“Indeed, the proliferation of new electronic and mobile instruments has opened the door to a possible revolution of the payments landscape” (Bryony Pearce)
It never ceases to amaze me when a section of the political class in the Third World tries to skew the operations of the mass media in such a way that their hidden agenda on the nation’s economy would transmute into ‘national interest’. To achieve their desired end, no media budget for changing narratives is too much. They may buy quickly into any idea of a well-funded revisionism handed down by their public visibility consultants. This may well be the first category of antagonists of cashless policy that the current Central Bank of Nigeria (CBN) has been battling with, since the year 2012.
They argue vigorously in the media, that national economic growth can be achieved with all the liquidity in the economy being outside the banking system. Discerning observers and even those with elementary knowledge of economics would find this politicised angle nearly obtuse.
Opponents of cashless policy who have bandied disingenuous arguments would rather turn a blind eye to the global economic trends and deliberately shut out the prevailing economic dynamics.
They also have no scruples about enlisting the support of some imaginary “stakeholders” to dominate popular television, radio and respected newspaper spaces to sway the tide of positive public opinion on any CBN policy, making their victims feel like jumping out of their skin. The stunt is usually to dissuade the citizenry from ever listening to the CBN side of the argument.
Let us take a second look at the CBN’s argument. Wherever paper money gets withdrawn from a nation’s financial transaction, a fully digitalised system would wipe our tax evasion and money laundering, reduce transaction costs and check the liquidity that stunts economic growth. CBN’s cashless policy is to make government more easily track every single transaction, blocking all loopholes that fraudsters may want to sneak in.
Most importantly, as with the case in many parts of the world today, the CBN can pursue any beneficial monetary policy – including negative rates.
The reduction of paper currency in circulation offers advantage for government to effectively manage the banking system.
According to a British FinTech blogspot, “For businesses who often find themselves with hefty queues, particularly during peak times like commuting hours, opting to go cashless will speed up the check-out process significantly, cut down on queueing time, and increase the chance of consumers who’re in a hurry are popping in to make a purchase.” Even in the Nigerian case, I dare say it would be faster as well.
Another fact is that the Cashless policy of the CBN has the added advantage of comparatively more convenience. How?
Recent studies have shown it is one of the top deciding factors in purchasing decisions. The choice of cashless banking promoted by the apex bank removes the stress on shoppers to go searching for an ATM for cash withdrawal or even visit the nearest bank’s branch and join long queues; or, like Takepayment blogspot described it, “worry about carrying enough change to make a small purchase – all of which can be enough to put them off completely”
Another thing for consideration in the cashless policy is safety.
Cashless transactions are safer in three ways according to a team of financial experts in Britain and South Africa. They are:
a) It reduces the risk of robbery. Elsewhere, one cafe, for example, opted to go entirely cashless in 2017 after suffering five robberies in the space of four months.
b) It eliminates staff theft. Hopefully, this is something you’ve never experienced or needed to worry about, but research shows employee theft costs UK businesses £190 million a year.
c) It lessens susceptibilty to fraud. The security behind card payments is constantly being updated and tightened. With cash payments, there’s always a risk of counterfeit money. In the first half of 2019, for example, 228,000 fake notes worth the equivalent of £5 million were taken out of circulation, says Takepayments blogspot.
Undeniably, cashless banking system can offer opportunity for the account owner to make purchases and pay in one piece, without visiting the ATM to make up for the total amount needed to complete the payments. This seldom happen with cash purchases. Experts argue thus: having a finite amount of cash in your wallet will put an upper limit on your purchasing compared to the flexibility on offer with a card.”
They went so far with a coinage, known as ‘friction-free spending’, though some would like to argue that there will be a tendency that people will be tempted to spend more. Training our minds on disciplined spending should take care of this.
It is also important to note that cashless policy saves time. Let us ponder a little. Most banks in the Third World are so far apart that often, a customer needs to drive quite far to get an ATM. To this, experts are questioning how much time it will take certain buyers to go and withdraw cash. They even question “how much goes into handling cash for a business? It involves regular trips to the bank to make deposits and needs counting up at the end of every day.”
Consider this scenario: “One business who took the plunge and went cashless put the decision down to their desire to grow their business and explained how two hours of every business day was lost to cash management per store.”
Significantly, cashless banking has great potentials of improving accounting.
Second scenario, offered by a finance specialists on the internet space: “Going cashless makes accounting a doddle, not to mention more accurate since you cut out the occurrence of human error when handing out change.”
An experience outside Nigeria’s shores
Here is a report. In recent years, the growth of online sales has been astronomical, in fact, the stats show in 2019 £1 of every £5 spent in the UK was spent online. What does that add up to? It’s pretty safe to assume then that business owners who operate online want a piece of the action…”
Very recently in Lagos, a meeting of economic experts highlighted the gains of cashless banking policy in Nigeria. Speaking in that meeting of the Nigeria Electronic Fraud Forum (NeFF) in Lagos the CBN Director of the Payments System Management Department, Musa Jimoh, said that fraudulent transactions reduced by 35% in 2022.
He revealed that currently fraudsters proceed to an ATM to withdraw everything at around 2 or 3am.
He noted that the system will be able to track down and stop such accounts before the money is taken away, therefore you won’t be able to steal as much money as you could in the past, due to the policy on limits.
Therefore, this cashless limit serves as a means of discouraging thieves from stealing other people’s money.
He reportedly disclosed at that meeting that, in terms of proportion, fraud instances have decreased by 30% to 35%.
“And in terms of recovery, we also recovered high numbers in terms of the percentage of the monies recovered because of the different initiatives and systems that have been put in place to checkmate all those fraudsters and to track wherever the money is taken into”, he further told the meeting.
The antagonism towards the cash limit policy of the CBN therefore is not grounded in well-known economic facts but seems more driven by an agenda best known to those opposed to it and their lackeys.
Nigerians at the lower rung of the ladder have maintained a studied silence, probably because those in the forefront of calls for reversal of cash limits have decidedly partisan badges.
Dambatta, a veteran journalist, writes from Kaduna via [email protected]
