As anticipated, the Central Bank of Nigeria (CBN)’s cashless policy went nationwide over a month ago, precisely on Tuesday, July 1, 2014, after its efficiency was first tested in Lagos and a few other states two years back. In this report, Bukola Afolabi gives fresh perspectives on how the policy has fared thus far
Understandably so, a lot of media hype greeted the introduction of the cashless policy, which began nationwide on Tuesday, July 1, 2014.
The policy places a limit on the amount of cash that could be withdrawn from banks, with more emphasis on the use of mobile and internet banking.
Besides, the policy allows individual customers to make cumulative withdrawal of N500, 000 daily across the counters and the ATM, while withdrawal above this limit will attract the payment of a processing fee of three per cent for the amount above the limit.
For corporate customers, they are allowed to make cumulative withdrawal of three million naira daily while withdrawal above the limit will attract a processing fee of five per cent.
Justification for cashless policy
The apex bank brought the policy to reduce the use of cash and engender cash inclusion. It was also expected that it would help to reduce corruption and trace stolen money by government officials. It was also expected it would help to reduce and discourage armed robbery incidences as people would now move around with little cash as well as minimise revenue leakages.
According to CBN statistics in 2012 when the policy commenced, an estimated N192 billion was being spent annually on cash handling and management in the country. If not curbed, the situation could lead to a continuous increase in the cost of cash management, necessitating the introduction of the policy, the CBN argued.
Successes recorded with cashless policy
As at the first half of 2013, the CBN report indicated that the volume and value of mobile payments increased during the review period to 5,982 million and N51.79 billion, from 1,668 million and N25.50 billion respectively in the second half of 2012.
This was attributed to the significant rise in the number of mobile payment users, as well as improved public awareness in the use of mobile banking services. It also revealed that ATMs accounted for 91.42 per cent usage; mobile payments, 3.68 per cent; POS, 3.43 per cent while the internet accounted for just 1.47 per cent.
However, to tackle the problem, the CBN had indicated that more POS have been deployed in the country with increment from over 5,000 deployed in 2012 to 153,167 as at April 2014.
POS recorded transactions were 1,624,564 valued at N24 billion transactions in the month of April 2014, compared to 3, 197 transactions valued at N99 million in January 2012.
Nationwide experience with cashless policy
After its successful operation in Lagos, where the policy was earlier marred by inadequate preparation such as lack of sufficient Point Of Sales (PoS) machines, fluctuating bank network and few ATM machines, residents of other states where the policy has just kicked off are beginning to also lament the difficulty in abiding with the policy.
Recall that as soon as the policy started in Lagos, residents went through lots of stress in an effort to abide with the policy. There were hues and cries about the policy as many lamented the difficulty they encountered trying to access their money.
Though mobile banking has continued to gain popularity in a city like Lagos and more, PoS terminals are now available in major stores, as well as the introduction of various channels outside the banking halls that banks have put in place, yet those experiencing the policy newly are battling to adapt to it.
Some residents of Ibadan, capital of Oyo State, Osun and Ondo states, and other parts of the country who spoke with The Nation, have started narrating the challenges they are facing adjusting to the new regulation.
Mrs. Comfort Alabi, a plank seller at the Sango Market, Ibadan, who spoke on telephone, said she is yet to get used to the new policy.
“It has not been easy adapting to the new policy. Because of the kind of business I do, I have been used to carrying lots of cash up to N1million to buy what I sell but now I can’t do that again because I can’t withdraw more than N500, 000. In most cases, you have to start explaining to some older people you transact business with who are not literate the reason you can’t give them all their money in cash. These are people who have been used to collecting cash and at times keeping it at home,” she lamented.
In the same manner, Mr. Ayoola Somorin, also a plank seller, said: ” I agree it is a good policy, but the problem is that I expect that by now, some of the problems discovered when it started in Lagos would have been corrected by now before it was extended to other states, but we are also experiencing the same problems. Most times, you find it hard to withdraw from the ATM because of the large number of people at the ATM machines. The machines would have overworked, so by the time one wants to withdraw, you experience cash retract.”
He further said that lack of stable bank network is making it difficult to make use of the mobile banking as, in most cases, he finds it hard to access his bank details on his mobile phones.
“Another problem is that anytime I try to log into my bank accounts on my phone, it doesn’t go through. If it eventually goes through, it goes off again before I complete my transaction. I know some people who are experiencing the same thing. The mobile banking is not working well. If you go to the bank and complain, they tell you it is their network and tell you they are working on it without any improvement. However, I am optimistic that it will improve as time goes,” he said.
Somorin also said the extra charges which apply for withdrawing above the daily officially stipulated amount would not prevent him from moving around with huge cash.
From Ondo State, Mr. Adelola Ademola, a civil engineer in Akure, also said lack of enough ATM machines, knowledge of the operation of PoS, as well as illiteracy are some of the challenges threatening the smooth running of the policy.
“There are not enough ATM machines here. The few ones available are not even working, making it difficult to make withdrawal from them. That is why many people still prefer to withdraw across the counter. I think banks should be encouraged to have more ATM machines to ease the stress of going into the banking hall.
“The mobile banking is not even working because bank network always fails. Large percentages of transactions are still carried out in the banking hall. Where are the PoS? You can’t find them in most public places, only in few places,” he said.
In Osogbo, Osun State capital, Adedayo Salami, a businessman, also said unstable bank network is one of the major problems they are facing.
Unintended consequences
The CBN had also admitted that there are challenges such as illegal charges on mobile transaction, and lack of enough PoS is still hampering the smooth running of the policy. According to the Director, Banking and Payments System Department of the CBN, Dipo Fatokun, mobile money operators have inadequate capital having spent more on agent network, marketing, amongst others, than they budgeted for at the beginning, adding that this has led to inadequate agent network in the country.
“There is a difficulty in reaching the unbanked especially in remote areas as agents are not available. Apart from being concentrated in the urban areas at the moment, the agents are grossly inadequate,” he said.
The issue of security is also not ruled out as electronic fraud has made many unsuspecting bank customers to fall victim to fraudsters as fraudsters hack into the online banking platform to dupe bank customers. There have also been cases of unauthorised withdrawals from ATM.
One of those who had expressed concern over the challenges facing the policy was EPPAN’s Chief Executive Officer, Onajite Regha, who expressed concern over some of the challenges the policy was facing.
“A lot of people have heard about the policy but many believe it does not affect them. The people concerned felt very upset about the policy, saying it’s a punishment, like the Timber Association in Sapele, Delta State. This was because they didn’t associate themselves with the merit of operating cash-less which involves conveniences and safety for the users,” she said.
She added: “Other challenges are the fear of fraud, fear of losing their phones, fear of ATM scam. During the awareness campaign, we discovered that many share their Personal Identification Numbers (PIN) with friends, relatives and office assistants with the ignorance of fraud. We also informed them on the new improvement of the CBN to provide a Consumer Protection Department, exclusively dedicated to the cash-less policy. The department operates 24 hours per day for complaints and problems regarding the cashless policy. We don’t want people to see the adoption of the electronic payment policy as a compulsion but conveniences.”
To rectify the problems, efforts are, though, being put in place to make sure Nigerians enjoy the full benefit of the policy.
Giving that assurance, the Executive Director, Business Development, Nigeria Inter-Bank Settlement System (NIBSS), Christabel Onyejekwe, had said then, “In the last two months, NIBSS embarked on a data clean-up exercise of duplicate and idle PoS terminals on our database and at merchant locations.”
