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A Case For CBN’s Cashless Policy-Nkechi Ibe

By definition, a cashless economy connotes a financial situation in which money is spent without being physically moved from one place to another. This system makes use of electronic devices powered by information technology as means of payments. This is in keeping with standard operating procedure as applies in most developed economies and even many emerging ones. Experts aver that without an optimal use of information technology, especially in banks, the attainment of a speedy socio-economic development of the sector and, by inference, the economy as a whole becomes, truly, a drag hampering its planned growth.  To those well informed on the relevance of Information technology in a digital age, its deployment can help to reduce transaction costs in financial institutions which will translate to lower costs for services to customers. Because of its inherent benefits, the apex bank is determined to encourage, on a wide scale, the use of electronic-based channels in the payment for goods, services, and transfers among others. At the moment, a nationwide implementation of the cashless policy is slated to take off in March 2020. A pilot aspect that imposes charges on deposits are now being applied in Lagos, Ogun, Kano, Abia, Anambra, and Rivers States as well as the Federal Capital Territory. In a circular by the CBN, the charges 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.

As pointed out earlier, some Nigerians are reacting to the policy as they understand it. However, 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. Many Nigerians have keyed in to the cashless transaction and will be pleased to see its expansion and sustenance. Already, it is recording remarkable successes with the substantial increase in the number of Nigerians who make use of electronic means of payments for services rendered in places that hitherto required cash transactions. Economic analysts have also said that the full implementation of the policy meant to enhance transparency was long overdue. The policy is, indeed, good and meant to monitor cash movement and basically to mop up excess liquidity meant to develop the sector.

Reacting to some insinuations that the policy would discourage financial inclusion, the CBN has once again, 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, 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 includes 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, breakdown 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. Regardless of the misgiving by some people that the policy is ill-timed, it is imperative to point out that no time will be right for everybody. All that is needed is for the policy to be given the chance to make its impact based on its viability. There is no denying that there has been a 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. E-payment being undertaken by indigenous firms.

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; reduction of 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 importer. Also, with cashless policy, CBN will reduce cash management costs. Going by the contributions of the cashless policy elsewhere around the world, experts are encouraged to argue that Nigeria’s economy stands to gain from this policy. All that is required are guarantees that it will be sustained over time with minimal hiccups. This will entail the CBN putting in place mechanisms to ungird this assurance. This will also include massive public enlightenment campaigns to sensitise those for whom the policy is designed to enable them to understand and appreciate its benefits.

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