First introduced in December 2011 by 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 – Central Bank of Nigeria (CBN), the cashless policy has reduced the heavy reliance on hard cash.
Kick-started January 2012 in Lagos, Rivers, Anambra, Abia, Kano, Ogun and the FCT were the next states to see the policy’s implementation. As at July 2014, the policy had taken a nation wide effect.
According to CBN, the cashless policy was introduced for the following reasons.
- 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. An efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.
- To reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.
- To improve the effectiveness of monetary policy in managing inflation and driving economic growth.
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.
What is a cashless society? A cashless society is a society that thrives on digital means to make 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.
Technology has been an enabler of the cashless policy, with the advent of sophisticated mobile phones and better secure payment platforms. Private organisations have contributed immensely to the advancement of the nation, catering to the three (3) core reasons for the policy’s introduction.
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 YoY as reflected in NIBSS report from 2017 through to 2019 viz. 1.6 to 2.2 to 3.0 (approximate in millions).
In the figures represented above, one cannot but ignore the great strides that has been made so far, while commending the efforts of the apex bank in its achievement.
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, they are “making financial services more efficient for millions of users.”
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.”