{"id":7364,"date":"2013-07-30T11:41:06","date_gmt":"2013-07-30T11:41:06","guid":{"rendered":"http:\/\/disnaija.com\/nigerian-newspapers\/combating-graft-through-cashless-policy\/"},"modified":"2013-07-30T11:41:06","modified_gmt":"2013-07-30T11:41:06","slug":"combating-graft-through-cashless-policy","status":"publish","type":"post","link":"https:\/\/disnaija.com\/combating-graft-through-cashless-policy\/","title":{"rendered":"Combating graft through cashless policy"},"content":{"rendered":"
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By Chima Titus Nwokoji<\/p>\n

The introduction of a policy that was meant to move Nigeria\u2019s economy from cash based to a less cash dominated economy was driven by the need for development and modernization of payment system in line with Vision 2020.<\/p>\n

Thus, beginning from April 1, 2012, banks keyed into this policy initiative of the Central Bank of Nigeria (CBN).<\/p>\n

They started to encourage their Customers by educating and accommodating them to try other payment channels other than cash.<\/p>\n

A \u2018processing fee\u2019 on daily cash withdrawals or cash deposits that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies was instituted. Ever since its introduction, the policy has faced a lot of opposition and critical punches, but like a fast moving train, it has continued its movement, and its acceptability in major cities across Nigeria is on the increase.<\/p>\n

The second phase of the project tagged Cash-less Nigeria commenced again in five states, Abia, Anambra, Kano, Ogun, Rivers and the Federal Capital Territory, Abuja on Monday, July 1, 2013.<\/p>\n

Arguably, it is expected that CBN might have leveraged on the challenges and hiccups noticed from the Lagos pilot exercise, but the latest huddle seems to be coming from political bigwigs, bent on stopping a moving train.<\/p>\n

Their concern might have been that it would be difficult if not impossible to move the usual \u2018Ghana must go\u2019 within the political circle. Analysts believe that if not for the singular reason of perpetuating corruption, no right thinking Nigeria would want the consequences of heavy cash usage in daily transactions to continue in the 21st century.<\/p>\n

Aside from rendering monetary policy ineffective, a cash-based economy encourages many other vices such as kidnapping, corruption and revenue leakages in the public sector. On the concern raised by a section of the law makers who wants the CBN to put a stop to the policy, Professor Olu Ajakaiye of the university of Ibadan and Ex-chairman, African Centre for Shared Development Capacity said the idea of stopping cashless policy in Nigeria today is a defeatist strategy. He believes that the national assembly should be working with the central bank to overcome identified constraints.<\/p>\n

\u201cSome of the reasons adduced to support the idea of scrapping cashless policy are not within the powers of the central bank. CBN does not provide electricity but the NASS in conjunction with the executive have control over the budget.<\/p>\n

They can initiate policies and approve certain amount for provision of electricity which is one of the infrastructures needed to drive cashless economy. So it is in other areas. The Nigeria Communication Commission is there to help on issues concerning telecom companies.<\/p>\n

NASS and other government agencies should work with CBN and not working against it. We cannot say because we are not cashless yet, then we should remain a cash based economy,\u201d Ajakaiye stated.?<\/p>\n

The professor sounded loud and clear that rolling back is a defeatist approach. He would prefer an engaging and collaborative approach and not to suggest remaining where we are because of fear of challenges.<\/p>\n

\u201cLet us create the challenges and then overcome them. That is our job, if we must move forward. Because there were no industries to work in, should we all have refused to go to school and remained peasant farmers? Nobody argues that way. We went to school and jobs were created to absorb us. That is the way development is advanced,\u201d he emphasized.<\/p>\n

Statistics show that cost of cash transactions to the Nigeria\u2019s financial system has been high and increasing annually.<\/p>\n

A 5-year projection of the direct cost to Financial System, excluding bank cash infrastructure costs and employee costs attributable to cash logistics is estimated at N114.5 billion as at 2009. It has also been revealed that Nigeria is lagging behind among comparable economies in terms of payment system maturity.<\/p>\n

Thus, in 2011 the percentage of cash in circulation to GDP was 41per cent in Nigeria and as low as 4.5 per cent in Indonesia, 1.9 per cent in South Africa and 35 per cent in Venezuala.<\/p>\n

Some antagonists of the policy believes that little or nothing has been achieved on the Lagos pilot project\u00a0 as non of the identified challenges like:\u00a0\u00a0 lack of understanding of cashless policy amongst the banked and unbanked; Techno-phobia; infrastructure lag; distrust in the banking system; independent online-real-time monitoring of electronic channels up-time, among others.<\/p>\n

But records from other stakeholders and the Lagos State government show that: Internally generated revenues (IGR) have tremendously improved with diversion of fund and excess charges on the state account minimized.<\/p>\n

The Lagos State Government has created a customized database infrastructure based on cutting-edge technology, which simplifies revenue collection and tax administration. The new system according to the tax office eliminates\u00a0 all sources of revenue leakage on all fronts especially through Taxpayers, Revenue officials, and Banks.<\/p>\n

It has created an online Database in respect of Taxpayers whose taxpaying habits are monitored real-time. The Data base is able to generate with a high degree of accuracy projected revenue of future periods from all sources.<\/p>\n

Although the PoS is the most preferred means of payment after cash for the merchants, only 15 per cent of the transactions are perceived by the merchants as transactions successfully performed.Along the time, this fact has impact in the level of adoption of this payment method leading people not to use PoS due to the unreliability of this payment method. Looking at damages which cash-induced corruption does to an economy, one can quickly conclude that the successes of cashless policy far out way its failures.<\/p>\n

The CBN Deputy Governor, Operations, Mr. Tunde Lemo in his sensitization campaign tours across the newly selected states reiterated that much have been covered in terms of addressing some of the initial teething problems associated with alternative payment platforms.<\/p>\n

For instance, the number of PoS and ATM machines has been tremendously increased since December 2011, with better technology and enhanced security features embedded.<\/p>\n

The cumulative number of PoS deployed\/connect to NIBSS central Terminal Management System stood at 120,605 and registered merchants reached an all-time high at 176, 255 as at June 16, 2013. The new PoS has enhanced features to take care of power outage and minimize the problem of interconnectivity such as 24hrs battery life to help save on power outage and 2 SIM slots for better connectivity.<\/p>\n

Meanwhile, the Bank has also assured that adequate dispute resolution mechanism are regularly being finetuned to address various complaints arising from the use of these alternative payment platforms.<\/p>\n

The CBN on its part has step up actions to ensure that that users of payments services get adequate attention from service providers. While established the office of the Ombudsman for the financial services is still in the mills, the Bank has created a Consumer and Financial Protection Department to strengthen users\u2019 confidence and promote adoption.<\/p>\n

Some financial experts have at various occasions called on all stakeholders join the CBN in its pursuit of the policy objective: \u201cto reduce the cost of banking service, including the cost of credit and drive financial inclusion, by providing more efficient transition options and greater reach.<\/p>\n

Improve the effectiveness of monetary policy in managing inflation and driving economic growth for the advancement of the economy.\u00a0 Nwokoji is on the staff of The Sun<\/p>\n

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Posted in Nigerian Newspapers. <\/a>A DisNaija.Com<\/a> network.<\/p>\n

Source: The Sun Newspaper<\/p>\n

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