James Emejo writes that the drive for a cashless society could be the magic wand that will enhance financial inclusion, and boost social and economic empowerment, thus addressing the endemic poverty in the country
Poverty remains perhaps, one of the greatest challenges bedevilling the country in general. In the previous years, economic growth had failed to impact the lives of the ordinary Nigerian as per capita income remains below the globally- approved thresholds.
The inequality in wealth distribution had been partly attributed to the endemic corruption in the system as well as a weak social protection architecture, which is constantly subjected to manipulations.
Until recently, social intervention programmes, which are aimed at improving the lot of the vulnerable population have been ineffective partly as a result of the nefarious activities of middlemen who would rather corner such benefits for their selfish interests.
More Nigerians Trapped in Poverty
According to the National Bureau of Statistics (NBS), no fewer than 133 million Nigerians, representing 63 per cent of the population are currently living in multi-dimensional poverty.
Of the total, 105.98 million poor Nigerians are located in rural areas compared to 16.97 million in urban areas.
However, President Muhammadu Buhari, in August 2019, committed to empowering an additional 100 million people to escape extreme poverty by 2030.
This implies that on average, 10 million people must be lifted out of poverty each year, starting in 2020.
But the adverse impact of the COVID-19 pandemic on livelihoods, and unemployment, had rendered the task more challenging to realise.
According to the Nigeria Multidimensional Poverty Index (MPI) 2022 Survey, there are high deprivations in sanitation, healthcare, food insecurity, and housing, with the poor people experiencing over one-quarter of all possible deprivations.
Moreover, both the incidence and intensity of poverty at 62.9 per cent and 40.9 per cent, respectively, exceeded the 26 per cent poverty cut-off threshold.
The report also pointed out that poverty is higher in rural areas where 72 per cent of the people are poor compared to 42 per cent in urban areas.
Among other revelations, the report stated that about 70 per cent of Nigerians live in rural areas, yet these areas are home to 80 per cent of the poor people.
Analysts however believe that for the fight against poverty to be meaningful, there is the need to reduce human contact with intervention funds to minimise corruption and ensure that such benefits get directly to the intended vulnerable beneficiaries. This could, of course, be achieved through the deployment of innovative payment systems that could allow for tracking and monitoring of such interventions.
Cashless Policy as Tool for Poverty Eradication
Beyond the immediate benefits of the Central Bank of Nigeria (CBN) cashless policy and currency redesign, which include countering terrorism, and managing money supply among others, the initiative will also ensure that going forward, social intervention programmes, which are targeted towards the poor Nigerians achieve their desired objectives.
This is partly because such funds can easily be tracked and monitored and this will further provide for greater transparency and accountability by those who administer the resources.
As highlighted by the CBN Governor, Mr. Godwin Emefiele, the Nigerian payments system has recorded significant achievements since the introduction of the cashless policy in 2012.
Emefiele said following the successes achieved in the payments landscape, Nigeria has been adjudged Africa’s undisputed real-time and digital payments leader with over 3.7 billion real-time transactions in 2021.
The central bank governor, during his recent appearance before the House of Representatives to discuss the apex bank’s implementation of the cashless policy and new withdrawal limits, also pointed out that electronic banking adoption had significantly proliferated among the Nigerian populace whilst the cashless policy had further spurred policy innovation that has expanded the breadth and depth of financial system participants, transaction channels and financial access points.
Represented by CBN Deputy Governor, Financial System Stability (FSS) Directorate, Dr. Aisha Ahmad, Emefiele also told the lawmakers that the CBN’s latest actions on Naira redesign and nationwide implementation of the cashless policy were intended to further sustain these achievements in a quest to foster a safe, credible and efficient payment system that is the pride of all Nigerians and the envy of the world.
He insisted that the cash withdrawal policy was neither targeted at any segment of the society nor intended to disenfranchise hardworking Nigerian citizens and businesses as insinuated in some quarters – and promised that the central bank would continue to monitor implementation and be flexible on the limits in response to feedback received.
