*Stakeholders urge upward review of deposit, withdrawal limit
Barely one month after the Central Bank of Nigeria (CBN) introduced the cash-lite policy in Lagos , the scheme seems to have run aground, as banks and customers are carrying on with business as usual.
The CBN spearheaded a new payment system designed to encourage e-payment and cut banks operating costs. Under the policy, the minimum cash lodgement and withdrawal by individuals and corporate organisations are pegged at N150,000 and N1 million daily, respectively.
Even ahead of the extended March deadline for enforcing penalties for paying or lodging above the limits, stakeholders noted that the scheme which involves cultural change with the expected societal acceptance, was bedeviled with challenges, such as lack of Point of Sale (POS) terminals, low awareness and infrastructure, while regarding it as punitive and poorly driven.
They observed that the Nigerian economy has some daily cash based transactions which require some time for adaptation. Customers said despite the postponement of sanctions, the cumulative cash withdrawal/lodgment daily limits are punitive and too small, as they claim that the daily transactions of some traders exceed the sum, while it serves as disincentive to corporate organisations.
They further said the fact that the cash limits apply to an account, irrespective of channel, such as over the counter, ATM, third party cheques encashed over the counter, as well as Master card, among others, means that the policy is anti-investment and would punish hard work which produces more cash for daily business people, while at the same time, it could starve some sectors of daily cash for business.
Interestingly, the limit also applies to collection accounts and cash brought through Cash-In-Transit (CIT) licensed companies, as the CIT company only serves as a means of transportation.
BusinessDay investigations revealed that the service charge for daily cumulative deposits above the limit, into an account, shall be borne by the account holder, while the service charge for daily withdrawals above the limit into an account, shall be borne by the account holder.
The general feeling is that with the ‘business as usual’ approach by both the banks and customers, as well as pervasive ignorance, the policy, an initiative of the Bankers’ Committee, comprising the CBN, NDIC, the discount houses and the 24 deposit- taking banks, may be heading for a major disaster, unless the authorities go back to the drawing board.
They recall their harrowing experiences during the last strike called by labour and civil society, during which the ATMs often failed to dispense cash, saying with the dearth of the ATMs and Point of Sales (POS) terminals, as well as the fact that most banks do not have electronic products, the future of the policy is dicey. They added that the only way out, would be for the authorities to further postpone the implementation of the punitive aspect of it after the March deadline and go back to the drawing board.
“The major challenge with the cash-lite policy is that it involves a culture change, which will naturally take some time to gain societal acceptance. Such transformation policy, although plausible, needs gradual introduction. At present, the cash-lite policy is faced with several challenges, among which are lack of access to bank accounts by a greater percentage of Nigerians, the absence of POS terminals at most sales outlets, the low literacy level among the citizens, absence or unreliable communication infrastructure in rural areas, etc.
“In view of these challenges, I will suggest that the Central Bank increase the maximum amounts that can be withdrawn daily without penal charges by individuals and corporate organisations to N500,000.00 and N2 million, respectively. It can then subsequently reduce the amounts progressively, as the bottlenecks are addressed,” said Johnson Chukwu, managing director and chief executive officer, Cowry Asset Management Limited.”
Salami Abiodun, a customer of one of the banks on Allen Avenue, Ikeja, said “There is confusion everywhere, as even the banks do not have answers to most questions. On Thursday, I was refused withdrawal of about N200,000, but today they are counselling me that I could continue withdrawing any amount until April.”
Ameh Friday, an analyst with an oil servicing firm in Lagos, said, “My experience is that banks are still operating business as usual, some are saying charges will take effect from March, 2012. In my view, the CBN did not do enough enlightenment to create awareness that will sink into the minds of people before making the pronouncement of cashless transaction.
“Secondly, the infrastructure/technology in place is not sufficient to carry the transaction in the economy of both Lagos and Abuja e.g. ATMs do not guarantee access to cash all the time, check out during the strike, other e-based transactions are not in place e.g. credit cards etc.”
Continuing, he said, “Thirdly the kind of trust that backs e-transactions in developed economies is not here in Nigeria . The pilot scheme to me has not succeeded, therefore it should be postponed. Let CBN go back to the drawing board to review the test case.”
The policy, which is the migration from cash based economy to electronic payment channels, aims to curb some of the negative consequences associated with the high usage of physical cash in the economy. These include high cost of cash management; high risk of using cash; high subsidy; checking high cash usage in the informal sector as well as inefficiency and corruption which allow leakages and money laundering.
To effectively drive the process, the apex bank set a target for commercial banks to roll out additional 75,000 Automated Teller Machines (ATMs) across the country by 2015. It also planned massive deployment of about 375,000 Point of Sale (PoS) terminals in different parts of the country in the next four years.
However, Business Day gathered that the CBN’s earlier target of 40,000 PoS terminals by the end of last December for the ‘Cash-less Lagos ’ project to cater for settlement of transactions, alongside other electronic payment options was not met. Only shopping malls, clubs and other social centres in the high brow areas of Victoria lsland, Lekki and Ikoyi had some limited quantity.
Last year, Tunde Lemo, CBN deputy governor, Operations, reportedly raised an alarm over frustration from other government agencies, saying that majority of the PoS meant for deployment to Lagos were being held at the nation’s ports by the Nigeria Customs Service (NCS).
