Cashless economy.png

Can any society in the 21st century engage in exchange of goods and services without the intermediation of cash? The answer appears to be in the negative except if the economists’ concept akin to full employment plays a part in the discussion. Full employment means a situation in which 5% or lower proportion of citizens willing and able to work have no jobs. Such situation exists in every society for reasons such as individual decision to quit jobs and search for new ones during which period such persons are captured by sensitive statistics as unemployed at the specific point in time. Other reasons exist and include business cycles and natural disasters.

                 Cash entered societies when trade by barter failed to provide accurate or at least acceptable means of determination of value for goods exchanged. How many oranges would be acceptable for a piece of loin cloth for instance? In a regime of vote buying what would a thumb print on a specified space be worth if cash or near cash such as promise of contract or office had no place in the discussion? Near cash items and in particular those expected to kick in on a future date with uncertainty of delivery makes life more difficult.

                 A cashless society should be seen as the most ideal in the 21st century world. In ordinary life it eliminates the need to carry bundles of cash around while it ensures people can access what they need sometimes without plan known as impulse buying. At the level of the society cashless operations takes care of such negative acts as money laundering, counterfeiting, cash robberies, fraud, and the trending issue in the 2023 election cycle in Nigeria – vote buying. The other strong point rests on ease of economy management which includes control of money in circulation, inflation, and interest rates for investments. 

                 Countries around the world have different orientations to the issue of cashless policy. A cashless economy implies near total use of digital means in preference for physical cash. The leading country in the art has been Sweden where just 9% of transactions are carried out with physical cash which includes coins. It took one decade – 2010-2020 – to drop from 39% preference for cash to 9% as Bloomberg World of 25th November 2022 indicates.

                Despite absence of glitches in digital funds management technology and Automated Teller Machine (ATM) cards, the United States ranks low in cashless policy.

                Americans are aware of the problems associated with money laundering and currency counterfeiting. In fact the US Secret Service arose from the activities of currency counterfeiters way back in 1865, July 5th when no one thought of the name Nigeria. President Abraham Lincoln established the agency when an incredible one third of American dollars in circulation were counterfeit! Despite the troubles the US continues to use large volumes of cash for transactions daily. Pew Research of 5th October 2022 showed a figure of 59% of Americans in some form of cash transactions by 2022 although in a decade the trend has declined. Imagine – just 14% of Americans went 100% cashless by 2022. In the Nigerian way, we must go zero cash in one month notwithstanding the near zero structures and enabling environment for cashless transactions.

                  In Britain Natalie Ceeney (CBE), Chair of the Access to Cash review said in 2019, “Cash use is falling rapidly, but digital payments don’t yet work for everyone. We need to safeguard the use of cash for those who need it, and at the same time work hard to ensure that everyone can participate in the digital economy. If we sleepwalk into a cashless society, millions of people will be left behind.” For Nigeria’s Central Bank every Nigerian must be railroaded into a cashless operator if possible by gun point.

                 To run a successful cashless economy the first step should be to provide facilities which promote it. First, at least 90% of Nigerians should be made to change their mindset in a gradual and least painful manner to bank-loving people. What would be impossible about banks getting their staff to visit Civic Centres to open accounts for everyone? If people are told in twelve months cash will be out of fashion there will be action though at a slow pace.

               To compel Nigerians to have National Identity Number the National Identity Management Commission created centres in schools, villages, religious centres, and registered private operators for the purpose. At present it appears no one can get anything done in Nigeria without NIN. It has taken about five years to get this done. Why should Godwin Emefiele believe Nigeria must be cashless in thirty days and create incredible pain and fatalities?

                Every banner which announces existence of point of sale (POS) operator indicates bank accounts can be opened by such operators. Have the operators been trained for such activity? Nigerians will resist but they will fall in line with time. To open a bank account requires several things but Nigerians go through such rigors as completion of forms, data capture, ownership of NIN, and in some cases ownership of utility bills and electronic mail addresses before they pay for SIM card. Nigerians complain but they go through the stress which every agency of government appears to delight in.

                If majority of Nigerians had bank accounts the next stage should be consolidation of relevant structures in banks and in particular availability of ‘network.’ Bank customers experience intense embarrassment when the simplest transfers fail to go through. In developed countries such cannot arise for any reason other than war or say, extreme weather conditions or natural disasters such as typhoons, hurricanes, or earthquakes.

                How embarrassing for Nigerians who have bought into the internet banking world years ago who found they had no cash to buy food and the valid ATM cards with them failed to be a savior? By this time internet access should be available across the country as we hear happens in Rwanda. And if we expect my grandmother to own an android phone with data to pay for okra and pepper I think we are day dreaming. How many villages have electricity to charge phones today?

                Nigerians used to internet/mobile banking should be encouraged by way of access twenty four hours a day at any location. Such persons will be in a position to encourage others to join the train. If the so-called elite find internet banking a source of frustration aside from the daily problem of inability to get their monies returned by banks, cash will continue to reign.

                 Sometimes it appears banks withhold the ‘small’ amounts as deliberate acts more so no penalty goes to them from the CBN. 

         Nigerians have lost count of the number of debits which banks refuse to credit back despite repeated visits to their branches. How can anyone regard ₦1,000 (one thousand Naira) as small for someone who earns ₦5,000.00 (five thousand Naira) to ₦30,000.00 (thirty thousand Naira) a month? At ₦200.00 (two hundred Naira) a day for lunch the worker would be denied lunch for five days!

                 Imagine another embarrassment – a transaction ‘fails’ as announced by the bank but after other attempts the ‘failed’ attempts succeed. How many people from family members to traders return money paid twice or thrice? This particular daily occurrence turns off several Nigerians from internet banking. The Bankers Committee does nothing about it, the CBN does nothing, and the system continues to float in the sedate stream of impunity.                 

The COVID-19 experience should have made Nigerians to love cash less than before. Nigeria will be cashless in another decade but work towards it should be gradual with the commencement being to get majority of Nigerians to own bank accounts. This should be followed with a sound internet/mobile banking system where failed and delayed transfers are non-existent. Nigerians are highly adaptable and will play along if the right foot goes forward first. We must avoid the penchant to place the cart before the horse in every public policy.

Leave a Reply

Your email address will not be published. Required fields are marked *