Bank customers groan as Abuja goes chashless

The cashless policy of the Central Bank of Nigeria (CBN), which set sail in Abuja and five other states in the federation on October 1, involving  Anambra, Abia, Ogun, Kano and Rivers  took many people by surprise despite weeks of sensitisation and campaigns by the apex bank.
CBN introduced cashless/cashlite policy into the economy in January 2012 with Lagos as pilot spot. But the novel policy met a lot of challenges of inadequate infrastructure, illiteracy and lack of enough sensitisation.
As a result, the introduction of the policy to other parts of the country, which would have taken off barely a year after it was introduced in Lagos, was delayed till July 1 instead of January.
In July when the policy was introduced in six more states, including the Federal Capital Territory (FCT), Rivers, Ogun, Kano, Anambra and Abia, a three-month window was given before penalty was applied. However, at the expiration of the three-month window on October 1, the full application of the policy was announced by the apex bank.
Following this, an individual’s transaction limit is N500,000 a day while a corporate body is entitled to N3 million transaction limit in a day from the same account.  Two per cent of excess amount is charged on deposit transaction for individuals while three per cent on deposit of excess amount is charged on corporate bodies.
Also, three per cent of excess amount is charged on withdrawals for individuals whereas five per cent of excess amount is charged on corporate customers.
On this, the Deputy Governor, Economic policy of CBN, Mr. Tunde Lemo, advised electronic device merchants to build in some mechanisms whereby the user will be compensated. This is to encourage them.  He saw the lack of use of the electronic system as sabotage.
“We have told the merchants.  We have told the operators to build in tips into the electronic payment transaction. There is a way you can encourage them to use. I personally went into one and they lied to me and said it was not working until I insisted and found out that it is working. There is a little bit of sabotage but we are dealing with it with the merchants themselves. And we have encouraged them to build in tips into the gadgets even into the arrangement such that at the end of the day their officers that make use of these are financially compensated,” he advised.

Your daily limit
On the penalties, Lemo said: “It is just charges that you are familiar with. If you are an individual and if you go to deposit any amount above N500,000 per day you are charged two per cent. That is the charge the bank will apply. And if it is withdrawal you are charged three per cent. But if you are corporate, of course that threshold is more than N500,000. The threshold is N2 million. And then of course if you deposit any amount above that in cash per day, you are charged three per cent. And if it is withdrawal it is five per cent. Those are the charges that are already applicable in Lagos area that we are bringing to this location. But however, you don’t necessarily have to go through that onerous task. Today, electronic payment transaction in Lagos area accounts for more than 70 per cent of high value transactions that happen everyday.  Daily, Nigerian electronic fund transfer and the NIP which, is driven by NIPS together account for three times the volume of cheques. So, if you have an already platform, why do you have to insist on cash,” he asked.
Similarly, all third party cheques above N150,000 will continue to be given value through clearing by lodgments into the beneficiaries bank account.

Change payment system
Giving reasons for the introduction of this novel policy, CBN Governor, Mallam Sanusi Lamido Sanusi, said that it is to drive development and modernization of payment system in line with Nigeria’s vision 2020 goal of being among the top 20 economies by the year 2020.
To this effect, an efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.
Also, he reasoned that the policy will reduce the cost of banking services, including cost of credit, and drive financial inclusion by providing more efficient transaction options and greater reach as well as improve the effectiveness of monetary policy in managing inflation and driving economic growth.

Stopping cash load
In addition, he said, the cash policy aims to curb some of the negative consequences associated with the high usage of physical cash in the economy, including high cost of cash: There is a high cost of cash along the value chain, from the CBN and the banks, to corporations and traders; everyone bears the high costs associated with volume cash handling.
High risk: Cash encourages robberies and other cash-related crimes. It also can lead to financial loss in the case of fire and flooding incidents.
High subsidy: CBN analysis showed that only 10 per cent of daily banking transactions are above N150,000 but the 10 per cent account for majority of the high value transactions. This suggests that the entire banking population subsidizes the costs that the tiny minority 10 per cent incurs in terms of high cash usage.
Informal Economy: High cash usage results in a lot of money outside the formal economy, limiting the effectiveness of monetary policy in managing inflation and encouraging economic growth.
Another reason proffered is Inefficiency and Corruption. Even corruption in the system is linked to high cash usage, leakages and money laundering, among other cash-related fraudulent activities.
As good as these reasons may seem, there are other extraneous factors which have posed a big challenge to the realisation of this lofty idea. They include the huge infrastructural gap in the economy. Not only that electricity is erratic, the Point of Sale (POS) and Automated Teller Machines (ATMs) as well as the network are hardly available or reliable.
The electricity infrastructure is hardly stable to power the ATMs and the POS. This is very frustrating to the user and ultimately, transaction is affected. Also, the lack of knowledge and enough sensitization will pose a serious challenge to the success of this policy because not many people in Abuja are aware of the introduction and the application of the device.
There is not enough provision of ATMs and POSs for the customers and the few that are available are overused and fail most times.
Some of the Abuja residents spoke to Abuja Metro about their experiences so far concerning the policy.

Omolayo
How can CBN introduce a policy without making an adequate provision for the people? For instance, there is no electricity to ease the operation of the machines. The machines are run on generators and there is a limit a generator can run. Also there is low internet connection and people, most times are frustrated in their quest to withdraw or save money.

Pat
The policy is a good one but it lacks good planning. In other countries where this system is operated, there is constant power supply and functional machines. But here, most of these machines are broken down. I went to the First Bank yesterday, out of the five ATMs in front of the bank, only one was functioning. Others had packed up and there was a large crowd waiting to use the only one. It is frustrating.

Gbola
The policy will boost the economy in the long run when adequate infrastructure must have been in place. But now, it is painful. The withdrawal limit is low and many don’t have bank account. Also, awareness is low.

Mohammed
It is nonsense. I blame the government for this policy because it ill-timed. They have not provided the basic needs of the banking populace. All they are quick to introduce is cashless policy. Well, that is not my business because I do not have any account in any bank.