IMPACT OF THE CBN CASHLESS POLICY ON THE NIGERIAN POPULACE – A PAIN OR A GAIN?
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IMPACT OF THE CBN CASHLESS POLICY ON THE NIGERIAN POPULACE – A PAIN OR A GAIN?
INTRODUCTION TO CHAPTER ONE OF THE IMPACT OF THE CBN CASHLESS POLICY ON THE NIGERIAN POPULACE
1.1 BACKGROUND OF THE STUDY
The Central Bank of Nigeria (CBN) implemented a cashless policy in January 2012, prompting mixed reactions. The strategy was first implemented in Lagos in 2012, however it was then expanded to the Federal Capital Territory (FCT), Rivers, Kano, Ogun, Anambra, and Abia states in July 2013.
While some cynics dismiss the strategy as mere economic jargon that may or may not be implemented, others argue that it would increase the country’s economic growth in accordance with worldwide best practises.
The CBN’s cashless strategy intends to reduce the quantity of physical cash in circulation, encouraging more electronic-based transactions for goods and services (CBN, 2012).
The Central Bank of Nigeria’s (CBN) cashless economy programme has had both benefits and drawbacks. Some criticise it, while others praise it.
According to the CBN, the policy calls for “cash-based transactions and imposes a cash handling charge on daily cash withdrawals or cash deposits that exceed N500,000 for individuals and N3,000,000 for corporate bodies.”
(CBN, 2012) Mallam Sanusi Lamido Sanusi, former Governor of the Central Bank of Nigeria, emphasised that the cashless economic strategy was intended to increase financial intermediation and financial inclusion while minimising tax leakages and eradicating thievery.
It will also limit the use of cash and boost the use of electronic payments (Berentsen, 1998). He went on to say that the policy became necessary since the cost of cash was rising, as was the risk of a cash-driven economy to Nigeria’s financial system.
Individual customers are permitted to make a free cumulative withdrawal of N500,000 per day via counter and ATM. Withdrawals above the free limit will incur a 3% processing fee for every N1,000 over the limit. Many Nigerians thought this was insufficient because the extra charges were viewed as extortion.
However, many individual customers may require more than N500,000 every day for one reason or another because residents are already accustomed to carrying cash, which has been identified as one of the drawbacks of the cashless policy.
Furthermore, business customers are permitted to make free cumulative withdrawals of N3,000,000 each day, according to a CBN statement. Withdrawals above the free limit will incur a 5% processing fee for every N1,000 over the limit. Individual clients are permitted to make a free cumulative lodgment of N500,000 each day under the policy on lodgment.
Lodgment above the free limit will incur a 2% processing fee for every N1,000 over the limit. Corporate customers can also make a free cumulative deposit of N3,000,000 each day.
Lodgment above the free limit will incur a 3% processing fee for every N1,000 over the limit. Stringent norms have been seen in some places (Ajayi & Ojo, 2006).
The apex financial institution in Nigeria has supplied a suitable e-payment technology that has been deployed to ensure the smooth operation of the cashless plan.
Among the mechanisms described are Point of Sale (POS) Terminals, Automated Teller Machines (ATM), Web, Mobile Phones, and Internet Banking. Because of the high prevalence of illiteracy in Nigeria, many Nigerians viewed these processes as inconvenient and difficult to utilise.
1.2 STATEMENT OF THE PROBLEM
Despite the fact that there are various limitations to the influence of the CBN’s cashless policy on the Nigerian public, there are several advantages to its implementation.
However, Nigeria’s legislative arm admitted that while the strategy could reduce costs in the financial sector, it did not suggest genuine sector growth.
They observed that the vast majority of retail and commercial payments were made in cash by a sizable proportion of the people who did not have bank accounts. They also pointed out that the CBN had failed to meet the required 40 percent growth of ATMs.
It is also clear that Nigeria’s financial infrastructure is woefully inadequate to satisfy the needs of a cashless society. Furthermore, the people’s low literacy rate and the lack of a consistent power supply would dissuade most citizens from accepting the idea, and Nigerians had been scammed of millions of naira in numerous ways through electronic transactions.
It is also worth noting that the majority of towns in the country lacked banking facilities designed to implement the strategy. However, despite all of the benefits of the cashless policy, such as reduced theft and robbery, it is worthwhile to assess if the CBN cashless policy is a pain or a gain, which is the focus of this study.
1.3 OBJECTIVES OF THE STUDY
The following are the study’s objectives:
1. To investigate the benefits of the CBN’s cashless policy.
2. To investigate the drawbacks of the CBN’s cashless programme.
3. To identify the obstacles impeding the CBN’s cashless policy’s effective implementation.
1.4 RESEARCH QUESTIONS
1. What are the benefits of the Central Bank of Nigeria’s cashless policy to the Nigerian people?
2. What are the negative consequences of the CBN’s cashless strategy for the Nigerian people?
3. What are the factors impeding the CBN’s cashless policy’s effective implementation?
1.5 HYPOTHESIS
HO: The CBN’s cashless programme benefits no one in Nigeria.
HA: The CBN’s cashless programme provides many advantages for the Nigerian people.
1.6 SIGNIFICANCE OF THE STUDY
This study’s significance is as follows:
1. The findings of this study will serve as a beneficial guide for the Nigerian government, as they will have firsthand information on the costs and benefits of the CBN’s cashless policy on the Nigerian people, allowing them to make required adjustments and amendments.
2. This study will contribute to the body of literature on the effect of personality traits on student academic achievement, forming the empirical literature for future research in the field.
1.7 SCOPE AND LIMITATIONS OF STUDY
This study will examine the advantages and disadvantages of the CBN’s cashless policy on the Nigerian people in order to determine if it is a boon or a curse.
STUDY LIMITATIONS
Financial constraint- A lack of funds tends to restrict the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data collection procedure (internet, questionnaire, and interview).
Time constraint- The researcher will conduct this investigation alongside other academic activities. As a result, the amount of time spent on research will be reduced.
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