* Mobile Money, Bank agents, Terminal operators, NACCIMA, CPPE react

* Ohaneze youths back Emefiele, ask Reps to rescind suspension order

By Peter Egwuatu,  Yinka Kolawole, Levinus Nwabughiogu, Rosemary Iwunze, Nkiruka Nnorom, Providence Ayanfeoluwa, Elizabeth Adegbesan & Ibrahim Hassan

Mixed reactions have continued to trail the directive by the Central Bank of Nigeria (CBN) to limit cash withdrawal from over the counter in banks, Automated Teller Machines (ATMs) and Point of Sales (PoS), with some stakeholders saying it will enhance financial inclusion and curb inflation while others think it would be counter-productive.

The general views by the respondents however indicate that although the implementation of the policy will come with initial pains, it is however good for the economy in the long run.   Recall that CBN recently announced a policy limiting cash withdrawals from over the counter, PoS terminals ATMs to N100, 000 and N500, 000 weekly for individuals and corporate organizations, respectively. It also directed that daily withdrawal from ATMs will now be N20,000 subject to N100,000 per week. However, there are conditions more amounts can be withdrawn. They will attract charges. CBN Governor, Godwin Emefile also said Thursday that the cash withdrawal limits may be reviewed with time.

Good for financial inclusion

Reacting, Mr. Olowu Babs Azeez , National Treasurer,  Association of Mobile Money and Bank Agents in Nigeria (AMMBAN), said: “I think this policy will go a long way to enhance financial inclusion and also curb inflation by reducing cash in circulation. It will deepen financial inclusion properly as it will encourage electronic transactions, and also control inflation.

“Talking about our industry the licensed

mobile money operators like Paga mobile, kudi mobile, among others.  It will have a positive effect on our

industry at large but will reduce traffic at agents’ outlets.

“It is a welcome development in the

Fintech industry and digital financial services sector.

“However, the Agent Banking sector has

to be more strategic and creative by developing more seamless financial

products and services to service the last mile aside CICO (Cash-in / Cash-out).”

Will help tackle insecurity

Also commenting, a maritime expert and spokesperson for Seaport Terminal Operators of Nigeria, STOAN, Dr. Bolaji Akinola, said the CBN policy would ensure better management of the currency and help tackle insecurity.

His words: “I support the policy and I think it is the way to go, it is a good policy. Cost of printing cash is exorbitant, so we need to reduce the paper currency. 

“Also for security reasons, government talked about taking money out to reduce the demand and payment for ransom to kidnappers. Even people holding cash in their house attract some unnecessary attacks. 

“It is a good policy, it would help CBN to manage our currency better. We need to drag people more and more into the formal sector, have more people in the tax net. This is going to help. 

“Carrying of cash is a mindset that people are used to and when this type of alternative is brought, it is a matter of time they would soon get used to it. It will not affect anything, it does not change anything, so instead of giving raw cash, you can use a PoS machine to make your payment or transfer, with these, the transaction is still going on from one person to another except that it would be in a different form and not in raw cash.

“If you go to UK today and bring out raw cash of 100 pounds people would begin to look at you suspiciously. So you use your card to do transaction and government is able to keep track of all these and help the economy much more,” he said.

Welcome development —SME operator

In his comment, a top official of National Association of Small Scale Industries (NASSI), Lagos, Mr. Segun Kuti-George, said: “For me, it is a welcome development. We have to move from cash to cashless economy for the following reasons: Fast and seamless transactions; Transparency in business transactions; Ease of monitoring of transactions; Reduction in corruption; and Reduction in ransom demands because it can be traced, thereby making kidnapping unattractive.”

It’s commendable

Reacting, Tajudeen Olayinka, CEO, Wyoming Capital and Partners, said: “I think CBN’s policy on cash withdrawal limit is commendable and should be supported by all economic agents. It is actually in the interest of the economy; as it goes further to strengthen the resolve to redesign the Naira. If CBN had left out cash withdrawal limit from its currency redesigning program, the end result could have been disastrous, as it could have taken the program and our economy back to the abyss. The implicit cost of redesigning the Naira could have produced negative impact on the economy. I think CBN is working on the right path; in the exact direction of possible goal attainment. The purpose of redesigning Naira is to remove economic distortions that are caused by money in wrong hands; illegal money that does not enhance productive income. The presence of large volume of illegal money in the economy is the reason you have a big economy with relatively smaller revenue generating capacity for government and other economic agents. That must stop.

Good and bad

A leader of market union in Kaduna, Abdul Abdurrahnan said that the CBN’s policy of cash withdrawal limit has its disadvantages and advantages. 

According to him, apart from the markets in major towns, there are over 40 markets in rural communities across the state where people buy and sell livestock and other products.

He said with the limit in cash withdrawal, transaction would not be smooth as these markets in rural areas lacked good network which will affect transaction. 

“Moreover, such transaction needs the use of Android phones which most of the local business persons don’t have,” he added. 

According to him, the policy will also put thousands of POS operators out of job, where many traders go to get instant cash for their transactions.

“Many of our traders are not well conversant with the electronic transaction of money. So, there is the tendency some may fall victim of fraudulent acts.”

He however noted that with time, the policy would help, especially in the security aspect because when people cannot keep huge amount of money with them, robbers, kidnappers and other criminal elements who demand millions from their victims would be discouraged.

Will prevent hoarding of cash

On his part, Executive Director, Technical, Anchor Insurance Company Limited, Mr. Adebisi Ikuomola, said that it depends on the way one looks at it because there are many dimensions to the development.

