The policy is intended to promote an efficient payment system and increase transparency in financial dealings, argues Abiodun Adebiyi
Contrary to widespread public perception, the cashless policy is not exactly a Godwin Emefiele policy as it was actually launched in 2012 and not a new initiative as such. The interesting side to it is that Emefiele, as Governor of the Central Bank of Nigeria (CBN), gave it a life of its own in line with the apex bank’s strategy to eradicate fraudulent activities in the Nigerian banking system.
Sadly, naysayers misinterpreted the noble intentions of the CBN by attributing to the bank motives that were not part of the policy at the time it was enunciated and now that it is being implemented. The allegation that the policy coming into effect at the time it did was targeted at some political and or business interests was clothed with mischief by those who had over the years benefitted from the rot the policy aims at eradicating.
The CBN was taken to task on this and Emefiele had consistently and painstakingly explained that the policy was not intended as a strategy to disenfranchise businesses as being speculated by a section of the Nigerian public. He averred that the full adoption of cashless policy is in line with the Section 2 (d) and section 47 of the CBN Act.
According to the banker, the policy is genuinely intended to promote an efficient payment system that will end charges incurred from cash processing often passed on to customers by Deposit Money Banks (DMBs), increase transparency in financial dealings and reduce fraudulent activities including ransom payments, extortion and cyber fraud.
Emefiele said this much in a circular dated September 17, 2019 titled, Re: Implementation of the Cashless Policy, addressed to all Deposit Money Banks. In it, he directed that as from September 18, lodgment of cash by individuals that is above N500,000 will attract three per cent processing fees for withdrawal and two per cent processing fees for lodgments. For corporate bodies, it said, withdrawal or deposit above N3 million will attract five percent processing fees or three per cent processing fees respectively.
Even the worst critics of the policy will, in all fairness, admit that it has achieved some measure of control in financial transactions in the banks in the light of the troubling activities of fraudsters especially criminals in the extortion and kidnapping for ransom business.
The redesigning of the N1, 000, N500 and N200 notes and the nationwide implementation of the cashless policy were both intended to further sustain the achievements in the payment system. This was in line with the quest to foster a safe, credible and efficient payment system that would be the pride of all Nigerians and the envy of the world.
The payment system, its digital component in particular, following the successes it achieved in the country, Nigeria has been adjudged Africa’s undisputed real-time and digital payments leader, with over 3.7 billion real-time transactions in 2021. Also, electronic banking adoption had significantly increased among the Nigerian populace. But the cashless policy itself has further spurred policy innovation that has expanded the breadth and depth of financial system participants, transaction channels, and financial access points.
The cashless policy and the Naira redesigning policy, were all well thought out instruments to bolster the financial sector and consolidate on the gains of Nigeria being a leader in digital payments and real-time transactions. Emefiele said that while a segment of Nigerians applauded the policies, others raised concerns, particularly with respect to the effect of the policies on the underserved and rural communities in Nigeria.
Further justifying the cashless policy, Emefiele pointed out that the CBN carried out an in-depth analysis of over-the-counter intra-bank cash transactions over 12 months (November 2021- October 2022) to assess the impact of the policy on the generality of citizens. He said the outcome showed that a significant volume of cash transactions was below the maximum thresholds indicated under the extant cashless policy and was, thus, not subject to the cash processing charges.
He added, “It is worthy to note that 94.04 per cent and 62.63 per cent, respectively, of volume and value of cash transactions by individuals were below the threshold while 82.36 per cent and 39.38 per cent of the volume and value of cash transactions by corporates was below the threshold.
The cash withdrawal policy that followed was neither targeted at any segment of the society nor intended to disenfranchise hardworking Nigerian citizens and businesses. Emefiele maintained that the bank was committed to the implementation of transformational payments and financial industry initiatives in line with its mandate. This was just as he assured that the CBN would continue to monitor the implementation of its monetary policies and be flexible on the limits in response to feedback received.
Justifying the naira redesign policy, Emefiele stressed that it would help control inflation, as the exercise will go a long way in mopping up currency outside the banking system, thereby ensuring more reliable data on money supply, which will in turn facilitate better monetary policy formulation and effectiveness.
In addition, he said that the policy would boost the appreciation of the naira, as the higher denomination and the volume of banknotes outside the banking system used to speculate on the currency would reduce.
Even more importantly, according to Emefiele, the naira redesign programme is helping to fight banditry and terrorism, as the large volumes of cash used to pay ransom to bandits/terrorists are no longer easily available. He explained, “It will assist in the fight against corruption as the exercise would rein in the higher denominations used for this purpose and the movement of such funds from the banking system could be tracked easily.”
In his opinion, “Despite the dominance of highly advanced payment systems, many countries carried out currency redesign to remain ahead of counterfeiters, ensure durability, fight corruption, and reduce the cost of currency management, among other reasons.
On the revised cash withdrawal limits, Emefiele noted that the CBN was not unmindful of the concerns raised in response to the new cash withdrawal policy and remained flexible to make the necessary adjustments to ensure wider public acceptance of the policy.
Adebiyi writes from Akure
