The Moment (London)
Tony Chukwunyem
21 December 2011
WITH less than two weeks to the take-off of the pilot scheme of the cashless economy policy in Lagos (Cashless Lagos), divergent views have started trailing the Central Bank of Nigeria’s (CBN) decision to postpone the commencement date of penalties on cash transactions that exceed the stated limits in the policy.
Although the scheme will still begin on January 1, 2012, as originally scheduled, CBN, on Tuesday, confirmed The Moment’s recent exclusive report that the commencement date for the imposition of processing charges had been moved to March.
The apex bank’s head of corporate affairs, Muhammed Abdullahi, said in a text message that ‘cashless Lagos is still starting January 1, 2012, but the effective date of the processing charge for cash transactions above the limit has been moved to end of March 2012.’
Most financial analysts and industry stakeholders argued that the modification of the implementation schedule of Cashless Lagos was an admission on the part of the promoters of the cashless economy policy that some critics had been right in their reservations about it.
However, other analysts noted that the move by CBN was in order as it would facilitate the smooth implementation of the policy.
The cashless economy policy unveiled by CBN in April this year states that individual and corporate customers would be restricted to free daily cumulative cash withdrawals and lodgements of N150,000 and N1 million respectively.
It further states that ‘individuals and corporate organisations that make cash transactions above the limits would be charged a penal fee of N100/thousand and N200/thousand respectively for amounts above the cumulative limits.’
In other words, anyone depositing or withdrawing any amount above N150,000 would be charged N100 for every additional N1,000 while for corporate customers, the charge is N200.
The policy, which was jointly formulated by CBN and the Bankers Committee is intended to help in reducing the dominance of cash in the economy.
However, it was learnt that the decision to postpone the application of penalties on deposits was informed by fears that such an action could affect the level of banks’ deposits as customers may prefer to keep their money at home instead of paying extra charges for saving it in the bank.
It was also gathered that since the level of currency outside the banking system is still unacceptably high, it would amount to a waste of the resources that went into printing this currency if it remains outside the banking system.
A financial consultant, Biodun Adeboye, said: ‘The shift in the date shows that the policy was not well thought out in the first place. Otherwise, why should the penalties be made to apply to cash withdrawals as well as deposits?
If CBN is serious about wanting to boost financial inclusion, there should not be any charge on deposits.’
Also faulting the policy in an earlier chat, former president of the Association of National Accountants of Nigeria (ANAN), Dr. Sam Nzekwe, contended that Nigerians’ confidence in banks must first be boosted before the cashless banking policy is implemented.
According to him, ‘if all of us are within the banking net, you don’t need to talk about cash withdrawal limit of N150,000 and things like that.
What the policy will do is that it will encourage people who need a huge amount for a project to be withdrawing it bit by bit and keeping in their homes until the entire sum is withdrawn and they would have escaped paying the charges.
The implication is that robbers will get to know that people are keeping money at home and this will increase the level of crime.’
But a top official of a new generation bank who spoke on condition of anonymity noted that whatever were the weaknesses of the policy, they were outweighed by its benefits.
‘The cost savings alone that banks would get from this policy are enough to override its disadvantages,’ he stated.
It would be recalled that the commencement of the policy’s pilot scheme in Lagos would be followed by its take off in June 2012 in major cities of the country such as Aba, Port Harcourt, Abuja and Kano.
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