By Onome Amuge
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Insists no going back on plan, take-off date
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PoS operators may take a hit
The sounds coming from the camps of those opposed to the Central Bank of Nigeria’s latest cash withdrawal limits policy may be deafening, but they are not enough to dampen the apex bank’s resolve to advance Nigeria further on the journey from a cash-based to a cashless economy.
The new policy, which is in furtherance of the CBN’s cashless policy introduced in 2012 but which has had to be stepped down on a number of occasions in order to allow for proper preparation and deepening of the country’s payment system infrastructure, has come to stay, according to Godwin Emefiele, CBN governor.
The January 9, 2023 take-off date would also not be reversed, he said in Daura, Katsina State, after a meeting with President Muhammadu Buhari.
Just like the redesigned naira notes, which come into use three days from now, it has also emerged that the central bank of Africa’s largest economy enjoys the firm backing of the president on the revised cashless policy which puts a cap on the amount of physical currency that could be withdrawn at any particular time.
“The president says he is happy and that we do not need to fear anybody and that we should carry on,” Emefiele said.
Since the policy was announced, opposing voices have arisen from among politicians, business owners, finance experts, PoS operators and other stakeholders who argue that the cash withdrawal limits would have adverse implications on the already tight economic environment.
Muda Yusuf, chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), said the CBN’s cash withdrawal policy was “a needless dissipation of energy and resources”.
Yusuf faulted the CBN’s claim that there is too much cash outside the banking system, noting that Nigeria is more cashless than many advanced economies. He said currency as a percentage of gross domestic product (GDP) in Nigeria is 1.8 percent, whereas in the United States it is about 10 percent.
The former director general of the Lagos Chamber of Commerce & Industry (LCCI) further noted that currency in circulation in Nigeria as at October 2022 was N3.3 trillion, out of which N2.8 trillion was outside the banking vaults. Similarly, the total money supply within the same period was N50.6 trillion while the total currency in the economy was just N3.3 trillion.
“The implication is that the Nigerian economy is already substantially cashless. It is, therefore, quite curious that so much energy and resources are being dissipated in this direction,” he said.
Adewole Adebayo, presidential candidate of the Social Democratic Party (SDP) in the forthcoming 2023 elections, said the CBN cash withdrawal limit policy was a plot against the masses and opposition.
“It is not a policy. It is a scorched-earth stratagem against the masses and perceived opposition,” Adebayo said.
“While a cashless society is desirable, macroeconomic considerations warrant a well thought-out plan to ensure that common people don’t suffer decline in productivity and financial intermediation hiccups that amount to virtual exclusion from mainstream economic participation,” he said.
Adebayo described the policy as a “rash measure” and “yet another cosmetic bandage over a festering sore of fiscal irresponsibility, monetary recklessness and lax security settings”, arguing that the policy “won’t produce any desired results other than create income for promoters of payment systems”.
“This is systematic capture of vast swathes of the financial transactions by those remote controlling the apex bank. I disagree with the measures just taken by the CBN. They need to be reversed,” he said.
Uche Okwuagwu, a Lagos-based POS operator, said the policy would negatively affect POS operators and may result in a hindrance to transactions conducted by the operators.
“Now that they have introduced this policy, they will automatically set it to the value of N20,000 for all POS and agent banking operators across the country which means that no POS operator can give more than N20,000 to a customer,” he explained.
Okwuagwu lamented that the move would hinder the growth of POS services because there will be a plunge in the usage of POS and also result in a “naira black market” which will further lead to scarcity of physical currency.
The POS operator noted that his POS machine currently has a withdrawal limit of N500,000 which can be renewed as many times as possible per day depending on the total value available in his account. He, however, projected that the withdrawal limit of N20,000 would lead to a hike in charges by POS operators as withdrawals between N1,000 and N20,000 which currently attract charges of between N100 and N300 would increase to between N200 and N500.
Okwuagwu added that though customers can withdraw up to N100,000 cash from POS and agent banking operators through cash transfers on their mobile devices, such transactions would cost additional charges due to the constraints in accessing huge amounts of cash from banks.
“This policy cannot work in the kind of markets we run; it won’t. The policy makers are far away from reality. The CBN can’t just impose the policy without a pilot scheme to test-run and see its effectiveness,” Gloria Agbaosi, a commodities trader based in Jos, Plateau State, said.
Agbaosi said in the produce markets where she operates, paper currency is more acceptable than cash transfers and most often the daily transactions per customer is above N100,000.
