As part of the strategy to fast track the implementation of its cashless policy, the Central Bank of Nigeria’s (CBN) Monetary Policy Committee (MPC) recently introduced several measures which included new charges for cash deposits and withdrawals in banking transactions across the country. A circular issued last week Tuesday to all banks, signed by CBN’s Director, Payment Systems Management Department Sam Okojere said MPC approved new banking charges in respect of deposits and withdrawals by individuals and corporate organisations.
According to the circular, new processing charges of 2% and 3% respectively are to be enforced by banks on deposits and withdrawals in excess of N500,000 for individual customers. For corporate customers, the new rates are 3% and 5% respectively for deposits and withdrawals in excess of N3 million. The new charges are to operate in selected pilot states of Lagos, Ogun, Kano, Abia, Anambra, Rivers and the Federal Capital Territory.
Justifying the charges, CBN Governor Godwin Emefiele said they were not intended to short change any customer of his hard-earned money but to encourage the use of on-line banking platforms. Besides they are not actually new, having been initially introduced in 2012, when it was considered that there was too much money outside the banking system. The measures are returning now, after a five-year suspension between 2014 – 2019. The suspension was at the instance of CBN to allow for the full implementation of the cashless policy across the country, in order to minimise the pains of banking customers as it was then too early to penalize people who were bringing money to the banks. The measures are returning now as the apex bank considers it appropriate to in Emefiele’s words, “return all the cash that is kept in people’s houses to the banks”. According to him, at the time of their initial introduction in 2014, the CBN had engaged a wide field of stakeholders.
The reasons given by CBN notwithstanding, the relaunch of the measures seems to have generated a multi-dimensional furore, with consequences that are vitiating much of the merit justifying the exercise. CBN’s implementation of the cashless policy is commendable, but the exercise can still be executed without unnecessary pains for Nigerians. The pains are in different forms for different classes of the citizenry. In the first place, it is wrong for CBN to assume that much of the critical infrastructure for implementing cashless society in Nigeria are in place for the use of bank customers, especially those in the informal sector. Hence, CBN acted prematurely by fixing the threshold of N500,000 for individual bank customers in the country, as it falls below the daily volume of cash transactions of many operators in the informal sector.
Expectedly, the prospects of losing any portion of their hard-earned money can serve as a disincentive for such customers to avoid saving money in the banks. CBN may therefore need to raise the threshold for individual customers to at least N1 million and N5 million for corporate customers. After all, the measures for now are at the pilot level and hence are amenable to further adjustments.
Meanwhile CBN needs to fast track ease of transactions in the cashless policy agenda, as such is still a major hindrance, especially with respect to rural Nigeria where banking facilities are still far below the expected level. Although the apex bank has implemented some level of saturation of banking services in Nigeria through the mobile banking facilities [ATMs and POS], these facilities are still woefully inadequate in rural and semi-urban areas.
Also important is the need to see how to repackage its relaunch of the measures to erase the groundswell of resentments and the allegations that the new measures are fresh avenues for banks to milk the banking public with additional charges. Such fears in the public domain will prove deleterious to whatever gains CBN and the country hope to reap from the cashless policy.
