I smiled when I saw the CBN new cashless policy.
The largest cash movement in volume happens within the population at the mid-bottom of the Pyramid.
Until we understand the behavior and business activities of the people in the middle-bottom of the pyramid; cashless policy will be unfruitful.
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According to NDIC three years ago, only 2% of Nigerians own 90% bank deposits. This means 98% of Nigerians owns 10% of bank deposit, which indicates that huge amount of cash is in circulation outside the bank.
A little analysis of the Policy, an individual will be charged 3% on withdrawal of an amount above 500,000; and 2% charges for depositing the same amount.
Let us take N501, 000 withdrawal for instance, then the charges will be N15, 030. Our people are sensitive when it comes to paying charges.
Fortunately, for the transaction that falls within the individual category, it will be more prudent for people to transact with Banking Agents and perform their transactions in tranches other than going to banking halls because the transaction charges will be higher in banks.
I believe Microfinance banks who are customers to Deposit Money Banks (DMBs) will not be affected since they fall under the corporate category because if they do, they will also pass down the charges to their customers.
Presently, Agency banking is still largely a cash based business; the market has become wider with this policy.
For cash policy to progress, the approach MUST be built from Bottom-Top.
The concern should be focused on how my security Guard (gateman as popularly called) accept his salary at the end of the month through digital payments, how will my Gate man’s Mai Tea accepts digital payments from him when he buys a cup of tea. The trend goes in that manner.
The population that will be affected under the Individual Category of this policy will be enormous.
There should be much aggressiveness in digitization of financial inclusion drive.
Many Fintech companies are only transaction based. Opay is already in the right direction by creating a community of business with ORide, OBus, OTrike, OFood, OKash and OWealth. All their customers have wallet from which they can pay for these services without physical cash movement.
A holistic view of how cash is mostly used is needed to give the true picture, this will enable formulation of a near accurate cashless policy.
This is my view on CBN AND CASHLESS POLICY.