By Morenike Taire
THE Nigerian banking industry has seen its own fair share of innuendo. Like other Nigerian colonial and pre-colonial institutions, the first Nigerian banks started on solid footing.

With virtually the whole of the Nigerian population operating their business and public lives outside of banking system, Nigerian banks had originally been established as extensions of mother pre-existing banks to serve imperialist interests and promote compliance in the growing civil service.

Nigeria’s first bank, the African Banking Corporation, was established in 1892. No banking legislation existed until 1952, at which point Nigeria had three foreign banks (the Bank of British West Africa, Barclays Bank, and the British and French Bank) and two indigenous banks (the National Bank of Nigeria and the African Continental Bank) with a collective total of forty branches. Needless to imagine, this kind of numbers were not so difficult to manage.

The naira devaluation of the Babangida administration, however, brought about a new era of the banking system, with emergency banks springing up and mushrooming all over the place with the sole objective of taking full advantage of the huge disparity between the official and black market rates for the dollar.

Regardless of widespread criticism that trailed the Soludo-led banking reformation and consolidation exercises of 2006, it was a good time to introduce strict(er) regulations into the banking system, particularly with the hindsight of the 2008 global economic meltdown and the recession that has followed it.  Trust in the industry has by far been the greatest benefit of the exercise, but Nigeria continues to lag behind her contemporaries in adopting a cashless lifestyle.

According to a UNESCO study, various factors led to the preponderance of the use of cash for settlement in Nigeria including low level of literacy (only 50 percent of Nigerians are literate), restriction of banking services to the cities and towns only (70 percent of Nigerians live in rural areas), inefficient banking system (the long queues in banking halls and long cheque clearing period has discouraged the public from using cheques), distress in the banking system (existence of distressed banks in the system has robbed it of public confidence) and lack of enforcement of enabling laws on the misuse of banking instruments, and this trust is the reason e-commerce picked up, and people became more confident about paying for goods and services over the internet.

It all looks good on paper. In the real world, the cashless policy would have worked, but our country might not be as real as it looks, for all the potholes on the roads, filth in the gutters and generator carbon in the air.

It is the place where the queues in front of the automated teller machine is longer than the queue in the banking hall in front of the actual teller, who is apparently too desensitized to wonder why she has to do far more work than a machine which cost far more to acquire and maintain.

For reasons that are not so apparent, at least half of all ATM machines  are either out of service, unable to dispense or without network access at any one time, even in big cities such as Lagos. Many also have defective or unmanned security cameras, and certainly don’t open for 24 hours a day. Point of Sale (PoS) machines fare even worse, with only one out of  three retail outlets using them.

It has been  a decade since public automated machines began to appear in major Nigerian cities such as Lagos and Abuja, though the first Automated Teller Machines (ATM) were introduced into the Nigerian market as far back as 1989, installed by National Cash Registers (NCR) for the defunct Societe Generale Bank Nigeria (SGBN). Yet, though major interventions by the Soludo and Sanusi have boosted confidence in the system overall, comparative confidence in the cashless systems are still relatively low.

With about 67 percent of Nigeria’s adult population being unbanked, and a meagre 30 percent of the adult population with bank accounts, the system desperately needs to  seek ways to foster financial inclusion and aid the unbanked. 33 million Nigerians access the internet through mobile hand held devices.

Two million Nigerians use blackberries regularly, and 80 million own GSM mobile lines, meaning every other Nigerian owns a mobile phone line. By any standards we not only have a modern nation in terms of communications, we can even be accused of having extensive regional affluence.

This is as good a time as any for cashless banking to take a foothold on the economy. Already, there has been a major explosion in the area of online retail, particularly in fashion, travel and consumer electronics. This is sure to have a concurrent effect on job creation, from shipping to warehousing, graphics to accounting, customer care to admin. Tourism can also receive a major boost if foreigners can pay for goods and services with their credit or debit cards without any fear.

Yet our own research shows just one in 50 petrol stations accept cashless payments and when they do, there are no guarantees that the Point of Sales machines would  actually work. Utilities providers including water, electricity and cable television providers have failed to incorporate Point of Sale options  into their billings  systems. As the cost of the cashless system crashes and the CBN lends its weight to an actual cashless policy, Nigerians and the economy are not nearly reaping the full benefits of the policy.

The Central Bank must go out of its way to ensure the cashless policy works by enforcing regulations and compliance to rules. If it is to build confidence it must do more than pay lip service to providing incentives to stakeholders.

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