Cash-less Nigeria is a policy established in the year 2012 by the Central Bank of Nigeria to curb excesses in the handling of cash in the Nigerian federation. It prescribed cash handling charges on daily withdrawal above five hundred thousand Naira (N500,000.00) for individuals and three million Naira for corporate bodies (N3, 000,000.00). The policy was enforced not to eliminate the use of cash, but to reduce the volume of cash in circulation.
A pilot run of the policy started on 1 January 2012 in Lagos State. The service charges were with held until 30 March of the same year to allow for seamless migration from manual to electronic devices. The second stage of the pilot run started in Rivers, Anambra, Abia, Kano State, Ogun and the Federal Capital Territory on 1 July 2013, while the program nationwide started a year later on 31 July 2014.
The move was worthwhile as financial analysts have always argued that it is necessary to reduce the amount of physical cash in the economy, and encourage more electronic-based transactions in order to drive 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.
It was agreed that an efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.
Analysts also argued that it is advisable to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.
Again, experts posited that time is ripe to improve the effectiveness of monetary policy in managing inflation and driving economic growth. Thus, the cashless policy of the CBN was a welcome development and step in the right direction as it intends to achieve such laudable objectives highlighted above.
Taking into consideration the fact that Nigerians have a strong habit of using cash for most of their transactions, it must be appreciated that inherent implementation of a policy of this kind demands attitudinal change from the public.
It therefore means that a gradual implementation of the cashless policy with emphasis on a more comprehensive enlightenment programme on a continuous basis to deepen the message and importance in order to achieve greater success. Thus, there must be stakeholders’ engagement and grassroots’ sensitisation.
In fact, the advice given by Mark Smith, Business Development Director (Africa), Travelex Group, who urged the CBN not to be in a haste to go full blown with the policy, should be given due consideration.
According to him, “a mixed purse is the best solution and the percentage of cash to card transactions will change with time.”
More importantly, efforts should be made to address the challenges facing the cashless policy in the country in order to make the policy a success.
With time, there are hopes that Nigeria will find unique ways to transit from the present cash based operations to design, evolve, develop processes, applications, software, systems and any other activities that will drive adoption and ultimately create the critical mass needed for the cashless policy to succeed.
Towards the end of 2022, the CBN announced that there was going to be a change in the three top naira denominations; 1000, 500 and 200. Licenses were also given to more financial institutions to issue POS machines to small and medium scale business operators to encourage cashless transactions.
Amidst the cash crunch in vogue now as a result of introduction of the new naira notes, the reality is hitting us hard that indeed whether you are a newspaper vendor or a beer parlor manager, you really need to diversify the ways you receive payment especially in a cashless Nigeria. Let us learn from that orange seller whose picture trended recently that had her account details on a placard she hung on her neck as she retailed her oranges on the streets.
A cashless Nigeria is possible and it is one of the ways we will usher in a first world Nigeria.
