CASHLESS, CASH-LIGHT POLICY IN NIGERIA: HOW FAR SO FAR?

Posted on by shekknett

By

NANA U. BATURE

DEPARTMENT OF BUSINESS ADMINISTRATION

UNIVERSITY OF ABUJA

TEL: 08085463195

EMAIL: [email protected]

And

Yakeen O. Abdul-Maliq

Banking Finance Actuarial Science Department,

University of Abuja.

Tel: +2348037770262

Email: [email protected]

 

ABSTRACT

Following the relative success of the 2004/2005 banking consolidation exercise, the Central Bank of Nigeria commenced the implementation of a cashless policy in 2012. This paper assesses the extent to which the policy has affected cash carrying propensities among Nigerian households and corporate entities, as well as how these have affected monetary aggregates in the period under study. Analyses show that values of Cheques cleared reduced by 78%, ATM, POS and Web based transactions increased by percentages ranging from 500% to 9000% and in some cases more. On the impact, results show that cash in circulation, cash outside bank and demand deposit decreased by 51%, 27% and 4% respectively. That these is not yet sufficiently satisfactory to Nigerians and, especially, monetary authorities, may be why CBN seems to have in recent time, taken actions aimed at further encouraging/compelling Nigerians to imbibe the cashless or cash-light culture. The paper opines that Nigerian monetary authorities may however have to look more to GSM/Internet service providers to drive the cashless policy, as it is in vogue in other countries, if issues of long queues, slow service delivery and other unsatisfactory observations are to be addressed. The paper therefore endorses CBN’s recent introduction or reintroduction of penalty for cash transactions in excess of some thresholds as well as licensing of PSBS.