The Central Bank of Nigeria (CBN) has explained why it suspended the planned nationwide implementation of the cashless policy in 2017.
Aishah Ahmad, deputy governor, financial system stability directorate, CBN, spoke on Thursday while briefing the house of representatives on the cashless policy and the new withdrawal limits.
According to Ahmad, the suspension was to allow more citizens to fully embrace alternative electronic payment platforms, and ensure further development and expansion of financial access points.
Ahmad explained that the cashless policy was introduced in phases, first in Lagos on April 1, 2012, to reduce the use of cash in the economy, encourage electronic transactions and enhance the efficiency of the Nigerian payments system.
Following the successes recorded during the pilot phase, she said the policy was extended to five other states (Abia, Anambra, Kano, Ogun and Rivers) and the federal capital territory (FCT) in July 2013.
Under the policy, a daily transaction limit of N500,000 and N3 million for free cash withdrawals and lodgments was imposed for individual and corporate customers, respectively.
“Processing fees for transactions above the prescribed limit was fixed at 3 percent and 2 percent for withdrawals and lodgments by individuals and 5 percent and 3 percent for withdrawals and lodgments by corporates, respectively,” Ahmad said.
She said, although the full, nationwide implementation slated for April-October 2017 was suspended at the time, the cashless policy remained in force in the six states and the FCT.
“In recognition of significant strides recorded in the transformation of the Nigerian payment system, expansion of financial access points, financial inclusion and proliferation in electronic banking, the CBN on September 17, 2019 announced implementation of full cashless policy in the FCT and the six states (Lagos, Abia, Anambra, Kano, Ogun and Rivers),” Ahmad explained.
“The CBN also approved the reintroduction of charges on excess cash deposits by individual and corporate customers above the prescribed limits that were temporarily suspended in 2017.”
Ahmad said the cashless policy would now be implemented nationwide by January 9, 2023.
The development, she explained, is in response to the “significant evolution of the Nigerian payment system and widespread availability of a plethora of financial touchpoints and electronic payment options to all Nigerian citizens.”
She further clarified that there are currently no processing fees applied to cash deposits in order to enable seamless and unrestricted deposit of any notes affected by the currency redesign.
Ahmad listed the benefits of the cashless policy to include reduction of cost of cash management (processing, movement, security, destruction of old notes) which is often passed on indirectly to Nigerians, including eliminating the physical risk of cash – robbery, kidnapping, terrorism.
Others are promoting Nigeria’s positive reputation for fighting money laundering and terrorist financing; deepening the Nigerian payment system through more innovation and cheaper costs; and more effective transmission of monetary policies.