, in its defence of this policy pointed out that the electronic-based channels would be used for payments of goods, services, and transfers among others. While the nationwide implementation of the policy will begin by March 2020, charges on deposits are now being applied as a pilot project in Lagos, Ogun, Kano, Abia, Anambra, and Rivers States as well as the Federal Capital Territory. The CBN further stated that the charges, which have taken effect, will attract three per cent processing fees for withdrawals and two per cent processing fees for lodgements of amounts above N500, 000 for individual accounts.
Although some Nigerians have reacted to this policy in different ways, it is worthy of note that ever since the adoption and pursuit of the apex bank’s cashless policy in 2012, the CBN has recorded steady progress in its objective of reducing the volume and frequency of cash-based transactions in the Nigerian economy.
This newspaper has also observed remarkable successes in the actualisation of the policy with the substantial increase in the number of Nigerians who make use of electronic means of payments for services rendered at petrol stations, supermarkets, restaurants, fast food joints, hotels, hair dressing and barbers’ shops, and in sundry other transactions which were hitherto mainly cash-based. Economic analysts have also said that the full implementation of the policy meant to enhance transparency was long overdue. We commend the reintroduction of the policy which we also consider as good because it is meant to monitor cash movement and basically to mop up excess liquidity in the banking sector.
The CBN, since the policy was put in place, has consistently reassured Nigerians that the resumed implementation of the cashless policy of the bank is aimed at encouraging and deepening financial inclusion through the use of alternative channels in line with global best practices. According to the apex bank, the policy was not designed to impoverish Nigerians.
For any economy to grow in the 21st century, we make bold to posit that the introduction of a vibrant cashless policy is key. This is because it aims to curb some of the negative consequences associated with the high usage of physical cash in the economy, which include high cost of cash, high risk of using cash, high subsidy, informal economy, inefficiency and corruption.
This is what the cashless policy of the CBN was designed for; it aims to provide mobile payment services, break down the traditional barriers hindering financial inclusion of millions of Nigerians and bring low cost, secure convenient financial services to urban, semi-urban and rural services nationwide.
Unlike calls by some people that the policy is ill-timed, we believe the time to do the right thing is now and should not be postponed. Already, we have witnessed steady improvement in different electronic payment channels in Nigeria which include: Automated Teller Machine (ATM), Point of Sales terminals, mobile voice, web, inter-bank, intra –bank and kiosks.
Cashless policy has many advantages, some of them are: prompt settlement of transactions; speeding up of settlement of transactions both locally and internationally; reduction in the frequency of visits to banks and reduction in the use of raw cash thereby transiting the country into a cashless society.
This policy also reduces theft. Since robbers are attracted by volume of cash movement through bullion vans, the use of alternative electronic payment system will no doubt reduce incidence of robbery in the society. The policy will also facilitate clearance of goods by importers Also, with cashless policy, CBN will reduce cash management costs.
While we believe the nation’s economy stands a lot to gain from this policy, we urge the CBN to carry out robust campaigns to sensitise Nigerians to understand the need for the policy to thrive.
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