Misconceptions of Cashless Policy
The CBN governor had also pointed out that there were many misconceptions about the naira redesign and cashless policy which needed to be resolved.
He explained that the N5, N10, N20, N50, and N100 currency denominations remained legal tender, and were unaffected by the naira redesign policy, adding that they are available for use across the country.
He added that there are currently no processing fees applied to cash deposits, stressing that unlimited amounts can be deposited without charge, to enable seamless and unrestricted deposit of any notes affected by the currency redesign.
He said: “The processing fees on cash withdrawals are not new as these have been in place in Lagos, since 2012, and in the five other cash-less states and FCT, since July 2013.
“The charge applies on the excess over the prescribed limit only and not on the entire transaction amount. For instance, a withdrawal of N550,000 by the individual- fee is more than the N500,000 limit (that is N50,000x 3 per cent= N1,500); a withdrawal of N6,000,000 by a corporate- fee is more than N5,000,000 limit (i.e. N1,000,000 x 5 per cent= N50,000).
“The Policy does not prohibit cash transactions above the prescribed limits. Such transactions shall attract the processing fees to serve as an incentive for account owners to embrace more efficient electronic payment channels.
“The policy applies nationwide in recognition of the plethora of financial touchpoints that are available in all the states of the federation. Nationwide implementation is effective January 9, 2023.”
Other Benefits of Cashless Economy
Among other things, the CBN boss noted that the benefits of the cashless policy included a “reduction of cost of cash management (processing, movement, security, destruction of old notes) which is often passed on indirectly to Nigerians including eliminating the physical risk of cash – robbery, kidnapping, terrorism”.
He said a cashless society would further promote Nigeria’s positive reputation for fighting money laundering and terrorist financing adding that cash limits are recognised in anti-money laundering laws due to their role in advancing these illegal activities.
He said the cashless policy will reduce incidences of crime – armed robbery, kidnapping, terrorism financing, advance fee fraud, graft, ransom payment and extortions, and deepen the Nigerian payment system through more innovation and cheaper costs – which would also impact Nigerians positively.
Emefiele said the CBN had commenced nationwide stakeholder engagement and sensitisation to promote understanding of the cashless policy, particularly in rural areas, markets, and underserved communities across the six geopolitical zones of the country that stand to benefit the most.
According to him, the CBN, Bankers Committee, and SANEF will intensify agent rollout across the country (especially in underserved locations) and enhance agents’ ability to carry out a wider variety of financial services in addition to cash in and cash out (electronic card distribution, wallet/account opening, BVN onboarding, bills payment, etc) will also be enhanced.
He added that the CBN shall continue to be flexible in its implementation of a cashless policy and monitor its impact, especially on vulnerable segments of society but ensure the multiple advantages are achieved.
Amidst increasing poverty and vulnerabilities among Nigerians, the CBN had committed to deepening financial inclusion over the years, an ambition that has recorded both milestones and challenges, amidst efforts to meet set targets.
President Buhari, recently at the 2022 International Financial Inclusion Conference, themed: “Financial Inclusion for All: Scaling Innovative Digital Models” showered accolades on the CBN Governor and other stakeholders for their contributions towards promoting and deepening financial inclusion in the country.
Buhari acknowledged the role of financial inclusion in achieving his administration’s economic agenda including the empowerment of vulnerable Nigerians as well as lifting them out of poverty and boosting the country’s economic fortunes.
However, Emefiele, as chair of the National Financial Inclusion Steering Committee, had worked tremendously to achieve a 65 per cent financial inclusion rate over the past few years.
The central bank had further set a new target to attain 95 per cent inclusion by 2024.
Emefiele maintained that financial inclusion remained key to economic development and inclusive growth, stressing that there is a positive correlation between the financial inclusion rate of a country and its GDP growth.
