Important Things You Need To Know About Cashless Policy in Nigeria
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Important Things You Need To Know About Cashless Policy in Nigeria

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Important Things You Need To Know About Cashless Policy in Nigeria

Important Things You Need To Know About Cashless Policy in Nigeria

The pilot run of the cashless policy started on the 1 January 2012 in Lagos State. The service charges were with held till 30 March of the same year to allow for seamless migration from the manual to electronic devices. The second stage of the pilot run started in Rivers , Anambra, Abia, Kano State, Ogun and the Federal Capital Territory on 1 July 2013 while the program nationwide gospel started exactly a year after, 31 July 2014.

As the name implies, Cashless Policy means you can carry out financial transactions without the use of banknotes.

The Cashless Policy introduced the use of debit or credit card as well as electronic transfer in financial transactions.

In 2012, the CBN introduced the cashless policy programme as a pilot scheme in Lagos. The policy stipulated a ‘cash handling charge’ on daily cash withdrawals that exceed N500,000 for individuals and N3,000,000 for corporate bodies. This was under the leadership of the leadership of the Emir of Kano, Sanusi Lamido. The policy was effective in Lagos which led to the CBN extending it to six other states; Kano, Rivers, Anambra, Abia, Ogun and Abuja in 2013 and then in July 2014 it was rolled out nationwide.

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Cashless Policy in Nigeria: How It All Started

In 2015, the Central Bank of Nigeria issued a notice to all banks that began collecting charges on withdrawals above the threshold in the remaining 30 states. The banks were directed to put a hold on these charges until a directive is given by the CBN.

According to the circular, the following decisions were made:

  • Charges on deposits have been reintroduced.
  • Charges on deposits and withdrawals have been reviewed.
  • The new charges will take effect from the 1st of April 2017 in the following states: Lagos, Ogun, Kano, Abia, Anambra, Rivers and the FCT.
  • The policy shall be implemented with the charges taking effect on 1st May 2017 in the following states; Bauchi, Bayelsa, Delta, Enugu, Gombe, Imo, Kaduna, Ondo, Osun and Plateau.
  • The policy shall be implemented with the charges taking effect on 1st August 2017 in the following states Edo, Katsina, Jigawa, Niger, Oyo, Adamawa, Akwa-Ibom, Ebonyi, Taraba and Nasarawa.
  • The policy shall be implemented with the charges taking effect on 1st October 2017 in the following states Bornu, Benue, Ekiti, Cross-River, Kebbi, Kogi, Kwara, Yobe, Sokoto and Zamfara.
  • The income generated from the processing fees charged above the allowable cash transaction limits shall be shared between the CBN and the banks in the ratio 40:60.
  • Existing exemptions remains sustained for:
  1. Revenue generating accounts of the federal, state and local government (lodgements only).
  2. Embassies, diplomatic missions, multilateral and Aid donor agencies in Nigeria are exempted from all processing fees relating to the cash-less policy implementation.

Implementation of the cashless policy comes with several benefits. For instance, people and companies can convert their paper money to bank deposit which means that more people use banking services thereby reducing the cost of these services.

Also, the cashless policy can help improve the effectiveness of the monetary policy in managing inflation and driving economic growth. As an efficient and modern payment system has been associated with economic development

Furthermore, the policy can curb criminality usually associated with travelling around with a lot of physical cash. In situations like fire and flood, you’re sure to keep your money safe because it doesn’t exist in physical cash.

The cashless policy is also a means of combating corruption, leakages and money laundering, among other cash-related fraudulent activities.

Overall, we’ve highlighted the prospects of the cashless policy below:

Prospects of Cashless Policy in Nigeria

  • Convenience: You just need your mobile phone or debit card to make payment these days.
  • Reduction in cash handling and transport cost: The cashless policy makes the process of payment seamless hence there would no longer be the need to move large sums in expensive high-level security vehicles.
  • Boost tax base: This is possible because majority of transactions can now be traced by the government.
  • Conversion of savings into consumption or investment: this can help boost the country’s GDP and reduce unemployment rate
  • However, the cashless policy is not without its faults, some of these include:
  • Illiteracy rate: The illiteracy rate is still on the high side which may affect the total implementation of the cashless policy.
  • However, this can be solved by sensitizing and educating the populace on the benefits of going cashless and showing them how to adopt it.
  • Lack of economic data and indicators: The absence of these data and tool can make it difficult to analyze the actual impact of the policy on the economy.
  • Increased cost: Apart from the problem of theft, paper money cost nothing to keep but depositing your money in the bank comes with charges which may lead to a loss of a part of your money
  • Accessibility to bank: Many poor people especially those in rural Nigeria don’t have access to the banking system which can make the cashless policy difficult to adopt.

Additionally, electronic transactions are not immune to unpleasant events like extensive power outage, cyberattack and cascading bank failure which can stall the transaction process.

Overall, enforcement of the cashless policy will only succeed if the Federal Government bans cash transactions and defaulters should be penalized.

