Some issues in the new cashless policy

I have again just received notice from my bank about the new CBN cashless policy that came into force today, September 18, 2019. According to the bank, the policy is meant to “help promote the cashless policy in Nigeria.”  I have no problems with the righteousness of that good cause.

This second notice is actually the existing policy now strengthened with some tweaks. But for reasons that were neither offered nor could be guessed, the apex bank appears to be testing its own policy in a manner that suggests it is a pilot scheme at the moment. The new policy took off today in only six states – Lagos, Kano, Ogun, Abia, Anambra, Rivers states and the federal capital territory, Abuja. I thought a major policy this important should take off simultaneously in the 36 states and Abuja. Why is it necessary for the bank to implement it piece meal?

I would not be surprised if the policy runs into hot okra soup of self-invited controversy. The main thrust of the policy, judging by the information my bank passed on to me, is a) the imposition of daily withdrawal limits of N500,000 and N3,000,000 on individual and corporate transactions respectively. There are penalties for exceeding these limits. An excess withdrawal by an individual attracts a 3% charge; and 5% in the case of a corporate body. Existing charges on withdrawals as part of the policy remain.

And b) is the part of the policy over which I am scratching my moustache. If an individual pays money into the bank in excess of N500,000 he is charged 2%. A corporate body is charged 3%. This, to me is punitive. Why should a man or woman be punished for putting his money in the bank? Is someone trying to make the banking system unattractive in a country that is still seriously contending with the traditional system of keeping money in pots and under mattresses?

I am not the only one who has problems with this. The director-general of the Lagos Chamber of Commerce and Industry, Muda Yusuf, has raised two issues with the policy. One, he said, the notice for the effective take off of the policy was too short. This, he pointed out at an interview with The Nation newspaper, “would have short term disruptive effects.” The CBN, he suggested, should have given “..at least two months (notice) to allow for players in the economy to adequately prepare themselves.”

The second issue he raised about the policy is the same one that sent me scratching my moustache: the charge imposed on cash deposits. Yusuf said, “It is difficult to justify the decision to penalise cash depositors.” I thought so too.

Ordinarily, we ought to ask why a man should be penalised for taking his money from the bank in the size and quantity he can afford. And why should there be a limit on deposits? A man has the right to put his money in the bank, no matter how small or large it may be. I do understand that all central banks take care not allow excess liquidity in the system because it fuels inflation and affects the purchasing power of the national currency. But deposits do not affect money in circulation. Money in the bank is technically not money in circulation.

I thought part of the objective of the cashless policy was to encourage us to cultivate the habit of keeping our money in the banks where, presumably, thieves could not lay their itchy fingers on it. We are not so sure about that any more. Many a bank manager and his minions have been caught with their hands in the cookie jars, helping themselves to their clients’ money. Check the EFCC docket for evidence.

It is true that the fear of EFCC has driven some quite enlightened and wealthy Nigerians to opt for the attractive alternative of not putting all their money in one huge basket anymore – the banks. They dig holes in their homes and hide what they can from the prying eyes of whistle blowers. You do not need me to tell you that this is clearly a retrogressive step. It sets us back in the comity of enlightened and banking savvy people of the world. I thought the new policy should offer incentives that would discourage this and ensure that all Nigerians keep their money, be it legitimate earnings or loots, in the banks. The informal sector has woken up to this with the traders embracing the wisdom of keeping their money in the banks. A wise policy should encourage and solidify this so our economic planners would have the basis for gauging how the national currency is doing.

When the cash policy was first introduced by the then governor of the Central Bank and now Emir of Kano, Sanusi Lamido Sanusi, it received a cool but curious welcome. We have been used to cash for so long in the country that cash transactions had hardened into a tradition. How else would you pay for the roasted corn by the roadside without cash? Or spray money at parties? But we have made tremendous progress in moving away from the old habit. We have got into the groove of the modern banking system such that the ATM has become everyone’s best friend.

I fear that this aspect of the cashless policy makes it unfriendly. It is weighted against bank customers. It is a burden we should not be made to carry in addition to those imposed on us by the banks. Nothing is free in the banks anymore. They slap their customers with all sorts of charges. We pay for SMS sent to us on our transactions; we pay for money receipts and transfers; we pay monthly charges for the privilege of keeping our money in the banks where it faces the ever-present danger of being stolen by those entrusted with keeping it safe. There is a slew of charges for which the banks do not feel obliged to explain to their customers. Taken together, these and other charges make the banks richer and their customers poorer. Evidence? Annual reports of the banks. Bank are supposed to be in the service of their customer not their customers in their service. Why should the CBN use the cashless policy to earn more money for the banks?

I believe it is the duty of the apex bank to protect customers against the greed and the sheer profit motive of the banks. The CBN needs to take another look at the charges imposed on bank customers for withdrawals and deposits under the new policy. They are excessive and at the expense of the customers. They should either be dropped altogether or reviewed downwards.

The CBN cannot be ignorant of the fact that a banking policy inimical to customers could have a deleterious effect on the management of the national economy. There is an alternative to everything. A man who chooses to keep his money outside the banking system breaks no law and cannot be punished for his action. It could be an attractive alternative but one that could set us bank as a civilised nation of bankers. Pot sellers could be in for brisk business. This, I fear.