It’s no longer news that Lagos State is currently experimenting with the cashless policy which was introduced by the Central Bank of Nigeria, more popularly known as the CBN. What must however, be mentioned and summarily discussed are the hitches as well as the catalytic effects of the policy’s implementation. The strategic importance of the apex body and the policy are too great to ignore a discussion like this, because such discussions provide mediums of interaction between the policy makers and the beneficiaries of the policy, as a way of developing understanding in the relationship between the two.
Commendations to the CBN for taking the bold step towards proposing and implementing the cashless policy. No doubt, the enhanced economic development of Nigeria is one of the key motivations for this policy, while keeping in mind, the positive multiplier effects that will spread into other facets of all-round development that can be inspired by economic development.
Like any policy, the highs and the lows exist. Policy expansion can be made when the highs are numerous, while policy adjustment can be considered when the lows are very numerous or even if few, occur in very sensitive areas.
Concerns have continued to trail the level of ‘pocket-friendliness’ of the policy on the common man. In recent times, the welfare of the common man has become more relevant in Nigeria’s decision making process, unlike the virtually complete neglect of the masses when decisions were taken in the past. The term, “anti-people” has also become mainstream language. With this development, the welfare of the common man needs to be considered.
Many businesses in Nigeria make very little profit. In a very remarkable number of such cases, transactions are made with huge sums of capital input in both financial and non-financial terms, but the resultant profit is often disproportionate to the amount of capital invested. Despite this, the common man continues to struggle to survive, desperately holding unto his lifeline in form of the very businesses he is involved in. This implies that charges on exceeding the Five Hundred Thousand Naira (N500,000) set by the CBN for individual accounts and the Three Million Naira (N3 million) limit set for corporate accounts will naturally eat deep into any businessman’s profit, and in some cases, not only wipe out such profit, but also dig into the financial capital as well, thus, causing gradual erosion of capital, creating a new class of poor people in the country. This occurrence can be described as “electronically-generated poverty” as the poverty comes through the application of electronic process in deducting commissions from the business man’s account as well as through the non-usage of electronic substitutes for payment. The occurrence can also be described as “policy generated poverty”, as the poverty comes through the direct implementation of policy.
Apart from businesspeople and money being transferred from one person to another for transcationary reasons, money can be transferred for personal, non-business and non-transcationary reasons as well, but both business persons and non-business persons alike. The price to pay for this is quite huge, as it will imply including the CBN’s charges in your budget, when transferring money for very personal reasons. In other words, the banking sector has a share of money (whether profits are made or not) in almost any transaction and any transfer of money which you undertake.
It is easy to say that if people do not want to incur charges, then they must use electronic means to effect payment. How many people know an iota about electronic means of payment? Among those who are electronically-literate, how many of them are brave enough to undertake this process, going by the huge loss of money due to fraud, encountered by some who have dared to do this in the past? Among the brave who have dared to undertake this process, how many of them can be careful enough to ensure they do not lose their mediums of cash holding, such as debit cards and credit cards or lose the privacy of their (Personal identification number) PIN to even someone as close as a family member, who needs just those few numbers to wreck havoc on the holder’s bank account? PINs do not need to be stolen before being known by another person. A good number of people willingly hand over their PINs to others, literally begging such recipients to assist them in effecting the use of the PINs, as they, the PIN holders, are often not technologically exposed or savvy enough to use the PINs.
It goes that in addition to the probability of widening the poverty gap and increasing the incidence of poverty in the country, other challenges to the success of the cashless policy are ICT literacy, conviction of service safety and greater client exposure to fraud as a result of service/instructional support seeking from third parties, and also, of entrusting the individual with all his money, which he or she prefers to entrust to the care and safe-keeping of the bank.
Functionality also comes into question. Many ATM machines do not function at all times. Either the bank complains of no network service, no electricity power and in some cases, no money in the ATM machines. This short-circuits the customer’s intention of using some of the available means of electronic –based transaction. Resorting to physical, over-the-counter means of financial payment attracts charges for the customer who will be in essence, paying dearly for the inefficiency of the system.
The cashless policy can however, promote the wide application of technology-enhanced business such as e-business and related web, internet and mobile phone/communication based businesses, but this will benefit only a limited number of people, as the vast majority of the populace are not endowed with such skills of using technological applications for business, and are either not yet ready to acquire such skills, or are not even in a position to acquire such skills. Despite these setbacks, the e-business community and other virtual platforms of transaction will receive a boost, no matter how little.
To help reduce the negative impact of the cashless policy, some may ask: “Why not a system that rewards users of cashless incentives rather than a system that punishes non-users?”
It’s understandable that in Nigeria, the reward system and the reward culture are not popular. A punitive structure and pattern is often unconsciously employed to ensure compliance to a rule, law or policy. Results can however, be greater if adherents are rewarded rather than dissents punished. As a form of conversion to the doctrines of a policy, the rewards enjoyed by adherents will act as a strong attraction to non-adherents, who will, in*a bid to enjoy same incentives, begin to adhere to the dictates of the rule, law or policy.
The CBN, as a pioneer in many innovations, can consider this reward-based system in attracting users to the cashless world, rather than imposing heavy fines on those who have not bought into the policy, many of who are already facing great difficulty in personal affairs, and many of who may eventually become the strongest converts and zealots of the cashless policy if all their needs and fears are suitably addressed.
A reward system can also rapidly promote interest in the acquisition of knowledge by users, who will be eager to benefit from the policy, and so, can psychologically connect with the CBN through a friendly platform rather than a hostile one. No mater how it is viewed or explained, a child who loves his parents will always obey them more easily than a child who hates his parents. This will translate to the loving child gaining more knowledge from his parents when compared to the hating child. Even in school, you listen to and learn better from teachers who you love, rather than from teachers who you hate. The truth is that technology and its applications cannot be forced down the throats of people, especially when such people are not founded on academic education in the first place. A vast number of the people have little or no exposure to formal education through schools of post-basic and higher learning, so will naturally be averse to things that relate to education. Therefore, a strategy which puts into consideration, the already severely malnourished educational state of the intended beneficiary may actually produce counter-benefits rather than benefits for the recipient, no matter how good the intentions of the giver is.
The cashless policy is good, but “good” is not the limit. The cashless policy can be made better through adopting a reward system for users, so that it won’t become a journey from cashless to cashloss.
A very high level of sensitization still needs to be employed. This implementation of money-based policies must not be done in a hurry, so long as the money of the everyday person is at stake. A five year plan should be set by the CBN, so that this period can be used for sensitization, structural development and the evolution of the right framework which will accommodate the needs of the masses, address their fears and give them cause to become zealous, unapologetic converts of the cashless policy