I wrote a few hours ago that the Central Bank of Nigeria had given a gift to our fintechs through the cashless policy. This is an update – the Nigerian Parliament, specifically the House of Representatives, has asked the apex bank to suspend the initiative. Personally, I think the initiative is a good one, and I support it, because it will seed a new growth sector – the digital economy. Those clamoring that it would hurt the poor need to look at the data. According to government data, 2% of the Nigerian bank depositors control 90% of the total value. Also, Nigerians who have more than N500,000 ($1,400) in their bank accounts are just 2%. Technically, this policy as announced will affect only 2% of affluent Nigerians who have more than $1,400 in their bank accounts.
The House of Representatives has asked the Central Bank of Nigeria (CBN) to immediately suspend the implementation of the new aspect of the cashless policy on deposits which has taken effect today.
The lawmakers took the resolution after adopting a motion brought under matters of urgent national importance by its spokesperson, Benjamin Kalu.
The CBN had announced that from Wednesday, September 18, certain cash deposits and withdrawals from individual bank accounts are to attract additional charges.
In a circular to all deposit money bank (DMBs), the Director, Payments System Management Department at the CBN, Sam Okojere, it said henceforth 3 per cent processing fees would be paid for withdrawals and 2 per cent for deposits of amounts above N500,000 for individual accounts.
The apex bank also said corporate accounts will attract 5 per cent processing fees for withdrawals and 3 per cent processing fee for lodgments of amounts above N3 million
Those who say the poor would be affected are not fair on this debate. If you can withdraw or deposit N500k in Nigeria, you are not poor, relatively! Yes, the “poor” (using that with decency) can still run their lives with cash unaffected.
Yet, this policy is also bad because it is wrong to decide for people how they would want to run their lives in this age of cyber-frauds and -attacks. The National Assembly may be smarter here.
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“Yet, this policy is also bad because it is wrong to decide for people how they would want to run their lives in this age of cyber-frauds and -attacks.” Not sure how well this statement fits in. Charging extra fee for certain level of cash deposits doesn’t equate to deciding for account owner on how its account should be run, rather it’s simply telling you that if you choose to go down a particular route, it’s going to cost you more; the decision is still account owner’s.
As for reps resolution, it’s not binding on CBN, you can choose to obey a resolution or move on with your policy; resolutions are different from bills passed by parliament.
Again, all the talks about who would be affected and to what extent are neither here nor there. They aren’t borne out of any empirical evidence, minting money is equally expensive, and we are never great when it comes to handling the naira notes well.
For Nigerians, our default state is to resist every new policy, there has never been anything introduced in this country where everyone accepted wholeheartedly; there will always be divergent views. The same parliament resisted the 2004 banking recapitalization, so nothing is new here.
All the complaints have answers, maybe in my head…
Fair but in U.S, cities have sued physical shops that wanted to introduce electronic-only payment, no cash accepted. They won because they posited and court agreed that the shops were discriminating against people who are using a U.S. legal tender – physical cash- to pay.
I AGREE WITH FRANCIS, AS FAR AS THE RESOLUTION OF THE HOUSE OF REPS IS CONCERNED. THE CBN HAS THE NECESSARY DELEGATED AUTHORITY ON THIS ISSUE. BESIDES THAT, ONE OF THE RESERVATIONS I HAVE ABOUT OUR LEGISLATORS IS THAT THEY’RE JUST REFLEXIVELY REACTIVE TO ‘BAD’ PUBLIC POLICIES WITHOUT NECESSARILY PROVIDING THE COUNTER ARGUMENT OR ANALYSIS TO SHOW WHY SUCH POLICIES SHOULD BE RESCINDED.
I GUESS INTELLECTUAL RIGOUR IS NOT SUPPOSED TO BE AN INHERENT ATTRIBUTE OF A NIGERIAN LAW MAKER.
The people who will be affected will be market women and religious organisations. The rich don’t carry cash, they have been used to cards for a long time. Perhaps, also politicians and crooks will be affected. The only people I would be concerned about would be the market women. I’m not sure their profit margins can accommodate losing 2% so they may prefer to hold the cash. My local Suya guy will also be affected. I’m fairly certain that he does more than 500k a day in sales. It will perhaps force him to get a POS!