The journey from cash-only transactions to less cash and thereafter, possibly, a cashless or digital money society was introduced by the Central Bank of Nigeria in December 2011. It kicked off in Lagos in January 2012, though the idea was mooted in 2009.
The policy, which is intertwined with financial inclusion, looks very simple in textbooks, but it can really be very different. Consumer experience has shown that it made business transactions across consumer markets problematic after the apex bank issued a new directive that took effect on Monday, January 9, 2023. With the directive, individual bank customers cannot withdraw more than N100,000 in cash over the counter, through Automated Teller Machines or Point of Sale in a day, amounting to N500,000 in a week or N2m in a month. However, for corporate customers, the withdrawal limit was placed at N5m per week, translating to N20m per month.
The apex bank, in October 2022, announced its decision to redesign the naira bills, revealing that over 85 per cent of the currency in circulation was outside the vaults of commercial banks.
CBN Governor, Godwin Emefiele, during the swap of old banknotes for new ones, disclosed that the monetary exercise yielded significant results. He said, “Available data at the bank showed that in 2015, currency-in-circulation was only N1.4tn. As of October 2022, currency-in-circulation had risen to N3.23tn, out of which only N500bn was within the banking industry and N2.7tn in people’s homes.”
During a press parley, recently, he said: “Since the commencement of the programme, the CBN has collected about N1.9tn, leaving us with about N900bn.”
Implementation of the policy, which engendered hardships across the consumer landscape, necessitated legal actions that culminated in a
Supreme Court ruling temporarily halting the move by the Federal Government and CBN to phase out the old N200, N500 and N1,000 notes from February 10, 2023.
The matter dragged to the Supreme Court where a judgement was pronounced on Friday, March 3, 2023, that old N200, N500 and N1,000 notes remained legal tender till December 31, 2023.
Despite the ruling, business transactions involving cash across consumer markets are still in limbo.
Banking network hitches
Unfortunately, since the monetary project commenced, there has been poor mobile service network across the country, as the network to ease transactions on the landscape of commerce is stalled. Consumers and traders complain, daily, of inability to transfer cash online. The traders said many customers, who bought goods with the hope of paying through online transfer, waited for the debit notification hours unending without success. In such cases, packed goods were returned.
Financial Street checks revealed that the introduction of the new N1,000, N500 and N200 notes and their slow release into the system were causing unbearable hardship in the country.
Cash shortage and ailing economy
Amid the cash squeeze, the government said the policy was aimed at revamping the economy.
But Hendrick Uweru, a trader at Ogba Market in Lagos, said the cashless policy was not helping matters because of the poor service network in virtually all the commercial banks in the country.
The trader, who also is a Point of Sale money dealer, appealed to the authorities to come to their aid by improving the mobile network in the mobile market. He said, “Since the government is finding it difficult to release cash to the system for reasons best known to them, they should allow us to trade with better network service to encourage online cash transfers.”
In the same vein, Mr Emeka Iwuchukwu, an artisan, said business has become frustrating, as people, who buy items as low as N1,500 opt for online cash transfers.
Iwuchukwu lamented his of N80,000 to lack of cash and poor mobile network, adding that the trend might lead to a revolt, as not a few consumers were groaning under the policy.
His words, “We are tired of this frustration. The government should provide us with an alternative means of payment or ensure that the network is improved. Many of us rented shops with huge amount. We also have workers and different levies to pay. It is from the sales that we foot these bills.”
He noted that the market was virtually empty because of cash shortage.
On what might have been responsible for the poor bank network at this time of cashless economy, Financial Street checks revealed that Association of Licensed Telecom Operators of Nigeria, sometime in September 2022, had threatened to withdraw the Unstructured Supplementary Service Data following accumulated debt of over N80bn by banks.
The Chairman of ALTON, Gbenga Adebayo, stated this in Lagos at a technology event organised by the Nigeria Information Technology Reporters’ Association, with the theme, ‘Creating A Digital Ecosystem In Nigeria: The Hurdles, The Gains’. At the event, he said the banks failed to honour the payment agreement with the Telcos for over two years; hence, the debt accumulation.
According to him, the last option left for Telcos was to withdraw the service, which the banks had been benefitting from without settling their own part of the agreement.
Clifford Guobadia, an accountant, suspected that the Telcos were making good their threat to disrupt the USSD service, as bank customers had, even before the Naira redesign, been having difficulty using the USSD codes, which are operated without data and mobile app.
Shylock PoS operators
In Nigeria, many businesses always capitalise in any opportunity to maximise profit, not minding the effect on the economy or consumers. The cash squeeze seems to have become a money-spinner for PoS operators, who charge as much as 50 per cent, against the erstwhile one or two per cent, for cash withdrawals.
Despite that few day before the January 25, presidential and National Assembly elections, President Muhammadu Buhari approved the continued use of the old N200 notes, alongside the redesigned notes, the exploitation has continued unabated.
CBN spits fire
The leadership of the apex bank had, last month, threatened to withdraw the licences of PoS charging above four per cent for cash withdrawals.
In a chat with journalists in Edo State, the Director, CBN Risk Management Department, Laise Ijebor, said the approved charge for every N5,000 is N100, that anything contrary to that amounts to punishing their citizens.
He said the apex bank was aware that PoS agents were engaging in sharp practices by charging customers up to 30 per cent before giving them cash.
On the alternative means of making payment for business transactions, he said, “We have bank apps, USSD, PoS and ATM machines to make payment. Customers should not be agitated; there is no need for any tension because your money is safe in the bank for now. Just get the little cash you need while using alternative means available to make payment.”
Also, the Edo Commissioner for Communication and Orientation, Chris Nehikhare, charged the people to use alternative means of making payments, assuring that the state government would join hands with the CBN in ensuring availability of cash through effective monitoring.
Banking hall horse-trading
As the PoS operators lament that they also get the cash at exorbitant rates, there are suspicions that the banks make the new notes from CBN available to the PoS operators through the back door at a price.
There is further suspicion that since politicians are banks,’ big customers, even some of them holding large chunk of bank shares, the bank managers may be releasing the cash to them at their beckoning. This is fuelled by the sighting, outside banks, of the new notes in wraps, whereas the CBN instructed that the new bills be loaded in the Automated Teller Machines, so that individuals cannot withdraw more than N20,000 at a go.
