Nigeria, As trial cashless policy begins
The latest monetary policy by the Central Bank of Nigeria (CBN) aimed at easing pressures on cash transactions in the banks has already begun in Lagos. It is known as ‘cashless’ policy. In some other countries operating the system, the policy is called ‘mobile wallet’, which is an alternative payment method that allows a consumer to use mobile phone to pay for a wide range of services. The choice of Lagos as the pilot scheme is understandable. About 65 percent of commercial transactions in the country reportedly take place in Lagos.
According to the CBN, the cashless system has become necessary to promote the use of electronic means of transaction towards making Nigeria a cashless economy in the nearest future. CBN says the policy is in reaction to the increasing dominance of cash in the economy with its attendant implications for cost of cash management to the banking industry, security, money laundering, among other huge costs. The policy was endorsed by the Bankers’ Committee, which comprises the CBN, the Nigeria Deposit Insurance Corporation (NDIC), Discount Houses and the 24 commercial banks in the country.
Under the policy, effective from June 1, 2012, daily cumulative withdrawals and lodgments in banks by individuals would be limited to a maximum of N150,000, while daily cumulative withdrawals and lodgments by corporate customers is pegged at N1 million. However, individuals and corporate organizations wishing to withdraw above the fixed amount would have to pay special charges. Such special charges are not yet clear. Still, many industry watchers insist that the cashless policy has the benefit to transform the payment system and help the banks, many of which are currently in dire financial straits, reduce operating costs and lending rates. The apex bank has also said that most of the banks are currently incurring ‘excess baggage’ because of unnecessary expenses that are cutting deep into their financial profile and profitability.
But this makes special precautions economically appealing and expedient. We are, however, concerned that while this cashless policy has its noble intentions with the ultimate aim of growing our economy and encouraging the emergence of e-payment across the country, the groundwork for the take off of the system has not been sufficiently done. It is one thing to borrow a good idea, but the success of that idea must take into cognizance the peculiar economic environment of the country. No adequate enlightenment has been done before the take off of the policy in Lagos where the scheme is now being put to test. Caution is therefore necessary to avoid any unpleasant consequences such as mass cutback of banks’ staff.
As a new phenomenon in Nigeria, if the operational hitches are not taken care of, the noble objective of the scheme will be defeated. That is why many policies that have worked elsewhere in the world have failed in Nigeria.
Onadeko Adetutu, Caleb University Lagos
Author: Chief Editor
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