Federal Government Prohibits Cash Payments to MDAs, Directs Use of POS Terminals

The Federal Government has announced a new directive prohibiting cash payments to Ministries, Departments, and Agencies (MDAs), mandating the installation and use of Point-of-Sale (POS) terminals to facilitate electronic transactions. The policy is part of ongoing efforts to enhance transparency, reduce revenue leakages, and strengthen accountability in public financial management.

Officials explained that the cashless initiative is designed to minimise the handling of physical currency within government offices, which has historically been associated with delays, misappropriation, and poor record-keeping. By requiring MDAs to adopt POS systems, the government aims to ensure that all payments, including service fees, levies, and other charges, are securely processed and directly recorded in official accounts.

According to sources within the Ministry of Finance, the policy mandates that all relevant MDAs deploy functional POS terminals across their offices and provide alternative electronic payment channels to citizens and businesses. The government stressed that this shift is intended to streamline payment processes, improve efficiency, and facilitate real-time monitoring of government revenues.

The directive comes amid concerns over inefficiencies and opaque cash handling practices in some MDAs, which have often been blamed for gaps in public revenue collection. Authorities emphasised that transitioning to electronic payments aligns with global best practices in public finance, while supporting broader digitalisation initiatives aimed at modernising government operations.

Officials highlighted that the move will also benefit citizens and businesses by reducing the need to make physical cash payments, cutting transaction time, and enhancing convenience. With POS terminals, payments are automatically recorded, generating receipts instantly and reducing the risk of human error or misplacement of funds.

The Federal Government has directed that all MDAs comply within a specified timeframe, warning that failure to install and use the terminals will attract penalties and could affect operational approvals or budget allocations. Authorities stressed that the policy is non-negotiable, noting that full compliance is critical to achieving the intended outcomes of financial transparency and improved governance.

Industry observers welcomed the directive, noting that electronic payments have become an essential tool for reducing corruption and improving accountability in both public and private sectors. They suggested that widespread adoption of POS terminals in government offices would help track revenue flows more accurately and minimise opportunities for fraudulent practices.

Financial technology experts also pointed out that the implementation of POS systems could encourage further adoption of digital payment solutions in Nigeria. By exposing citizens and businesses to convenient, secure, and traceable payment channels, the policy may accelerate the country’s broader cashless economy agenda.

Some analysts noted that while the move is promising, its success will depend on adequate infrastructure, staff training, and public awareness. Ensuring consistent power supply, reliable internet connectivity, and technical support will be critical to the smooth operation of POS terminals in all MDAs. Additionally, educating citizens on how to make electronic payments safely is expected to increase acceptance and participation.

Government sources indicated that a phased rollout will begin in major urban centres before extending to other regions. The initiative will be monitored closely, with compliance reports submitted regularly to the Ministry of Finance to track progress and address challenges promptly.

Civil society groups have welcomed the policy, noting that it has the potential to reduce corruption and improve public trust in government revenue management. They urged the government to pair the rollout with strict enforcement mechanisms and public sensitisation campaigns to ensure maximum effectiveness.

The Federal Government’s cashless directive also complements recent reforms aimed at enhancing financial inclusion, promoting digital transactions, and reducing dependency on cash. By institutionalising electronic payments across MDAs, authorities hope to create a transparent, efficient, and accountable system that supports good governance while facilitating economic growth.

As the policy is implemented nationwide, stakeholders anticipate a gradual but significant reduction in cash handling within government offices, improved revenue tracking, and strengthened fiscal discipline. The adoption of POS terminals in MDAs is therefore expected to mark a major step forward in Nigeria’s drive towards a fully digital public financial management system.