The Nigerian Economic Summit Group (NESG) has called on the Central Bank of Nigeria and the bankers committee to incentivise the use of digital channels for financial transactions to cushion the effects of the cash crunch facing Nigerians and their businesses.
Specifically, NESG said there should be incentives to promote the use of digital channels, such as a reduction of charges on transactions associated with digital channels.
It said Nigeria’s digital infrastructure should be strengthened also. “There is an urgent need to expand the capacity of the digital financial system to accommodate the mass migration to digital channels. This is important to ensure a seamless transition to digital channels as alternatives to cash,” the group said in a report that was recently published.
According to NESG, difficulty experienced by people attempting to use digital channels for transactions suggests that payment
platforms are not adequately mature to adjust quickly to a cashless economy.
The economic think-tank said as laudable as the aims of the CBN were in its decision to redesign the currency, evidences indicate that there has been a myriad of unintended challenges which have been significantly disruptive to economic activity and negatively affected the welfare of citizens.
The CBN had announced plans to redesign the country’s currency, specifically the higher denominations, on October 26th, 2022. The announcement came with a tight
deadline of January 31st, 2023, to phase out the old N200, N500 and N1,000 notes
– which account for 95.6 percent of the total value of the currency in circulation.
Implementation of the bank’s currency swap deadline and the corresponding scarcity of the new banknotes has created much hardship for Nigerians.
The NESG reviewed the process and said urgent redress is therefore required to stave off further adverse socio-economic effects and to restore confidence in the financial system. The NESG made the remarks in a new report tagged: Naira Redesign Policy: Caught in the Web.
In its recommendation, NESG adviced the authorities to adopt gradual phaseout of old notes due to the hardship households and businesses face, especially in the informal sector. It stated that the CBN needs to reconsider prolonging the legal tender usage of the old notes side-by-side with the new notes.
This, it said, is important to give the CBN the opportunity and time to devise effective ways of getting the new note to the unbanked populace and rural dwellers that constitute a large portion of the informal economy.
“Expedite the printing of new notes
The CBN should expedite the printing of new notes.
“Additionally, the apex bank should streamline distribution channels to ensure efficient delivery of the new notes to commercial banks and other financial institutions. This will
help ensure an adequate supply of cash to meet the public’s demand and reduce long queues and other inconveniences,” NESG said in a review and merits of the currency swap.
