Following the early gains from the recently launched twin policy on cashless economy, the Central Bank of Nigeria, CBN, has put some key steps in place towards consolidating the policy measures.
The twin policy is based on the Naira redesign and establishment of new limits on cash withdrawal from banks, both geared towards effective monetary policy and security environment and a way to tame corruption.
The commencement of a nationwide stakeholder engagement and sensitization to promote understanding of the cashless policy, particularly in rural areas, markets and underserved communities across the six geopolitical zones of the country is one of the key steps put in place.
The Central Bank together with Bankers Committee and Share Agents Network Expansion Facility, SANEF, is also strengthening the Agent Network Capacity by intensifying agent rollouts across the country (especially underserved locations) and enhance Agents’ ability to carry out a wider variety of financial services in addition to 12 Classified as Confidential cash-in and cash-out (electronic card distribution, wallet/account opening, BVN onboarding, bills payment, etc).
Al map of available financial access points is also being completed at the moment and the Central Bank said it shall be made public once it is ready, to inform all stakeholders of the locations of physical and electronic financial access points where they can process transactions electronically.
The CBN promised to continue to be flexible in its implementation of cashless policy and monitor its impact.
In response to the Naira redesign policy, banks’ vaults have recorded about N190 billion inflow as Currency Outside Banks, COB, fell by 6.7 per cent in November to N2.64 trillion from N2.83 trillion.
The N2.64 trillion COB in November represents the lowest in 12 months since October 2021.
Further reflecting the impact of the CBN cashless policy, currency-in-circulation (CIC) also fell by 4.0 percent, to N3.16 trillion in November from N3.29 trillion.
Recall that the CBN Governor, Mr. Godwin Emefiele, on October 26, announced the redesigning of the naira notes in denomination of N200, N500 and N1,000.
Consequently, the CBN directed that bank customers must deposit the old notes in their possession on or before January 31st when they will no longer be legal tender, while the new notes were released into circulation on December 15th.
According to Emefiele, one of the challenges is hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation are not in the vaults of commercial banks.
He said as at the end of September 2022, available data shows that N2.73 trillion out of the N3.23 trillion currency in circulation was outside the vaults of commercial banks across the country.
Addressing the many misconceptions of the Naira Redesign and Cashless Policy, the CBN Deputy Governor, Financial System Stability, Mrs Aisha Ahmed stated: ‘‘Currency denominations of N5, N10, N20, N50, and N100 remain legal tender, are unaffected by the Naira redesign policy and are available for use across the country including at markets in rural areas and informal sector of the economy.
‘‘There are currently no processing fees applied to cash deposits. Unlimited amounts can be deposited without charge, to enable seamless and unrestricted deposit of any notes affected by the currency redesign.
‘‘The processing fees on cash withdrawals are not new as these have been in place in Lagos, since 2012, and in five other Cashless states and FCT, since July 2013.
‘‘The charge applies on the excess over the prescribed limit only not on the entire transaction amount. For instance, withdrawal of ₦550,000 by individual- fee is excess over N500,000 limit (i.e. ₦50,000x 3%= ₦1,500); Withdrawal of ₦6,000,000 by a corporate- fee is excess over N5,000,000 limit (i.e. ₦1,000,000 x 5%= ₦50,000).
‘‘The Policy does not prohibit cash transactions above the prescribed limits. Such transaction shall attract the processing fees to serve as incentive for account owners to embrace more efficient electronic payment channels.
‘‘The policy applies nationwide in recognition of the plethora of financial touch-points that are available in all the States of the Federation.”