Recommendations to make cashless policy succeed in Nigeria:

  1. Periodic review of the policy to iron out grey areas.
  2. Embarking on intensive awareness campaign and sensitization of the citizenry.
  3. Putting adequate security mechanisms in place to forestall fraudulent practices.
  4. Making the public power supply work efficiently and
  5. Exempting cash lodgements and public holidays from cash management charges

Unfortunately, the Central Bank of Nigeria after commencing the nationwide implementation of the cashless policy on the 1st of April 2017 had to suspend the process 3 weeks later in 30 states of the federation.

The announcement came with the reversal to the old charges. Also, the CBN mandated that customers who had been debited for withdrawing and making cash deposits above the limits allowed under the policy be refunded.

It would be recalled that the CBN in line with the announcement of new charges on deposits and withdrawals above a threshold of N500000 for individuals and N3m for corporate organisations.

The bank had fixed 1.5% and 2% for deposits above N500000 and N1m in the individual category.

The CBN revealed that the old charges are to be reverted to 3% processing fee for withdrawals above N500000 in the individual category and 5% for withdrawals above N3m.

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Business

CBN, Governor Emefiele reacts to ‘missing’ of over N600bn

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Breaking News; Buhari appoints Godwin Emefiele, CBN governor for second term in office

The Central Bank of Nigeria, CBN and the Governor of the Apex bank, Governor Godwin Emefiele has reacted to rumour going around on social media and elite that about 600Bilion is missing since 2016.  The reactions of governor Emefiele was received on Monday morning by NIGERIA NEWS

This news was generated as a result of audio recording going around where the board of the CBN are heard saying 644bn is missing.

Here is the full statement made by the apex bank on the issue and audio recording.

The Management of the Central Bank of Nigeria (CBN) has been notified of a purported audio recording of selective conversations amongst the Governor, Deputy Governor and some Senior Officials.

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Contrary to the headline-grabbing narrative that the discussion was about a fraudulent transaction, this conversation – the beginnings of which was omitted to create a different impression – was simply to proffer solutions to a misunderstanding that affected the Bank’s balance sheet.

As publicly known, the CBN was approached in 2015 by the National Economic Management Team and the National Economic Council (NEC), chaired by the Vice President, to assist State Governments with Conditional Budget Support, in the aftermath of the significant nose-dive in global oil prices and associated FAAC allocations.

In order to ensure that ordinary Nigerian workers got their salaries, pensions and gratuities, and that the economy continued to recover from recession, the Bank provided about N650 billion in loans at 9% with a two-year grace period to 35 States of the Federation. These monies were distributed to the States monthly with documented approval of the Federal Ministry of Finance and the Presidency.

In closing the Bank’s 2018 accounts, external auditors in their Draft Account, erroneously classified about N150 billion of these loans as bad, which negatively affected the Bank’s Balance Sheet and shareholders fund.

The selective conversation being circulated was simply a discussion to ascertain why the auditors took that position and next steps to resolving it. Obviously, it soon became clear that a State Government loan cannot be classified as “bad” or “irrecoverable” when the State still exists and getting FAAC allocations.

The Bank then reached out to the Federal Ministry of Finance and they jointly gave comfort to the auditors who accepted in writing that these monies would be repaid. On this basis, the auditors reversed the negative entry and the certified that the CBN’s 2018 accounts were a true reflection of the State of Affairs.

Reconciliation of Balance Sheet items are regular conversations amongst Senior Management of many agencies and should not be misconstrued as anything but that. Had the online media which released the selective recordings sought the comments of CBN as required of journalism practice, we would have provided it.

Clearly, those who listened to the audio can easily ascertain that the conversation had nothing to do with anything fraudulent as purported. The Bank therefore urges all well-meaning Nigerians to disregard this audio and continue to trust that the Bank is doing everything it can to represent their interests in the best possible way.

Under the leadership of Governor Emefiele, the CBN has always stood for, and vigorously pursued transparency in its stewardship of public resources and policies. NO MONIES ARE MISSING OR STOLEN. The integrity of the CBN Governor remains unassailable.

He has no account in Dubai or anywhere in the world and would never convert the funds of CBN for personal use. Not in the past, not now and not ever. The use of selective wiretapped conversations of the Bank’s Management, to malign his character and integrity will never stand.

The Bank will pursue every legal means to bring the perpetrators to justice.

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Economy

Buhari appoints Godwin Emefiele as CBN governor for second term

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Godwin Emefiele reappointed as CBN governor by muhammadu Buhari, Nigeria president

The news reaching NIGERIA NEWS is that the governor of Central Bank of Nigeria, Godwin Emefiele has been reappointed by the Nigerians president, Muhammadu Buhari for the second term.

Recall that the tenure of the governor of the CBN is meant to expire next month, June buh his reappointment will see him spend another four years in the CBN.

NIGERIA NEWS understands that provided that Emefiele spends another full term he will become the first Nigerian to spend 8 good years in the apex bank of Nigeria since the returning of Democrazy in 1999.

BREAKING: The President of the Senate, Dr. Abubakar Bukola Saraki, has just read a letter from President Muhammadu Buhari, reappointing the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, for a second term.

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