Some financial experts and stakeholders in the nation’s economy have advised the Federal Government to enact a law prohibiting keeping of money at home.
They gave the advice in a national survey conducted by the News Agency of Nigeria (NAN) on why prominent Nigerians keep money in their homes.
They said that the law should, among others, specify the cash that could be kept in peoples’ homes as part of efforts to fight corruption.
In South-South, they said the practice, if not urgently nipped in the bud, would worsen the economic situations of Nigerians.
An Onitsha-based industrialist, Chief Ugonna Okegbue, urged government to enact law prohibiting keeping of large sums of money at home, describing the practice as an economic sabotage.
Okgbue, the Chief Executive Officer, Ugobest Plastics Ltd., told NAN in Asaba that keeping huge cash at home was counter-productive to the nation’s growth and development.
He opined that if the government failed to check the practice, the situation could cripple businesses and cause a major inflation in the nation’s economy.
“You will agree with me that circulation of cash promotes business and a business-driven economy is the bedrock of a nation’s growth and development.
“So, it’s tantamount to economic sabotage when individuals start hoarding liquid cash, thereby crippling businesses which depend on cash to strive.
“Government must rise up and do something about these corrupt practices by enacting a law to discourage such act and punish culprits,’’ Okegbue said.
Mr Jude Afeilokha of Ecobank in Asaba said that stashing of money at home hampers business growth and constitute serious security risk.
“When people begin to save or stockpile money in their homes, it affects trade and other businesses. If money in circulation is limited, there is no way it will not tell on the daily lives of the citizens.
“So, I must say that in as much as keeping cash at home affects business life, it equally constitutes a serious security risk for the individual.’’
Afeilokha noted that the practice had reduced the money in circulation and made it difficult for banks to grant certain credit facilities to customers.
According to him, a reduction in cash in circulation makes businesses suffer and increases demand for cash which causes hyper inflation.
In Calabar, an economist, Dr Albert Asu, said the act diminishes the economic value of a country and its currency.
Asu told NAN that “keeping money at home does not drive investment, but rather, reduces the value of our currency and affects economic growth.’’
He argued that stashing of hard currencies in private home was partly responsible for the fall of the value of the naira in international market.
According to him, Nigeria, as a consuming nation depends largely on the dollar for trade and other purposes.
“Money is not supposed to be kept at home. What drives the economy of any country is investment and not home savings’’, he said.
In Benin, Mr Joseph Ehigiator, an economist said that the millions of naira and dollars stockpiled in people’s homes would have done much good if injected to the economy through the banks.
He attributed the practice to greed and corruption among Nigerians, especially among the ruling class and politicians.
Mr Cyril Nwaka, a chartered accountant and financial advisor in Asaba, corroborated Ehigiator’s position, adding that it had become a common practice among public office holders to avoid being arrested and prosecuted.
“Due to the high-level corruption in the nation’s public service, many individuals who have squandered public funds are afraid to take their loots to the banks for safekeeping,’’ Nwaka said.
Mr Joseph Odok of University of Calabar argued that it would be difficult to give a accurate statistics of liquid cash in circulation because of the practice.
Odok advised the Federal Government to change the currency by given Nigerians a period of time to change the currency in their possession.
In South-East stakeholders opined that the act had reduced the cash in circulation and stifles the economy.
Dr Frank Ibeawuchi, Assistant Director, Central Bank of Nigeria (CBN) in Enugu State, told NAN that the habit creates financial linkages and reduces the value of the same money kept outside the banking system.
Ibeawuchi, CBN’s Product Development Office, Development Finance Department, said the move denied the owner the gains that should naturally come when such money were invested or kept in the bank.
He noted that only money in the financial system have value and could create more value for the owner and the financial system.
“When you put money in the bank, you are creating interest for yourself as well as value for the financial system and economy as well.
“However, one can still put just little money at home for precautionary motive or for use to solve an immediate problem; then the rest should be invested or kept in the bank for safety and interest generation.
“Today, with banking inclusion and technologies; you can get the little money you need or make payments from electronic platforms such as ATM and online banking at ease within your house, office or immediate neighbourhood in most places,’’ he said.
Ibeawuchi also agreed that most times money stashed in homes were not money made in a genuine way.
“Those large sums of money being stashed in people’s homes are coming from wrong means; if not why not keep it in the bank,’’ he queried.
The director said that the government should go ahead to recover and scoop this money back into the financial system for accountability, data collection and overall planning purposes.
“CBN will continue to sensitise the public on the need to use the bank to create more interest, make money to be useful to both the owner, financial system and the economy at large.
“We would continue to create confidence in the banking system through sound macro and micro regulatory policies as well as deal with any trace of fraud in the system.
“While technologies that would make banking safer, easier and more convenient would be encouraged in order to build total inclusion of everybody into the banking system,’’ he said.
In Awka, an economist, Prof. Hassan Oaikhenan, noted that it was not in the best interest of the economy for individuals to take lump sum of money out of the banking system.
Oaikhenan, a lecturer in the Economics and Statistics Department, University of Benin, said that doing so would deny investors the access to the funds in the formal financial system and impede progress.
He said anybody who legitimately earns his money did not have need to bypass the banks as it remained the safest place to keep money.
“The impact of not using the banking system cannot be farfetched; it has ripple effect on the entire system such that investment, savings and spending are stifled.
“Generally there is no disincentive to banking now in Nigeria; as a matter of fact, there is competition among the commercial banks to attract depositors and as a result some of them have stopped charging CoT.
“Unfortunately there is no law that says every money should be in the bank, but when lump sum is recovered without good explanation of how it came about, it is supposed to be a financial crime,” he said.
According to him, the only law is the limit for withdrawal or depositing but the proviso is that you inform CBN and/or be charged for the excess.
Mr Josiah Dadu, a Bank Manager in one of the new generation banks in Owerri urged for a law banning the hoarding of large sums of money at home.
Dadu also pointed out that such fund could not be taxed, thereby reducing the revenue generated from taxes.
Alhaji Nurudeen Suleiman, who trades in foreign exchange, said that hoarding of foreign currency had negatively affected the nation’s economy.
He said the effect was that the value of naira would continue to crash.
A retired banker, Mr Collins Ibe, from Umuahia in Abia, said: “It makes no economic sense for people to keep money at home; money stored at home has no economic value.
“Money that is not invested but stored in a tank, in a well or inside the mattress at home is not an investment, hence it attracts no interest or return but is idle money,” Ibe said.
Ibe said the trend posed great danger to the economy, adding that “it stalls cash flow in the economy. ”
He said that various reasons could account for why people keep money at home such as convenience, nature of one’s business, secrecy about one’s source of wealth and the fear of losing one’s money due to bank failure.
Ibe said that to check the practice, banks should evolve customer-friendly banking processes and convenient ways of transacting business.