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THE IMPACT OF THE CBN CASHLESS POLICY ON THE NIGERIAN POPULACE – A PAIN OR A GAIN? (A CASE STUDY OF THE BANKED AND THE UNBANKED)

 CHAPTER ONE
INTRODUCTION
1.1   BACKGROUND TO THE STUDY
Mixed reactions have continued to trail the cashless policy introduced by the Central Bank of Nigeria (CBN) in January 2012. The implementation of the policy commenced in Lagos in 2012 but it was extended to the Federal Capital Territory (FCT), Rivers, Kano, Ogun, Anambra and Abia states in July 2013. While some die-hard cynics describe the policy as just another economic jargon that may not be feasible, others say it will boost the country’s economic growth in line with global best practices. The CBN cashless policy aims at reducing the amount of physical cash in circulation; thereby encouraging more electronic-based transactions in payment for goods and services (CBN, 2012).

The cashless economy policy of the Central Bank of Nigeria (CBN) has come with both pains and gains. As some are knocking it, others are hailing it.
The policy, as enunciated by the CBN, entails “cash-based transactions and stipulates a cash handling charge on daily cash withdrawals or cash deposits that exceed N500,000 for individuals and N3,000,000 for corporate bodies’’ (CBN, 2012) The former CBN Governor, Mallam Sanusi Lamido Sanusi, explained that the cashless economic policy was designed to promote financial intermediation and financial inclusion, while minimizing revenue leakages and eliminating incidence of robbery. It will also reduce the amount of cash payment and encourage electronic payment (Berentsen, 1998). He further explained that the policy became imperative because the cost of cash and associated risk of cash-driven economy to Nigeria’s financial system was ever increasing.

The policy on withdrawal allows individual customers to make a free cumulative withdrawal of N500, 000 daily across the counter and ATM. Withdrawal above the free limit will attract processing fee of three per cent for every N1, 000 above the limit. Many Nigerians considered this as not good enough as these extra charges is seen as a means of extortion. However, many individual costumers might need more than N500, 000 in day for one purpose or the other because the citizens are already used to the system of going about with cash and this has been considered as one of the pains of the cashless policy.

Also, according to the statement by the CBN, corporate customers are allowed to make free cumulative withdrawal of N3,000,000 daily. Withdrawal above the free limit will attract a processing fee of five per cent for every N1,000 above the limit. The policy on lodgment allows individual customers to make a free cumulative lodgment of N500, 000 daily. Lodgment above the free limit will attract processing fee of two per cent for every N1, 000 above the limit. Also, corporate customers are allowed to make free cumulative lodgment of N3, 000,000 daily. Lodgment above the free limit will attract a processing fee of three per cent for every N1,000 above the limit. This has been seen has stringent rules in some quarters (Ajayi & Ojo, 2006).

The apex financial institution in Nigeria has provided appropriate mechanism for e-payment which has been deployed to facilitate the smooth running of the cashless scheme. The listed mechanism includes Point of Sale (POS) Terminals, Automated Teller Machine (ATM), Web, Mobile Phones, Internet Banking, among others. Several Nigerian considered these mechanisms as not convenient and not easy to operate because of the level of illiteracy among the Nigerian populace.

1.2   STATEMENT OF THE PROBLEM
Despite several constraints that are there for everyone to see as to the effect of the CBN cashless policy of the Nigerian populace, there are several benefits accrued to its implementation. However, the legislative arm of government in Nigeria conceded that even though the policy could save costs in the financial sector, it did not, however, imply real sector growth. They noted that the majority of retail and commercial payments were usually made in cash by a large percentage of the population who did not operate bank accounts. They also noted that the CBN had not achieved the needed 40 percent expansion of ATMs.
It is also obvious that the financial infrastructure in Nigeria is grossly inadequate to meet the demands of a cashless society. Besides, the people’s low literacy level and the absence of constant power supply would discourage most citizens from embracing the policy and Nigerians had been variously defrauded of millions of naira through electronic transactions.
It is also important to note that most communities in the country lacked banking facilities that were designed to implement the policy. However, despite all the advantages of the cashless policy including the fact that it will save cost of printing currency notes, reduce theft and robbery etc. it is worth considering if the CBN cashless policy is a pain or a gain which is the focus of this study.
1.3   OBJECTIVES OF THE STUDY
The following are the objectives of this study:

1. To examine the advantages of the CBN’s cashless policy.
2. To examine the disadvantages of the CBN’s cashless policy.
3. To identify the factors limiting the effective implementation of the CBN’s cashless policy.

1.4   RESEARCH QUESTIONS

1. What are the advantages of the CBN’s cashless policy to the Nigerian populace?
2. What are the disadvantages of the CBN’s cashless policy to the Nigerian populace?
3. What are the factors limiting the effective implementation of the CBN’s cashless policy?

1.5   HYPOTHESIS
HO: The CBN’s cashless policy has no benefit on the Nigerian populace.
HA: The CBN’s cashless policy has lots of benefit on the Nigerian populace.
1.6   SIGNIFICANCE OF THE STUDY
The following are the significant of this study:

1. The findings from this study will form a useful guide for the government of Nigeria as they will have first hand information about the pains and the gains of the CBN’s cashless policy on the Nigerian populace and make necessary reforms and amendment.
2. This research will be a contribution to the body of literature in the area of the effect of personality trait on student’s academic performance, thereby constituting the empirical literature for future research in the subject area.

1.7   SCOPE/LIMITATIONS OF THE STUDY
This study will cover the benefits and the demerits of the CBN’s cashless policy on the Nigerian populace with a view of ascertaining if it is a pain or gain.
LIMITATION OF STUDY
Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.