The interest of bank depositors is paramount

Following intervention by the National Assembly, the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, last Thursday clarified that the new policy on cash withdrawal limits was subject to review. That is reassuring given the controversy that has been generated by the new rules. While we do not intend to underplay the huge advantages inherent in a cashless environment that will help increase transparency in financial dealings and reduce crimes such as ransom payment, extortion, and vote-buying during elections, we nonetheless still urge the CBN to err on the side of caution. 

Under the new dispensation, the apex bank has restricted the maximum cash withdrawal over the counter (OTC) by individuals and corporate organisations per week to N100,000 and N500,000 respectively. Withdrawals above the thresholds would attract processing fees of five and 10 per cent respectively for individuals and corporate entities. This is seen as a subterranean move to further short-change bank customers who are already overburdened by sundry charges ranging from stamp duty to Automated Teller Machine (ATM) maintenance fees. In addition, third party cheques above N50,000 shall not be eligible for OTC payment while extant limit of N10 million on clearing cheques remains. The new regime further pegged the maximum cash withdrawal per week via ATM at N100,000 subject to a maximum of N20,000 cash withdrawal per day. 

First, we must first admit that the cashless policy is not new, having been inaugurated in 2012 while the implementation began in 2014 with charges. Introduced to reduce the amount of physical cash used in business transactions in the economy as well as encourage more electronic-based transactions, we have always endorsed the policy, hoping it would help facilitate economic development, reduce the cost of banking services, and improve the effectiveness of monetary policy in Nigeria. Besides, the CBN had on 17th September 2019 directed all Deposit Money Banks (DMBs) to immediately commence implementation in six pilot states across the country, including Lagos, Ogun, Kano, Abia, Anambra, and Rivers States, as well as the Federal Capital Territory (FCT). The apex bank stated at the time that the nationwide implementation of the cashless policy would commence on 31st March 2020.  

Granted that the CBN may be trying to complete this process, but it should also be aware of the challenges. There is genuine fear that the policy could undermine financial inclusion by dissuading people from embracing banking services. Yes, it is true that many Nigerians have already embraced electronic channels and online transaction in marketplaces. But despite what can be seen as the early successes of the cashless policy, illiteracy, limited knowledge of computing/use of internet and lack of trust, etc., still constitute problems. Many people are not conversant with using electronic channels and thereby breach security by giving their PINs to strangers to transact on their behalf. In addition to the foregoing, infrastructural challenges persist, internet access remains erratic, ATMs debit accounts without dispensing cash and merchants’ apathy to using POS terminals remain due to a loss in tips.  

While we concede that the new rules are consistent with the CBN cashless policy to promote a credible and efficient payment system, the interest of bank depositors must be paramount. There are several issues that the CBN management must factor in during implementation. The informal sector in Nigeria is mostly unbanked and cash-dependent, inflation has eroded the purchasing power of the Naira, necessitating larger cash requirements and the new rules contain no incentives for encouraging more people to open bank accounts. With 133 million Nigerians already in the poverty bracket, we cannot afford a further complication of their challenges. In trying to solve a problem, the CBN should be careful not to create a bigger one. 

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