The last time I was at the Lagos Murtala Mohammed airport to book a flight, I was not very pleased when I walked up to pay for my ticket. I had the equivalent of $300 in Naira and the pile was so big the cashier waved me aside and served the Cameroonian guy who was also at the counter but arrived after me and wanted to pay for the same flight in American dollars.
When I tried to protest, the female cashier gave me a dirty look and said quietly, “dollars before Naira.” She smiled after saying that. If I had another option, I would have walked away but I didn’t so I waited patiently and paid after the Cameroonian guy. His country’s currency (Franc CFA) will equally have been a bit bulky but not as much as the equivalent of $300 in Naira.
You need a suitcase to carry that. You also need a carrier bag to hold N1 million This is why introducing cashless payment is welcome in Nigeria, but not everyone is praising this revolution.
Since he became Governor of the Central Bank of Nigeria (CBN), Alhaji Sanusi Lamido Sanusi has come up with bold policies intended to revamp the country’s economy, but his policies have been received with mixed feelings.
The first of such policy was his plan to introduce a N5,000 (about $30) note and N50 (about $0.3) coin. The highest denomination in the Nigerian currency is N1,000 (about $6.5) note.
Despite the CBN’s argument that the move would lessen the bulk of money people have to carry on them, the policy met with stiff resistance from various quarters, including the National Assembly and it had to be dropped.
A few months ago, the CBN boss came up with yet another policy, this time a cashless banking policy, which has also attracted mixed reactions. Whereas many people have described the new policy as a welcome development, there are increasing doubts as to its effectiveness.
Among other things, the CBN governor has been explaining that the new cashless policy was introduced to help stimulate, development and modernize the Nigerian payment system. He said it would reduce the cost of banking services, improve the effectiveness of monetary policy and curb the criminality usually associated with travelling around with a lot of physical cash.
According to Sanusi, an efficient and modern payment system is not only positively correlated with economic development but also is a key enabler for economic growth that could bring Nigeria among the top 20 economies of the world by 2020. He further argues that with the new cash policy, inflation will easily be managed and the high risk of using cash will be reduced or curtailed.
“Cash encourages robberies and other cash-related crimes. It also can lead to financial loss in the case of fire and flooding incidents,” he argues, while adding that “high cash usage results in a lot of money outside the formal economy, thus limiting the effectiveness of monetary policy in managing inflation and encouraging economic growth.
“High cash usage enables corruption, leakages and money laundering, among other cash-related fraudulent activities.”
It will be recalled that cash-related fraudulent activities (particularly what has become known as 419) are rampant in Nigeria, and corruption is on the gallop because people carry huge sums of money around or keep them at home. The consequence is that either people are easily visited by robbers, kidnapped or they seem not to know how to spend money frugally.
There are situations I personally have to make desperate efforts to avoid engaging in wasteful spending out of the meagre income I have, but with the cash in hand, I find it difficult to control my spending. The situation is compounded by the fact that sometimes the automated teller machines (ATM) are faulty or disappointing.
According to Mr Elusola James, an import/export businessman in Abuja, the cashless policy was welcome because some petty traders, especially market women and butchers had the tendency of soiling currency notes,
primarily by rough handling the notes. You can easily see oil marks on bank notes.
He said if cashless payments would reverse that trend. Musa Abubakar Kano of the Maurison International Bureau De Change in the Wuse Zone 4 District said he was not worried by the policy because the limited amount of daily withdrawals by individuals was within the neighbourhood of what he was dealing with each day.
The new cash policy, whose pilot phase started in Lagos, the Nigerian commercial headquarters, stipulates that third party cheques above N150,000 (about $1,000) shall not be eligible for encashment over the counter but value for such cheques shall be received through the clearing house. Only licenced companies shall be allowed to provide cash pick-up services while banks which continue to offer cash in transit lodgment services to merchants shall be sanctioned.
Meanwhile, the policy also stipulates that there will be a ‘cash-handling charge’ on daily cash withdrawals or cash deposits that exceed N500,000 (about $3,000) for individuals and N3,000,000 (about $20,000) for corporate bodies. But the CBN boss explained that the policy is aimed at reducing, not eliminating, the amount of physical cash circulating in the economy, and encouraging more electronic-based transactions in the payment for goods, services and transfers.
It is expected that a variety of benefits will be derived from an increased utilisation of the e-payment system by various stakeholders in Nigeria such as customers, corporations and the government.
To avoid confusing people, the House of Representatives has urged the CBN to implement the policy in phases. This is the content of a bill tabled by 53 lawmakers, calling on the CBN to implement the policy in stages moving from cash-based to cashless, in relation to available technical and financial infrastructures at each stage.
The 53 lawmakers, led by Honourable Yakubu Dogara, representing Bogoro/Dass/Tafawa Balewa Federal Constituency of Bauchi State, called on the Central bank to remove the charges and limits on daily transactions to encourage Nigerians engaged in small businesses, while urging that the security of customers’ transactions be taken seriously.
Following the intervention of the lawmakers, the Central bank delayed the implementation of the charges on lodgements and withdrawals in the Federal Capital Territory (Abuja), Abia, Anambra, Kano, Ogun and Rivers states until October 1 to allow customers adjust to the new policy.
The Chairman, House Committee on Rules and Business, Albert Sam-Tsokwa, Taraba State, argued that cashless Nigeria would make business virtually impossible in areas like his state, which had no commercial banks.
At the Model Market in the Garki II District, Mama Sabina Adebisi, a palm oil retailer described the policy as unworkable because she did not know how she could function without cash after selling her goods and people pay in cash. She added that nobody had come around to explain how the policy would work to them.
Another trader, Malam Bukar Saidu, said cashless payment was really created for people dealing with huge sums of money.
“Those of us who live from hand – to – mouth and are here to gather groundnut money have very little to worry about in this matter. It is for those who steal millions of naira from state coffers,” he stated.
He maintained that since he started hearing people talk about cashless Nigeria, he never understood what the whole brouhaha was about adding he hoped it was not intended to cripple petty traders like him.
Very soon then, I will not have to carry a suitcase to pay for a $300US dollar equivalent air ticket all the time. I can still decide to carry all that cash but I now have another option, an ATM card.