Cashless Policy: Covering the gap between implementation and objectives


When the Central Bank of Nigeria, CBN announced the cashless policy in April 2011, it was greeted with mixed reaction. In some quarters, it was condemned out rightly, while people, who believe it was a good policy, but the timing was wrong.

The apex bank responded with a massive publicity campaign aimed at explaining in details the need for the policy, the objectives, and methodology.   Prior to the commencement of the pilot scheme in Lagos on January first, the CBN conducted town hall meetings with critical segments of the economy community. Though the meetings were to complement the blaze of T.V and radio advertisement as well as billboard advertisements, it however became an eye opener for CBN. It revealed that despite all the advertisements, there was still widespread, ignorance misunderstanding, misinterpretation among the populace. Thus the town hall meetings reveal that so much work needs to be done in terms of educating and communicating the populace about the cashless policy.   Leveraging on these revelations and lessons, the apex bank produced a comprehensive Frequently Asked Questions (FAQ) on the policy. Initially the FAQs were posted on the website of the CBN but realizing that internet penetration in the country was still low, they were packaged into a booklet which was distributed in subsequent town hall meetings, and elsewhere.

It contained 52 questions with detailed answers which addressed every conceivable misunderstanding of the cashless policy.      They also addressed electronic payment issues. Some of the questions are: Does the cashless policy mean there will not be cash in circulation or people are not allowed to use cash?   Does the cashless policy mean a customer of a bank will be denied access to his money?   In a situation where armed bandits get on a bus and force passengers to give their ATM cards and pins. How do you prevent this?

The FAQs were a good attempt but its effectiveness as a publicity campaign tool has become blunted. But it is not just the FAQs; it is the whole publicity efforts surrounding the cashless policy.   Perhaps, the management of CBN has the impression that the populace has been effectively enlightened and educated. Hence the slowdown in publicity in terms of billboards, TV/Radio advertisement.   For so many reason this should not be so.

First we have not slowed down on implementation of the policy. On July 1st the policy was extended to five states and the federal capital city namely Abia, Anambra, Kano, Ogun and Rivers State Federal Capital Territory (Abuja). And on October 2nd the cashless charges became effective in the states.   Consequently banks’ customers in the states now pay charges for cash transactions above the stipulated limits.

The six states have 19.51 per cent of the total population of the country. They also have over 5.88 per cent of the branches of commercial banks and over 50 per cent of trading activities. These statistical realities informed the choice of the six states. Thus combined with Lagos state, the cashless policy is been implemented in states that account for over 70 per cent of commercial activities in the country.

But the results are not commensurate. Yes, number of ATMs,   have more than doubled, Point of Sale (PoS) terminals have risen to over 150,000, but electronic payment still accounts for 20 per cent of retail transactions in Lagos, almost two years since the commencement of the policy.   This implies that though the number electronic payment card has increased rapidly, the rate of usage is slow. A visit to any of the eateries and big retailers will confirm this.

While this cannot be attributed to a slowdown in enlightenment campaign efforts of the CBN, it is however a reason for the apex bank to step up this campaign. As it has reviewed the policy, it should also conduct a comprehensive review of its publicity material and pursue aggressive dissemination. The FAQs will be a good starting point. Many of the questions need to be amended especially in view of amendment to the policy itself. A thorough review may reveal that some of the questions need to be deleted (as they might not be necessary again) and new ones inserted based on experiences of the 20 months of implementation.

It was good that the apex bank printed the FAQs but the distribution should be more strategic. For example, after the review, the booklet should be reprinted and distributed to all banks’ branches in the country, with a directive, that banks give it to every customer that come in for transactions. It may be very costly, all the customers may not read the booklet, but most will, and those who did not, will eventually do so, especially when subjected to the charges for withdrawing above the stipulated cash limits.


By Babajide Komolafe


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