Cashlless Policy: Stakeholders laud CBN as operations extend to more states

[Mirror]

Clearly and determinedly, the Central Bank of Nigeria (CBN) may have rubbished all negative presumptions about its lack of capacity to pursue the cashless banking policy to logical conclusion as the frontiers of its implementation will cover five more states and the Federal Capital Territory tomorrow.

With about 18 months into the implementation journey of the innovative policy, indications have shown clearly that the project is on course, despite initial fears by pessimists that the project would be hampered by operational hiccups and the political whirlwind that had caused many similar beneficial policies to crash in the past.

Expectedly, the Board and management of the regulatory bank have over the past few months proved that they were determined to ensure that the policy succeeds by learning through mistakes of the pilot project in Lagos, listening to constructive criticisms and adopting best global practices to gradually integrate the Nigerian financial system into the world financial operational portal.

Even when the journey has not been smooth all through, the gains of the daring adventure being championed by Mallam Sanusi Lamido Sanusi and his team are beginning to show for all as one of the best options open to the country in improving the efficiency of the financial system.

The apex bank had projected that the operations of 'Cashless Lagos' project and the subsequent phased extension of the implementation of policy into other parts of the country would substantially reduce the cost of banking services (including cost of credit), drive financial inclusion agenda by providing more efficient transaction options and improve the effectiveness of monetary policy in managing inflation and driving economic growth.

According to the CBN, the take-off of the cashless project in Lagos by December 2011 would be supported with the deployment of about 40,000 ATMs per 100,000 persons in different parts of Lagos.

In addition, the architects of the project also projected that by June 2012 the number of ATMs in Lagos would have increased to 75,000 ATMs per 100,000 persons and by December the installed capacity of 150,000

ATMs per 100,000 persons would have achieved to drive the drive the ambitious cashless banking project in the country. The medium term projection is to have 375,000 ATMs deployed nationwide by 2015.

The Director of Banking Supervision of the, Mr. Joe Adewole, had at the end of the Bankers' Committee on June 7, 2011, assured Nigerians and members of the public that the bank will implement the policy with all sense of responsibility to ensure that banking transactions go on without any problem.

Despite all its hiccups, the policy has achieved some level of success when analysed within the context of customers' awareness, reduction in banking operations costs and reduction of frauds within the banking system following the introduction of the KYC policy about a year ago.

For instance, the Governor of the apex bank had at the Strategy Execution Master Class of the FSS 2020 held on September 14, 2011 said reports indicated that ATM-related frauds reduced by 90 per cent, even as he disclosed that the apex bank was also deepening the yield curve in the financial markets and the level of transparency.

Although complaints about malfunctioning ATMs, POS and other platforms being used to drive the policy still remain, the CBN has continued to respond to such complaints with appropriate policy statements and actions that suggest that if embraced fully, the economy would be better for it in the years ahead.

Available statistics captured by Financial Derivates Company (FDC), one of Nigeria's leading financial and economic consulting companies in the country, in its latest presentation at the Monthly Economic News and Views at the Lagos Business School Executive Breakfast Meeting of June 5, indicated that there had been remarkable increase in card-based transactions.

The FDC also noted that electronic transactions on the Nigerian Inter-Bank Settlement had also reached N80,000 daily (about N2.4 billion monthly) just at it observed that the implementation of the restriction on third party cheques not to exceed N150,000 across the country may have begun to rob on positively on the implementation of the policy.

The Bankers Committee of the CBN had on June 11 this year hinted of plans by the apex bank to extend the policy to five additional states in view of the achievements recorded in Lagos and the need to engender the culture of card and expand the frontiers of the financial inclusion drive nationwide.

Speaking on the plan, the Acting Director Banking Supervision of the CBN, Mr. Fakunle Adeoye, said the decision by the Committee to extend the operations of the cashless transactions to five states, namely Ogun, Kano, Abia, Anambra and Rivers and the FCT was informed by the progress and the success recorded in Lagos and an attempt to ensure that the use of cash transactions is discouraged in the economy.

With less than 24 hours of the extension of policy to the Federal Capital Territory and five other states, analysts have rated the implementation of the cashless policy as desirable for the economy in view of its long term benefits.

Just a few days ago, Governor Rotimi Amaechi of Rivers State declared support for the cashless policy of which the introduction will kick off this tomorrow in the five targeted states, stressing that the policy will curb corruption in Nigeria. The Governor stated this when he received a delegation of the apex bank led by the Deputy Governor Operations, Mr. Tunde Lemo in his office which was in the state as part of the Bank's sensitization programmes ahead of the commencement of the policy in the state. According to him, his support for the cashless policy stemmed from his conviction that the policy, as designed, would reduce the volume of physical cash in circulation, thereby narrowing the window of corruption.

"The CBN and its Governor (Sanusi) have my 100 per cent support if they are putting in place policies that will curtail unfettered access to the assets of Nigeria," he stated. Governor Amaechi, however, emphasized the need to fast-track the roll-out of the policy across other states of the federation in order to ensure uniformity and a level-playing field for all. Speaking further, the Governor pointed out certain peculiarities, particularly in coastal communities of Rivers State, which he noted would pose huge challenges to the success of the policy.

While disclosing that the Rivers State government had made efforts to provide infrastructure to link the riverine communities with the mainland, he expressed the view that the ordinary fisherman in these communities would still need to be fully educated in order to embrace the policy. He therefore urged the CBN to increase the tempo of its campaign for behavioral change among the banking public as well as ensure that the necessary banking infrastructure are put in place to ensure that the populace is not short-changed.

Mr. Lemo, while explaining the benefits of the cashless policy, emphasized that the policy did not in any way denote a zero cash policy but a demonstration of the Bank's commitment to increase the number of cashless platforms as well as improve on available infrastructure in order to meet the demands of customers and ensure the success of the policy.

Taking the Governor through a presentation, the CBN chief said the policy had recorded success in Lagos and other climes where the cash volume in the economy was low, adding that the volume of cash transactions necessitated the choice of Rivers and five States, including the Federal Capital Territory (FCT), to go live with the cashless policy next week.

In his reaction to the planned extension of the policy to more states, an Abujabased financial analyst, Ibrahim Dauda, told Sunday Mirror that "doing so will translate to gains for the economy as we have realized now that the security of the transactions platforms are being beefed up by the regulatory authorities and thereby minimizing the risks of electronic transactions.

Adamu, who said he was optimistic that what had been done in Lagos and the lessons would facilitate successful implementation of the policy in other states, however urged the CBN to continue to encourage the building of technological infrastructure required to ensure hitch-free implementation of the policy in the years ahead.

"I think so far the progress made has been remarkable as those in the grassroots and farmers in some areas now know how to use card for their transactions. I foresee that within the next two years, the whole country could be covered. Despite all the gains, involvement of private sector in providing the infrastructure is crucial. This is an area the authorities should focus on as they go on with the laudable agenda" Adamu advised.

National Mirror