In December 2011, the Central Bank of Nigeria (CBN), the key regulatory body of the banking sector and the body responsible for oversight of all banking policies and consumer protection in the banking industry, first introduced the cashless policy to reduce the heavy reliance on hard cash.
According to CBN, the cashless policy was introduced to achieve three objectives which includes; first and foremost, to drive development and modernization of our payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020. It is believed that an efficient and modern payment system positively correlates with economic development, and is a key enabler for economic growth.
The policy also aims to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach and finally, to improve the effectiveness of monetary policy in managing inflation and driving economic growth.
The phased implementation of the policy was therefore kick-started in January 2012 with Lagos, Rivers, Anambra, Abia, Kano, Ogun and the FCT as the states to see the policy’s pilot implementation. As at July 2014, the policy had taken a nation wide effect.
Amongst other reasons, the policy was also introduced to curb some negative consequences associated with high usage of physical cash viz; high cost of cash, high risk of using cash, high subsidy, informal economy, and inefficiency and corruption being at the apex.
With cashless policy, a society thrives on digital means to make all money transactions. Transactions are carried out using debit, credit cards, electronic fund transfers, mobile payments, internet banking, USSD codes, and other means yet to be developed. This implies that technology is a primary driver and the enabler of the cashless policy.
In Nigeria, access to sophisticated mobile phones and provision of better secure payment platforms has helped the synergy of the populace and many private organisations respectively contributing immensely to the nation’s economic advancement due to the ease of monetary transactions. Attaining this feat is an indication that the achievement of the three core objectives for the policy’s introduction is not a far cry.
Analysis of the data released by Nigeria Inter-Bank Settlement System Plc (NIBSS), revealed that the value of Point of Sale (PoS) transactions hit ₦3.2 trillion in 2019. This shows a stunning transaction increase of 6513% between 2012 and 2019 from ₦48.46 billion to ₦3.2 trillion. The increase in PoS transactions is also revealed in the number of deployed machines as reflected in NIBSS report from 2017 through to 2019 viz. 1.6 to 2.2 to 3.0 (approximate in millions).
Many banks and financial institutions especially those in the FinTech space have been expanding the frontiers of the CBN cashless policy. Notably in recent times is Opay – an all-in-one mobile app that aids users to take control of their payment economy. With services ranging from transportation, food & grocery delivery, mobile banking, loan, amongst others, Opay is set to establish their app as the predominant super app in Nigeria. Their passion is that, “nobody should be denied access to participate in the world economy because of their circumstances or background.” Hence, “making financial services more efficient for millions of users” is a venture on their front burner.
With easier access to financial services the high percentage of unbanked is on the decline. This has also led to creation of jobs as mobile banking operators and agents are springing up around the country. The Govenor of CBN, Godwin Emefiele, in a financial inclusion newsletter is hopeful that “Nigeria will attain 95% of Financial Inclusion by 2024.”