CBN ‘Counterproductive’ Policy Forced Nigerians to Pay Cash

President Muhammadu Buhari and the governor of the Central Bank of Nigeria, Godwin Emefiele.
  • CBN ‘Counterproductive’ Policy Forced Nigerians to Pay Cash

The Central Bank of Nigeria has introduced several policies and directives to stimulate growth, turn Nigeria into a cashless nation and increase the number of adults in the financial system through its financial inclusion programme.

The numerous policies and directives were to achieve government aim of creating jobs and improve revenue generation by ensuring working Nigerians pay taxes.

However, poor wage growth amid several charges in a nation with 23.1 percent unemployment rate has forced several consumers to shun convenience, created by the growing fintech space for cash payment, in an effort to beat extra charges imposed by the central bank on PoS usage.

In September, the CBN had directed all Point of Sale (PoS) owners to charge an additional N50 stamp duty per N1000 transaction despite advocating for a cashless society.

This was after the Federal Government closed Nigerian land borders in August, pushing prices of food items about 50 percent above their normal price.

The surged in consumer prices boosted inflation for a second consecutive month in October to 11.61 percent, further hurting consumer spending and savings.

Merchants have said customers, in a bid to manage their expenses better, have resorted to cash payment.

The President, Association of Mobile Money and Bank Agents in Nigeria, Mr Victor Olojo, said: “We have filling stations and big merchants who have actually dumped the PoS because customers have declined using it and in other cases, it is not profitable any more when they don’t charge customers; they have to bear the cost of the N50 stamp duty.

“To a large extent, the PoS is still a very important tool for agent banking and in most cases, the agents try to push the N50 stamp duty charge to the end users.”

Last week, the Federal Government asked Nigerians to demand PoS payment at the post office, saying it will help to curb leakages. The same government is imposing an additional charge on every single transaction charged via PoS.

The story is not different in the bank where customers are saddled with various financial burdens.

A recent report showed six Nigerian banks generated N675.9 billion non-interest income in the first 9 months of the year.

Non-interest income is income generated from monthly account service charges, deposit and transaction fees and annual fees.

Six Nigerian banks generated N675.9 billion or about 0.6 percent of Nigeria’s 2020 proposed budget by charging customers for service in a largely automated system.

Financial experts have said this will continue to impact CBN’s financial inclusion and cashless policy programmes as more Nigerians, especially its largest population – the uneducated, may dump card payment for cash payment and bank for virtual currencies.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

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