Why the proposed cashless economy in Nigeria is unrealistic

Earlier this year, the Central Bank of Nigeria announced its intention to implement the cashless banking policy that will make the Nigeria society a cashless one effective from June 2012, with the first stage kicking off from December this year in Lagos. Lagos state, the former capital state of Nigeria was chosen because it is the economic centre of the country.
The policy which is meant to make sure that all deposit money banks (DMB’s) in the country ensure that the daily cumulative free cash withdrawal and lodgments by individuals and corporate organizations do not exceed a maximum ceiling of #150,000 and #1million respectively. To necessitate the adoption of the policy, CBN took a step further to impose a penalty of #1000 on all individual cash transactions in excess of the limit, while organizations that exceed their withdrawal limit will pay a fee of #200 per #1000 withdrawn.
The need for a cashless Nigeria as proposed by CBN is inherent especially as the nation hungers to move forward `and improve its quality of experience but the target date of June, 2012 is unrealistic. In a developing economy like Nigeria, a lot of factors need to be put into consideration before this kind of objective can be achieved. Whatever is the main reason CBN is bringing up this policy, it must be done with a good laid down Middle term plan not a short term plan especially when the entity we are talking about is a nation like Nigeria.
However, for this proposed cashless society to succeed the supporting technological infrastructure must be on ground but that is not the case at present. The number of Automated Teller Machines, ATM’s, which can support this kind of society, can never be effectively and efficiently installed before the June 2012 kick off date. In a nation like Nigeria, which comprise of 36 states and FCT; Abuja, it will take a period of not less than 6 years to efficiently implement this plan. There must be a radical installation of the requisite supporting technological infrastructure like the presence of enough ATM’S in each state of the federation. Professionals must be employed and deployed to make sure that these infrastructures are working effectively. Enough enlightenment must be done on why people will have to use cheque for their transactions and how to use it. Needless to say, the people will have to be enlightened on how to use the Automated Teller Machines. Moreover, even some of the existing ATM’s are malfunctioning and other thing been equal, this scenario is not inspiring. In Lagos, if 75,000 ATM’s are fixed in various parts of state as stated by the Nigeria Bankers’ committee earlier this year by June 2012, 75,000 ATM’s can never serve a state with over 17million people.
It would be recalled that the Governor of CBN, Sanusi Lamido said earlier this year that CBN will embark on enlightenment campaigns. Needless to say, with a Nigeria population of about 150 million people, less than 2 years is too small a time to educate Nigerians, not only on the importance of a cashless society but to also encourage the unbanked to patronize the banking system.
The ICT prospect in our education system syllabus needs to be improved. What we have in our secondary and tertiary institutions now in terms of ICT education is not encouraging. Some tertiary institutions can’t define their position in the information technology world. Some do not even have the requisite materials and equipments to educate for teach a student of Computer Science aspiration. As a matter of fact, information and communication technology should be integrated into the nursery and primary school syllabus as we have it in the developed world.
The education system can also play a role in the success of this policy by emphasizing more on the applications and utilization of the kind of technology that can support it. Without been mistaken, many would wonder if CBN have also included the Academic section as one of their strategies or enlightenment platforms to educate Nigerians, especially the young at heart who make a up a considerable percentage of the banked and un- banked. Many of those who are already banking do not know how to use an Automated Teller Machine.
In addition, Nigerians are discouraged from accepting cheques because of the lack of trust that is inevitable in our kind of value system and the high rate fraudulent activities in the country. It will surely take a longer time to transform the mindset of Nigerians in the usage of electronic payment channels. More Nigerians will prefer to hold so much cash in hand and they will probably keep money at home instead of the bank. Organizations that deal in large sum of money in their transactions will have to issue cheques for up to 7 times if the worth of their business transaction is about #7million. This will not only consume and waste productive time but will also discourage business.
Experts Opinion
A cross section of experts has shown their concern about the policy. A good number of them believe that Nigeria lacks the requisite supporting infrastructure for the success of the policy while a few believe it can still make a positive difference notwithstanding the suddenness.
Oracle of the Nigeria IT industry and President of the Institute of Software practitioners of Nigeria said issues of technological advancement needs to have a straight line policy that will address the needs of the society.
“We are putting the cart before the horse sometimes because now we do not have a national e-transaction bill. It is the national e-transaction bill as law, framework that will establish all the sub-domain of a cashless society and e-commerce. You cannot just create e-commerce and give license and people start to do business”.
He pointed out that the CBN as not even consulted with the domain expertise that will facilitate the success of this kind of project. In his words “what I believe is that, there are domain experts which need to be consulted by CBN, which they have not done. One of those expert domains will be the institute of software practitioners of Nigeria”
According to Mr. Femi Mosaku, renowned IT Professional and Director, Adkolm-Emerald Microfinance Bank, the problem of the unavailability of the right supporting technology and infrastructure is a major constrain. The time frame, he stated is also unrealistic.
He said “The cashless society is a good one but the problem is the country is not ripe for it. The infrastructures are not there. We still have power problem, IT problem is still there, and the link problem is still there. So I think the first thing is to solve all the preliminary problems before going to a cashless society". He also added, “The time is short. The issue is, can we solve those problems before that time?"
A Development Communicator, Mr. Peter Ogudoro emphasized that Nigeria must embrace new technology but implementing it in phases is very important, recognizing that Nigeria is a country with different constituent units that are not the same in characteristics.
“So long as they take it in phases and recognize that the different region in Nigeria are not uniform in-terms of characteristics. Characteristics; looking at the state of technology, the rural communities are different from the urban centre’s. Lagos is much more sophisticated than kebbi, Adamawa and even Kano in terms of the exposure that the people who live in this communities have. So I know that we must be willing to embrace new technology because we live in the universe and the rest of the world will not wait for us.”
According to Dr Nnadozie Godwin .O, Managing Director of Solutions Pharmaceutical Limited, The CBN governor has not taken his time to really review the policy which may carry consequences especially with the haste in the policy implementation.
“I believe the CBN governor is not matured enough in allaying his policy. He is in a haste to make theoretical points that when muscled through executive fiat, will have cascading consequences that leaves him justifying even the laughable.”
Vox Pop
Consensus opinion of the respondents’ points to the fact that the right supporting infrastructure should be put in place for effectiveness of the policy which of course should be within a comfortable time frame.
According to Shoetan Lanre Felix, a computer operator, there should be an extension of time for the implementation of the policy and there should be enough awareness with the installation of the right supporting technology. He also observed that if Nigerians irrespective of their dissimilarities do not understand the policy well, it will make them to hold so many cash and they will probably keep money at home instead of the bank.
To David Oladele King, a musician, the Apex Bank can succeed on this proposed policy provided the requisite facilities are put in place. He also further stressed that unless the personnel’s that are monitoring the implementation of this policy are put in check, the policy will never achieve the desired objective.