Why Cashless Policy?
The CBN, in collaboration with the Bankers’ Committee, aims to achieve an environment where a higher and increasing proportion of transactions are carried out through Cheques and Electronic Payments (e-payments), in line with the global trend.
The term Mobile Money has often confused a lot of people, including myself. While I was doing a research on this piece, a tech writer here in Nigeria went on to say that cashless policy is essentially mobile money. I am glad to tell you that it is not.
I am not writing about mobile money today, but about the cashless policy, there will be another article to take care of that. It is a confusion that has been created by the mobile money operators. Know this; there are different types of mobile financial services.
A case for adoption
The Central Bank of Nigeria, CBN, is going about the cashless policy in good faith with lots of benefit for everyone. The Nigerian economy does not exist in isolation. Any of the other existing economies have been moving towards cashless policy.
What good will it serve if the people who are meant to benefit from this policy are not at ease with it and are not willing to adopt it?
Oduntan Odubanjo of Twinpine Networks, a mobile ad company in Nigeria wrote a piece where he highlighted the role of mobile advertisement in driving cashless policy. Here is an excerpt from what he said;
It’s pretty obvious that the early adopters of this change will be the Millennials. Young people aged less than 30. They are fresh, have the tendency to try new things, want to be up-to-date and are easily influenced by what happens around. I strongly believe that the change should and will begin right where these people are, Mobile.
He presented it clearly in this piece that since young people are usually on their mobile, they will adopt the cashless policy more. Since the CBN and the banks will be working hand in hand to drive mass awareness of the programme, they will certainly reach the youth population more if they devote some budget to mobile advertising. But to reach the other sector of the economy, they have to look at using the traditional media—TV, radio, bill boards, BRT busses and holding town hall meetings.
Issues against the cashless or cash-light policy economy include: the aged population, the unbanked and the illiterates. It is paramount that in addition to the pilot program currently being done in Lagos that a mass education and enlightenment of the public should be done, while targeting the youth using mobile advertisement.
The vehicles that would drive cashless policy and make it smooth as stated by the CBN document are Cheques, ATM cards and e-commerce [There was mention of other payment solutions, but it was not particularly called m-money. I have written to them. As at the time of publishing this piece, I have not gotten a response yet]
The cashless policy is a large concept that has components. Each of the components will have to play its role for the policy to run smoothly. Prof. Pat Utomi, Lagos Business School was asked about how effective this new policy will be, he said for cashless policy to succeed, cost of e-payment transactions must be reduced by service providers while building public confidence.
He said, “We must reduce cost if we must achieve the cash-lite policy of the CBN, we must reduce cost of transactions, and there is also the need for us to get it right. People who are competing in this case must cooperate and not create entry barriers as first entry movers for others. We must build confidence, and government has a very big role to play here. And there must be a very high level of mass education.’’
Smooth running does not mean that some people will not find it challenging. Even in a Nordic country—Sweden—where cashless society is near perfect, there are still people in the society that still find it hard to adapt.
You will remember how it was when ATM was first introduced. Many of us did not find it convenient, like people are already complaining about the cashless policy. But see where we are today. There are definitely going to be challenges, but it is not enough reason not to go ahead with the policy. The implementation is what is vital.
The time is ripe and right. At this time the CBN has granted Mobile Money licence to some companies, ATM is working [even if not optimally], the number of people who have mobile phones are high. It is left for the CBN and partners to ensure that they make it less stressful for people to adopt while ensuring that banks and e-payment providers reduce the amount of downtime experienced on their networks.
The pilot programme, Cashless Lagos, will open the way and allow the government to see what needs to be adjusted in order for the policy to be gradually rolled to other states.
The charges placed when the deposit /withdrawal limit is exceeded have recently been adjusted. The daily cumulative limits of N150,000 and N1 million have been reviewed upwards to N500,000 and N3 million on free withdrawals and lodgements by individual and corporate customers respectively.
The processing fee for withdrawals above the limit for individual customers has been reviewed downwards from 10% to 3%, while the processing fee for withdrawals above the limit for corporate bodies has also been reviewed downwards from 20% to 5%.
With this few words of mine—like it were a secondary school debate—I hope I’ve been able to make it simple and clearer to those who were like me, shying away from the topic.
Is there any other thing that you think will make the mass adoption of the cashless policy a fail?