Cashless Policy: A Dream Still Far From Reality

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In 2012, the Central Bank of Nigeria (CBN), introduced the catch phrase: “cashless policy”, many Nigerians were happy that at last the apex bank is taking banking and financing transaction to the next level.

According to the CBN, the policy is aimed at reducing the amount of physical cash circulating in the economy and encouraging more electronic-based transactions (payments for goods, services, transfers, etc) also, the policy is targeted at lowering the cost of banking services, improve the effectiveness of monetary policy in managing inflation and driving economic growth.


The CBN noted that the new policy which kick started in Lagos, will breakdown conventional barriers inhibiting financial services to urban, semi-urban and rural areas. Speaking, the CBN Governor, Lamido Sanusi, stated, “it is estimated that over 70% of cash in circulation in the Nigerian economy exist outside the formal banking system. This has cost implications for the economy. Physical cash has life span; it gets destroyed easily. This means government spends a lot of money replacing cash with new ones.

Besides, if cash is not in the formal setting it can’t be available for lending. But if you know an aggregate, that is how much is available to kick-start the economy, it makes lending and production easier.”

With the policy that make users pay utility bills, school fees, hotel bookings and other transactions in the comfort of their rooms, cars, offices etc, kick-started in Lagos, the apex bank recently extended it to other states. The states which are Abia, Anambra, Kano, Ogun, and Rivers state and the Federal Capital Territory, joined the fray in this latest move by the Sanusi Lamido led CBN to reposition financial transactions. However, this policy been pursued by the CBN, has generated a lot of questions from Nigerians. How will it thrive under the prevailing circumstances in the country? Will it go down the drain as most laudable policies of old or just a mere jamboree?
Quoting one writer, “the Nigerian government has just left leprosy to thrive while they treat ringworn”. Apparently, he was referring to the epileptic power situation experienced in the most populous black nation in the globe. For the cashless policy to thrive, there must be a solid power supply base. Unfortunately the country is still generating about 2,000 megawatts of electricity. There have been instances where the poor power supply has truncated the use of this system. Most organizations spends huge sums of money just to run the policy thereby likening it to a situation where one is looking for hair when there is no head.

Additionally, the low-level of awareness about the CBN’S move, it embarrassing and antithetical to say the least about cashless policy with 4.5million illiterates in the country; making it the 9th country with most illiterates (UNESCO, September 11, 2012), the policy cannot penetrate to the target group (rural dwellers, semi-urban settlers), if proper enlightenment is not carried out. According to News Agency of Nigeria (NAN) report, bank customers in Umuahia, Abia state, complained that they were still ignorant of the policy and how it operates. A petty traders, Mrs. Anthonia Enyinnaya, noted that, “many people are yet to be acquainted with the nitty-gritty of the policy and most of us heard about it here in the bank for the first time.” She explained that “the implementation of the policy without adequate sensitization will cause confusion and distortion in the economy.”

Again, the low-technological penetration experience in Nigeria is another loophole in the actualization of the cashless policy. Most areas in the country, are not connected to internet services thereby rendering the policy of no effect. As the cashless policy needs credit cards and the installation of Automated Teller Machines (ATM) at strategic points, many people, housed in rural dwellings, may not be exposed to them, which will in turn water down the plan (this is because 80% of Nigerians are reported to be living in rural areas) and 80% of rural dwellers are unbanked).

Furthermore, as the policy places limit on the amount of cash to be withdrawn daily by individuals/organization starts, there are skepticism in some quarters that online scam and robbery; not forgetting exploitation by some banks, will mar it. A UBA customer in Maitaina, Abuja, Musa Wada, was of opinion that some banks may capitalize on the poor knowledge of the programme to hit customers below the belt (Blueprint Newspaper). How secure is the average Nigerian from mischievous banks/bankers and individuals?

The cashless policy provides an avalanche of benefits but it may end up not getting a warm embrace from a vast majority of Nigerians. According to a writer in UNIBEN REPORTER, February, 2013, “the cashless policy is only likely to tickle the fancy of elites (rich and educated minority)” and presently just as realistic as a thunder in summer”, if the policy is not properly pursued by removing some road blocks”.

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