By Tiko Okoye
It has long regrettably become fashionable to be accused of being financially rewarded ‘for doing a hatchet job’ whenever a public affairs analyst is supportive of a government policy. It is laughable that the same accusers fail to recognize that by the same token they are equally guilty of being financially induced to oppose government policies.
Still, anyone familiar with my current David-versus-Goliath battles with the CBN would appreciate why I ought to be rolling all over the floor with glee that the executive management of the apex bank is much discomfited by the acidic public response to its policy action. Albeit, patriotic fervor outweighs personal angst and I cannot but cry by the bucket over how CBN’s sloppy handling compromised the integrity of a much-needed and relevant monetary policy.
Many commentators and politicians seem mischievously hell-bent on whipping up public dissent by employing emotional and emotive language that can only provoke fear and anger and fuel grievances against the government. They are the ones who rhetorically wonder aloud, for instance, how one would pay for roasted groundnut sold by roadside vendors without cash or spray money at parties. For crying out loud, a cashless policy does not mean a total elimination of cash; just that an account holder would henceforth be required to pay a charge on the actual difference between cumulative amounts and the specified daily limits.
While there may be acceptable logic in the contention of those insisting that the bank should be the one paying a stipend for cash deposit brought to it, not the other way round, the truth is that the Nigerian economy is too heavily cash-and-carry oriented and only the spectre of having to pay a punitive fee would actually make it costlier to keep cash under mattresses or in earthen pots or dig holes to bury it!
A pilot scheme is a tried and trusted market research and decision-making tool. It ought to be clear that contrary to doomsday supposition of conspiracy theorists, the six affected locations were specially chosen for the pilot phase because they are hotbeds of cash-based business activities with a last-mile connectivity above the national average. It should also be noted that that the 2019 policy statement exactly mirrors the one unveiled in 2012 when Sanusi Lamido Sanusi was governor of the apex bank. That it received such a cool but curious welcome back then as opposed to the virulently hostile and abusive opposition under the current dispensation ought to be sufficient food for thought for the monetary policy authority.
As for cash spraying at events, an inverted societal value system has culminated in people who acquired their wealth under very questionable circumstances being revered as good role models and people of timbre and calibre when spraying cash at parties or making huge cash donations. It is equally true that the abuse of the naira at such cash spraying jamborees is one of the major reasons why the cost of currency management is skyrocketing. Those stricken with the addiction of showing off at parties can still do so – but all that is needed is for the celebrant to provide a POS machine for the purpose while the name of the sprayer and the amount can be announced on the public address system should he or she so desire!
It costs the CBN, the banking sector and the national economy multiples of billions of naira annually in printing replacement currency notes, currency sorting and cash movements. The introduction of the cashless policy is predicated on a CBN analysis indicating that only 10% of the banking population actually withdraw and/or deposit more than N500,000 on a daily basis, meaning that the rest of us in the 90% bracket that are incapacitated to do so (for even a microbusiness) end up subsidising the weighty cash management costs that the tiny 10% incur in terms of high cash usage.
The policy should, therefore, be additionally rightly perceived as an equity-seeking machinery designed to make high cash users pay solely from their pockets for their primitive orgasmic indulgence rather than make the innocent majority bear that cross. As for those who still think they can circumvent the policy after its introduction by hoarding huge stockpiles of cash, they are well-advised to consider that the government holds the trump card by way of a surprise change of currency!
Nigeria’s teledensity is one of the highest in the world but the uptake of the mobile telephony payment system sadly remains at the bottom leagues when compared to several African nations with much lower teledensities. It is certainly high time we optimised our comparative advantages by developing and modernising our payment systems in line with the global trend, else the country stands to be considerably short-changed when the African Free Trade Zone Agreement finally takes off.
Suffice to say that contrary to whatever misconceptions business operators and industrialists may harbour about the adverse impact of the cashless policy on their operations, the truth remains that they actually stand to gain the most from its implementation by way of increased economic growth and development. Apart from improving the effectiveness of monetary policy, its adoption would also reduce the cost of banking services (including cost of credit) and actually drive financial inclusion by providing more efficient transaction options and greater reach.
This is not to underplay the attendant challenges. Talk of the relatively poor POS density; abandonment of bank-supplied terminals by merchants and salespersons; huge gaps in required infrastructure like power and internet connectivity, especially in the rural areas; recurrent high failure of transactions on the POS platform and unreversed debit alerts; tedious and enervating process of getting refunds after failed/incomplete transactions; and, least but not the least, lack of trust and confidence on the part of the public. The experience of many Nigerians in the hands of banks has often not been too pleasant, resulting in a very limited degree of customer confidence in banking institutions.
But these challenges are not insurmountable and any talk of increasing the proportion of financially excluded persons is just a pernicious lie. No system is ever prefect or error-proof from the onset. Required improvements can be effected by way of modifications and enhancements to handle identified flaws and drawbacks. Those contending otherwise should pause for a moment to wonder why we ever made the change from the use of cowries and barter as media of exchange/payment to the modern banking system when a preponderance of rural and urban folks were stark illiterates and supposedly ill-prepared for the transformation.
There is also the case of the ATM that was launched in the past by the CBN to get the economy into the groove of the modern banking system. The considerable opposition and scepticism that attended its introduction presaged non-adoption and failure. But despite challenges still dogging the scheme, it has virtually become everyone’s friend and there are tens of millions now celebrating the “24/7, spatial” convenience it provides!
The commencement of domestic electronic funds transfer eliminated the need for traders to haul huge cash amounts across state lines, therefore enhancing safety and security of lives and funds. Apart from its being safer and more convenient pay for big ticket items, such as house rent, school fees and purchases of land, vehicle and house, electronically rather than hauling Ghana Must Go bags stuffed with cash to bulk counting rooms, the menace of salespersons fleecing their customers by claiming “There’s no change” will equally become a thing of the past.
As politicians with a wary eye on public opinion, the lawmakers cannot be faulted for seeking to make a lot of mileage out of the CBN’s misstep and sanctimoniously wax lyrical on providing succour to ‘suffering Nigerians,’ even if the action of drastically reducing their stupendous allowances would have been more exemplary. But to all intents and purposes, there does not seem to be any wriggle-room left for the CBN except to suspend the scheme like the Reps have directed, while embarking on extensive and intensive public enlightenment campaigns prior to re-launching the polic
High Chief Tiko Okoye, a financial inclusion expert, writes from Abuja.