CBN's CASHLESS POLICY.
The Central Bank of Nigeria isn’t here to play this year We can say for sure, that it is functioning in terms of policy making.We are however, still concerned if the Government’s bank is actually for the people or against the people with its recent policies. The social media was buzzing last week, everyone was seen talking about the CBN’s new policy on ‘Cashless policy’. Many expressed their views, opinion and pains about the new policy. Although the policy was misinterpreted by most people.
The policy is aimed at creating a cashless society. In a simple term, a cash less society is a society where financial transactions are conducted without the exchange of physical cash, instead it makes use of digital technologies between the parties by using net banking, credit cards etc.
According to the Banker’s bank, a charge has been placed on the deposit and withdrawal of money that is above 500,000 Naira for individuals and 3,000,000 Naira for companies. This charge is referred to as ‘a processing fee’. This charge is to discourage depositand withdrawals.
The processing fee or charge is summarized in the table below.
|Account type||Deposit/withdraw||Charge on deposit||Charge on withdrawal|
It is important to note that this charge is an addition to the normal charge on deposit and withdrawal. The importance of a cashless society cannot be overemphasized. However,is this the right way to go about it? And if it is the right way, is this the first step in achieving a cashless Nigeria society?
The CBN started this policy in the year 2012 when it established’Cash-less Nigeria’ with the aim to curb excesses in the handling of cash in the Nigerian federation. Everyone is however concerned how this will benefit the economy and more importantly how it will benefit them (citizens and corporate bodies).
The advantage of a cashless society would of course, make any policy maker go ahead with it. A cashless society brings about a decrease in corruption, lesser cost in the production of bank notes and coins, Less time and costs associated with handling paper money, storing and depositing; the long queue in the Bank will be reduced, reduced crime rate in terms of stealing and a whole lot more.
On another thought, one would wonder if there’d be any reduction in crime rate with the recent rise in cyber-crimes, for example the popular ‘yahoo yahoo’ this will create a higher risk since it dealswith online transactions. This policy is not really favorable to most individuals and corporate bodies who deposit money on a regular basis, just like the supermarkets, fuel stations who receive cash on a daily basis; will they use their profit to pay a processing fee. In the short run, they might but in the long run, it will be passed down to the customers.
Living in a cashless society is arguably a very good strategy. However, strategy are built with underlying assumptions which includes (in this case) all or almost all members of the society should have a bank account and understand how the mobile working works. Statistics has shown that only 40% of the population have a bank account,with this statistics we can estimate how many Nigerians really understand what the mobile banking entails? The first step in creating a cashless society is to make sure wah member of the society understands the concept of a cash less society,to have a bank account, to operate using digital technologies. However, the first step taken was to place a charge on transactions..
Also, there is a normal charge on normal deposits and withdrawals, let’s not talk of maintenance charges, service charges, SMS charges and the rest… Proper explanation should be given to the society on what this fund is meant for and not just to impose it on the citizens. The CBN’s motive is great, to make money and increase the GDP or income of the economy but of what use is an increase in national income when the standard of living is low?
Let’s not forget the poor network in our country. Money transfer works with network. Everyone understands how the network in the Nigeria society fluctuates over time. This is a very big hindrance to achieving a cashless society.
Could this be a contractionary monetary policy on another thought? We cannot possibly say. Only the CBN can provide us with the answers.
The views and pains expressed by members of the society were not in vain as the House of Representatives has asked the Central Bank of Nigeria to suspend the charges imposed on cash deposits in the implementation of its cashless policy. The policy would be on hold until consultations have been made from various stakeholders of the economy. We hope due consultations will be taken from key stakeholders of this economy so our views and pains will be well expressed.
By Oladele Abigail
Oladele Abigail, an economics graduate of Bowen University who applies her passion for writing to her career path.
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