By Atilade Atoyebi

In 2010, the Central Bank of Nigeria, CBN realized that Nigeria was lagging behind in moving towards cashless economy. While western economies had taken due advantage of Information and Communication Technology, ICT revolution to tilt towards cashless societies, Nigeria trailed far behind. In fact, at that time in 2010, CBN sources said that 99% of all monetary transactions in Nigeria were by physical cash. If cash transactions were meant to be virtually extinct globally, Nigeria could not sit idly by and do nothing about following the emergent trend.

So, in 2012, Nigeria’s apex bank decided ab initio that cash deposits and withdrawals from banks above N150,000 for individuals and N1 million for corporate bodies should attract disincentive levies. However, CBN moved the cash deposit and withdrawal limits to N500,000 for individuals and N3 million for corporate institutions. Any amount above those figures would attract the stipulated handling charges. The pilot project began in Lagos in 2012 and embraced Ogun, Kano, Abia, Anambra, Rivers State and the Federal Capital Territory on October 1, 2013.

At that time, CBN mounted awareness programmes and publicity to the extent that bank customers might not like what hit them, they could not claim that the Bank failed to explain the policy to them.

Strangely enough, not much has been heard about the nationwide implementation of the cashless scheme. It appeared that CBN itself went to sleep about it all until it put out a news release last week announcing the immediate implementation of the scheme in Lagos and the States covered by the pilot project. It promised to spread the scheme across all the states of the Federation by next year.

Of course, there was instant revolt against the scheme everywhere. To begin with, CBN must have believed that the public enlightenment programme it embarked on in 2012 would still be in the skull of everyone by now. So, it applied the well-known military tactic of policy implementation ‘with immediate effect’ and the generality of Nigerians did not like that posture a bit. Stakeholders across the board kicked against the policy itself and the timing. The Organized Private Sector, OPS in its reaction said that the entire cashless economy being promoted by the Central Bank would increase the cost of doing business in Nigeria. The House of Representative told the Bank to shelve the move. Individuals took their case to the social media to protest the overbearing posture of the Bank in levying them over their cash transactions.

For several days, CBN was on its own, as they say in Nigeria. The other stakeholders were opposed to its circular. What is more? The cashless policy lent itself to misinterpretation because CBN did not offer sufficient clarification this time even if it tried to do so in 2012. The calculation making the rounds is that the 2% levy on deposit of over N500,000 cash or 3% levy on withdrawal in excess of N500,000 by individuals would be applicable to the total sum being deposited or being withdrawn. The same understanding goes for corporate bodies that deposit over N3,000,000 or withdraws from any bank, an amount in excess of N3,000,000. The belief was that 3% would be paid on the entire amount being deposited and 5% on the total amount being withdrawn.

When the uproar was becoming deafening the CBN Governor, Godwin Emefiele had to take advantage of a news conference he addressed later in the week to set the records straight. The handling charges or levies were to be imposed on the exact amount in excess of what the Bank had stipulated as permissible limits of cash deposits and withdrawals under its cashless policy. An example will suffice. A man who walks to the bank counter to deposit or withdraw N500,000 cash as an individual pays nothing by way of cash handling charge. However, if he deposits or withdraws N510,000, the customer will be charged 2% or 3% of N10,000 in case of cash deposit or withdrawal. The handling charge will not be in respect of the total cash deposit or withdrawal.

CBN’s circular of last week took a lot for granted and the Bank had to smart under its own failing. To be sure, CBN will not backpedal on its directive, regardless of the call by the House of Representatives for the suspension of the scheme. Emefiele says that Nigeria must move with the times; it must comply with international best practices and implement international agreements in that regard. On the home scene, he argued that the cost of printing cash will be reduced; the scheme will make payments safer and more transparent as well as minimize the incidents of money laundering. The CBN Governor also wants everyone to take due advantage of facilities like Internet/Electronic Banking, Point of Sales machines, ATM, telephone banking and several products that would make cash transactions less attractive. That only 10 percent of the people would be affected by the cashless scheme is a claim by CBN that many will take with a pinch of salt given the fact that it will take a while for all the products of cashless banking to penetrate through the rural communities in a vast country like Nigeria.