That means anyone who takes their cash to commercial banks to exchange for the new notes will face this restriction when the policy is enforced.
The cashless policy is sold to the electorate to believe it would fight electoral fraud and help the people. One begins to wonder how the Central Bank is doing the work of INEC. One also wonders why the apex bank should act as a commercial bank sales associate by forcing people to open bank accounts in banks they do not own.
The cashless policy is about the daily cash withdrawal limit of N20,000 and bank charges of 5% and 10% for any cash withdrawal over the limit. That means anyone who takes their cash to commercial banks to exchange for the new notes will face this restriction when the policy is enforced.
Cashless transaction is a decent technological innovation that provides options for transactions. Globally, due to technological advances, people are increasingly using less cash for transactions. The 2021 Global Payment report shows cash payments account for 27.4% of all point-of-sale (POS) transactions in Europe, 19% in Asia-Pacific, and 53% in the Middle East and Africa.
Using the same data source for Nigeria, the market share of cash transactions stood at 69% in 2021, declining from 91% in 2016. As of April 2022, there are 1.1 million POS owners in Nigeria, and many serve as bank agents. That shows people are more aware and can adopt innovations, especially when the resources are available and the tangible benefit of transitioning is evident.
The transition to cashless transactions was achieved without being paternalistic – restricting people's choices through coercion for their own good. The process took time, and research is ongoing to understand how this can be improved.
The policy seems to be applied to bank customers only. The service providers, commercial banks, the suppliers are left alone. They should know that 45% of the population over 14 years old have bank accounts in the country, according to World bank data. The Yobe State Governor recently stated that the State has banks in only 4 of the 17 local government areas. So, much must be done before implementing this kind of policy.
Of course, they rarely learn. They should have learnt from the rice importation ban and the failure of the eNaira. But they don't.
The cashless transaction can undoubtedly be beneficial. On the one hand, it can help eliminate several business risks at a time, such as theft of cash by employees, counterfeit money, and robbery of cash common. On the other hand, the cashless society faces various challenges related to cybercrime, fraud, privacy, and the digital divide.
So, those who prefer cash holding need to see the benefits of cashless transactions outweigh that of holding cash. After all, holding cash can be thirst-quenching. Even Aliko Dangote can attest to the love for holding cash. He once told a story about how he withdrew 10 million dollars from a bank only to return it the next day.
Most people who use cash for the transaction will not welcome the policy because of choice and lack of resources to transition within a short period. Countries that excelled in cashless transactions did not apply such draconian measures. Although many have withdrawal limits, charges over the limit are not imposed. Implementing the policy will shock the economy and change the banking system as we know it.
Like every other sector, the largest employer in the country, agriculture, will be affected. Grain sellers will have difficulty accessing their money and even taking it to a bank. The restriction will, by and large further erode their confidence in the banks and other financial systems. Banks will see fewer deposits and more cash withdrawals. Those who have cash at the bank will find ways to withdraw it, even if it will cost a one-off charge, and then stay away. Economic activity will decline if cash withdrawals are delayed due to government policy. It will choke the economy.
As we know it, the primary responsibility of the government is to design a legal framework for economic activities to occur in the economy. If a policy truncates economic activities, the government should reflect and find ways to deal with it.
Surprisingly, Senator Uba Sani, a gubernatorial candidate in Kaduna, and the Senate's banking committee chairman support the policy. His constituency has 8 million multidimensionally poor people. We hope they are listening. If this is not evil, then I do not know what it is. If there is an English word coined for a man like this, I believe I have not learnt it.
The Central Bank did not bother to do mass public enlightenment to educate people about the merits of the new system. If the CBN wants everyone in the country to open an account, they should either establish their banks in every locality or ask the banks to do so. How do we expect towns without banks to operate? Even if they do, the 1.1 million POS operators in the country will be restricted from serving as commercial bank agents.
In a free-market economy, we expect the government to allow commercial banks to do their business without interfering. Commercial banks do not want the government to become their sales manager. The policy should only take off when the banking sector announces it has adequate infrastructure and sufficient resources to attract a larger customer base. Otherwise, we will be creating more problems than solutions.
Let's be clear there is nowhere in the world where a cashless policy has been used to stop electoral fraud. Besides, those who intend to receive payment for voting will do it by collecting cash or bank transfer.
Dr Nasir Aminu