culled from: Vanguard Newspaper
THE beginning of the year is indeed a new one for Nigerians, as it came with a lot of changes which have altered the living habit of Nigerians in different ways.
Before the untold hardship that trailed the new-year day removal of fuel subsidy on petroleum products, took its toll on people, Nigerians, especially Lagosians, were already gripped with the fever of adjusting to the cashless policy introduced by the Central Bank of Nigeria,CBN.
The policy which among other reasons, seek to curb some of the negative consequences associated with the high usage of physical cash in the economy, is already generating divergent feelings across different quarters.
Investigations by VanguardFeatures,VF, indicated that the policy which took effect on January 1, this year, started amid confusion, as customers still engaged in cash transactions above the limit, as most of them claimed ignorant of the policy.
Besides, it was also gathered that most bank operators are yet to know more about the policy.
At some commercial banks visited, customers still made deposits and withdrawals far above the N150, 000 for individuals and N1 million for corporate organisations, specified by the CBN.
"I don't really understand what it means, I have seen the advert on television but I don't know which is which. How can this kind of thing work in Nigeria? We are not ready for this scheme because we don't have the sophistication that it requires,"a customer, Obinna Akuluono told VF at UBA Wharf road branch Apapa.
Also, a visit to Oceanic Bank Randle Road Apapa, indicated that customers conducted transactions in their usual banking manners. But the same issue of the populace not being prepared for it also came up, as most customers expressed frustration that cashless economy would make banking transactions expensive among other reasons.
At Cash and Carry supermarkets at Apapa, customers preferred paying cash for their goods, even though there is an alternative for payment.
Sensitisation of customers
Despite this anxiety, it was gathered that the CBN and most commercial banks had before now, sensitised its customers and staff on what the policy entails.
Accordingly, the apex bank begun its awareness campaign on Monday 26 September 2011 at Ile-Epo market in the Ipaja and Abule-Egba axes of Lagos. The campaign tagged, "Towards Cashless Lagos" was later taken to other major markets within the state to sensitise market men and women. And, according to the CBN, the traders embraced the new initiative. A similar exercise was undertaken by Fidelity Bank Plc within the Lagos area to complement the apex bank's efforts.
But the growing frustrations on the part of customers and bank employees, have raised questions on whether the policy would actually impact positively on the populace.
Instructively, VF gathered that the emergence of e-payment, as cashless method of transaction is also known, could be traced to early 2011, when CBN announced that single daily cash withdrawal limits for individuals would be N150, 000 and N1 million for corporate bodies cost free.
The policy provided for charges on withdrawal in excess of the specified amounts and also proposed innovative practices that would substantially minimise the operational costs of banks, ensure improved security for transactions, translate to huge benefits for the economy and align the national payment system with internationally recognised order.
Specifically, the apex bank stated that the new cash policy was introduced for the purposes of driving development and modernisation of our payment system in line with Nigeria's vision 2020 goal of being amongst the top 20 economies by the year 2020; reducing the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach; improving the effectiveness of monetary policy in managing inflation and driving economic growth.
Tackling of cash related transaction
Other reasons adduced for the imperativeness of the policy are monetary authorities' plan to curb some of the negative consequences associated with the high usage of physical cash in the economy. These include, reducing the high cost of cash along the value chain; minimising robberies and other cash-related crimes, eliminating all forms of banking transactions subsidy; ensuring effectiveness of monetary policy by bringing huge volume of money in circulation in the informal sector to the banking system and tackling cash-related corruption, leakages and money laundering, amongst other fraudulent activities.
However, wonderful as the aims of this project may seem, analysts are worried that while there appears to be some level of enlightenment among the elite, the same cannot be said of the informal sector where majority of Nigerians belong to.
Speaking on this, the President of Stovey Finance Group, Mr. Shupo Williams, observed that the policy is commendable, given that it is in line with global practices. But he was quick to add that infrastructure on ground may constitute a challenge to the project.
"What the CBN has done is in line with what obtains in developed societies. E-payement is a good initiative but we must not deny that we don't have the needed infrastructure for the success of this programme. This cashless drive provides ample opportunity for banks to improve the performance of their service delivery infrastructure. What motivate us from an e-banking perspective are convenience, safety and security. Those are the watch word for us," Williams stated.
Continuing, he said, "Our economic system is based on cash and carry basis. I am of the view that it is not so developed to the level that people should be mandated to make use of card money."
In addition, Williams insisted that the policy will enhance convenience and savings on the part of Nigerians and the government, as well as elevate the economy to a more competitive stance internationally.
For Mr. Peter Adegboye, Chairman of Petra Funds and Securities, " the idea to transform the economy to a cashless one is laudable, all the stress of queuing in the bank, cost of transportation and the danger of carrying large sum of money about will possibly reduce and you can even buy and sell using electronic banking products, but we need to update our existing infrastructure in order to get efficient cashless society."
Adegboye however faulted the idea of Lagos being selected as a starting point.
He said, "I am against the idea of Lagos being selected for the pilot scheme. They may not get the needed result from Lagos because most people in Nigeria are in the informal sector. States like Edo, Delta or Ogun, should have been used as pilot states.."
New year economic disaster package
Chairman of Lagos State Chapter of African Renaissance Party,ARP, Chief Udoka Udeogaranya, described the policy as a new year economic disaster package to Lagosians, noting that the policy is doomed to a colossal failure right from the point of commencement.
"After an extensive study of the CBN cash-less policy , the African Renaissance Party (ARP) Lagos state chapter wishes to establish that the CBN cash-less policy is.a disaster package," he noted.
As far as he is concerned, "Lagos state chosen by CBN to experiment their cash-less policy is not ripe for a programme that has to be effective right from the word go. The effectual implementation of an all encompassing cash-less policy has no chance in a state that struggles with poor electricity supply, poor information technology services, poor ITC maintenance units and poor ITC literacy."
Accordingly, Udeogaranya, said, "Lagos State has the highest number of traders in Nigeria, Lagos state could be called a state of merchants and merchants are allowed to transact by cash world over.
"We dare the CBN governor to visit a merchant city like Guangzhou in China and see how the Chinese government that is austere with economy, yet allowed merchants to have their way there, while industrial cities like Ningbo, Yiwu and Xiemen can thrive with over regulatory financial policies. In the livelihoods of merchants; it's cash first and prices varies, therefore regulations are minimised."
Retrenchment of bank staff
He however regretted that the policy might lead to retrenchment in the banking sector, as most bank jobs will be done electronically.
"This Cash-less policy will see retrenchment of bank staff as much of the work will now be pilled up for information technology gadgets to handle and that will culminate into high rate of unemployment that is already a threat to the nation's security," he submited.
On the vexed issue of the poor state of the needed infrastructure for the project, Udeogaranya said, "Nigeria does not exist in the world of Information and communications technology (ICT), therefore an introduction of cash-less policy in a state like Lagos will receive a besiege of Cybercrime of which Nigeria has not yet developed enough capacity, including an effective insurance system that can safeguard peoples hard earn money.
"We advice CBN to forgo this policy, until Nigeria has put in place the necessary infrastructure, but if they insist, CBN may commence their tryouts of cashless policy in States like Zamfara or Yobe, where there are less merchants and any mishap of cash-less policy would not amount to a high cost to the nation."
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