Gabriel ldahosa, deputy president, Lagos Chamber of Commerce & Industry (LCCI), expressed concerns that the policy may have negative consequences on the economy and lead to a crisis.
Idahosa noted that it is likely to cause disruptions in the economy as Small and Medium Enterprises (SMEs) that have small working capital tend to hold most of it in cash in order to keep their businesses running. He added that people in rural areas where bank branches are few and telecommunication networks are very weak would bear the brunt of the policy.
According to the LCCI deputy president, the CBN may be forced to introduce special arrangements for rural areas and SMEs if the disruptions degenerate into crisis situations.
In its assessment of the CBN’s cash withdrawal policy, the Nigeria Employers Consultative Association (NECA) said it could lead to the collapse of many businesses.
Wale-Smatt Oyerinde, director-general of NECA, in a statement said the CBN did not consider the adverse effects the withdrawal limit would have on the economic activities of Nigerians.
According to the statement, the 5 percent and 10 percent processing fees for withdrawals above the new thresholds were “traps” to make money at the expense of individuals and businesses who desire to withdraw their hard-earned money.
“As usual with the Central Bank of Nigeria (CBN), the bank announced a new naira withdrawal policy without extensive consultation with organised businesses and those that will be directly impacted by the policy. This new policy is diversionary and a mere distraction from the critical issues that are affecting the nation,” NECA said.
“With the inflation rate hovering around 20 percent and over 100 million Nigerians in multidimensional poverty, the best that the government should do is not further cripple the economic activities of Nigerians. It is no gainsaying that the livelihood of many individuals and enterprises would be impacted,” it noted.
NECA further stated that though it supports the CBN’s cashless policy and the plan to get all bankable individuals and businesses into the banking system, the timing of the cash withdrawal policy was wrong due to inadequate preparation and sensitisation of the people that drive the economy. The association further stressed that the banking infrastructure and mobile/digital facility to drive the cashless policy are not sufficiently developed.
It, therefore, urged the CBN and the federal government to replicate the energy and promptness used in implementing the cash withdrawal policy to address more crucial issues such as the dwindling value of the naira, rising inflation, oil theft, rising foreign debt profile, and get millions out of poverty.
But the CBN, in response to the reservations expressed by concerned Nigerians, said there was no cause for worry as it was on top of the game. The apex bank said the plan was only a continuation of its monetary policy direction aimed at developing the economy.
“So, there is no need for anybody to worry, the Central Bank is monitoring what is happening and I can assure everyone that we are up and alive to our responsibilities and we will do what is right for Nigeria and Nigerians,” Emefiele said.
He, however, noted that possible adjustments have not been ruled out.
“We will be reviewing from time to time how this is working because I cannot say that we are going to be rigid. But it is not to say that we will reverse, it is not to say that we will change the timing, but whether it is about tweaking some amount to be a little bit higher or a little bit lower, and all the rest of them,” he said.
And to those – like Aliyu Magaji, a member of the House of Representatives – who are concerned about how Nigerians in the rural areas who transact most of their businesses in cash would cope with the new policy, Emefiele assured that financial platforms that will enhance seamless operations in remote areas have been put in place.
“We have heard people talk about the people in the rural areas. The truth is that even online banking is working even in Daura. I saw a kiosk that has super agents today because of the way we felt that there is a need to deepen the payment system infrastructure,” Emefiele said.
“We have 1.4 million super agents that are all over the country, in all local governments and all villages and I have told my colleagues, we are going to publish all the names of all the super agents,” he said.
The CBN governor said having super agents as different from commercial banks, MFBs and other financial institutions is as good as having 1.4 million banking points where people can conduct banking services.
Meanwhile, the CBN also assured bank customers that the cash withdrawal policy would not prevent depositors from having access to their money, urging Nigerians to make use of alternative channels to transact their business.
“If you go to a bank to withdraw money, it is possible, we only push a threshold. There are other options by which you can take the money, it is not only cash that you can access your money. It can be accessed also in electronic form,” Musa Itopa Jimoh, CBN director of payment system management, said during an Arise News Channel programme.
“Today, business outlets are begging banks to come and deploy PoS terminals. In fact, there are some shop outlets when you go there, they will designate a specific point for cash payment, every other point is electronic payment,” Jimoh said.
“So, the CBN has not prevented any Nigerian from taking your money from the bank. We are only saying we want to go cashless; we want to build our payment system; a detailed financial inclusion makes our financial system very stable,” he said.