Ikuomola said: “It is going to strain the volume of money in circulation. Also, it is going to prevent deliberate hoarding of cash by few individuals for reasons best known to them anyway.

“You can see the fallout of the policy from CBN when it said people should bring their old money to the bank based on the redesigned currency. So you discover that if a ceiling is placed on withdrawal, it will prevent deliberate hoarding of cash by few individuals that may want to withdraw large sums of money and keep it for reasons best known to them.

“There is going to be possible slowdown in economic activities as cash is one of the main trading vehicles or means of exchange in the country. So when you have limited money to trade, it is going to slow down economic activities.”

Bank charges on money transfer should be reduced 

In his reaction, Prof Uche Uwaleke, President of Association of Capital Market Academics of Nigeria (ACMAN), said: “It goes without saying that cash withdrawal limit is an integral part of currency redesign meant to reduce the amount of currency circulating outside the banking system. If the experience of India’s demonetization exercise is anything to go by, then it’s evident that imposition of cash withdrawal limits by monetary authorities, following a demonetisation exercise, is a norm.

“So, cash withdrawal limit is part of the currency redesign package. The two are mutually dependent. If depositors of old currency notes are able to exchange them for new naira notes which get withdrawn from the banks, then the primary aim of currency redesign is defeated.

“That said, I expect it to give impetus to financial inclusion as Nigerians become compelled to embrace alternative payments platforms.

“It now behoves the CBN to ensure that bank charges on money transfers and other related charges are reduced to the barest minimum.”

 Cashless transaction should be an option

But faulting the move, Director General, National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Sola Obadimu, stated: “Honestly, I don’t understand it. Is it that they can’t afford to print sufficient notes? It will be too ludicrous if they think they can control inflation or exchange rate that way. It won’t happen.

“You don’t ‘ration’ currency notes arbitrarily like this. You can’t force everyone to do cashless transactions all the time. Even in the so-called advanced countries it remains just an option – never the only option.”

Will negatively impact informal sector

In the same vein, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said that the CBN directive on cash withdrawal will negatively impact on the informal sector of the economy.

Yusuf stated: “The informal sector is a significant part of the economy accounting for over 80% of trade and commerce in the Nigeria economy and substantial components of jobs in the economy. Many of them are in very remote locations where there are no bank branches.  And they transact business largely in cash. 

“The distributive trade accounted for N23.3 trillion of the country’s GDP in 2021. This was about 15% of GDP.  This restrictive policy will pose a major risk to this very critical sector of the economy.

“There is also the risk that this policy would negate the financial inclusion objective of the CBN.  Some of the informal sector operators may begin to avoid the banking system entirely.  

“This could also be an infringement on the fundamental rights of the unbanked Nigerians.

“CBN needs to think through this policy properly to avoid creating more problems than it sets out to solve.”

Yusuf further noted that currency in circulation is meant for cash transactions and it’s a mode of payment.

“It is a contradiction to expect currency to be largely kept in the vault of banks, rather than outside the banks. Currency notes are printed primarily to facilitate payments in the economy by segments of the population that needs them.

“There is a difference between money supply and currency in circulation. Total money supply as at October 2022 was N50.6 trillion. Total currency in the economy was just N3.3 trillion, which is a mere 6.5% of money supply. Currency outside banks as a percentage of total money supply is even less at 5.5%. 

“Currency as a percentage of GDP is a mere 1.8%. Even in the advanced economies, the percentages are much higher. The implication is that the Nigerian economy is already substantially cashless. It is therefore quite curious that so much energy and resources are being dissipated in this direction,” he added.

No robust infrastructure to drive initiative

Also in his objection, Mr. David Adonri, Vice Chairman, Highcap Securities, said though the initiative is laudable, the country lacks infrastructure to drive the initiative.

He posited that the new policy is capable of crippling the rural economy where cash transactions basically thrive.

He said: “For an economy that is still largely informal and cash dependent, the decision may not help. The desire to transit to a cashless economy is ideal but a cork must mature before it crows. Nigeria lacks the robust infrastructure to make virtual payment a totally reliable alternative to cash. 

“It is difficult to understand what purpose N20,000 cash per day can serve today when inflation has already eroded the value of the Naira. This obnoxious policy is capable of crippling the rural economy where access to banks and telecoms is highly limited. 

“The history of the development of money is evolutionary.  Any attempt to make it revolutionary when the underlying enablers are at a teething stage is a recipe for disaster. 

“The virtual payment channels that CBN is diverting depositors to are inundated with failed transactions and incidents of network failure. Payment through these channels also comes at huge cost compared to cash transactions. The most ridiculous part of this new policy is the wicked penalty of 5% and 10% respectively for individuals and corporate bodies, imposed for cash withdrawal above the limits. 

“One can infer from this policy that CBN wants to enrich banks unduly at the expense of depositors and cause cash squeeze for clandestine purposes. If this policy misfire like several CBN past policies like banking consolidation in 2005 and the expansionary monetary policy of 2020, CBN must be held responsible.”

Ohaneze youths back Emefiele, ask Reps to rescind suspension order

The Ohanaeze Youths Movement has endorsed the decision of the Central Bank of Nigeria (CBN) on the new withdrawal limit policy, saying the decision of the House of Representatives against it was pushed by alleged agents of vote buyers.

The group in a statement made available to Vanguard in Abuja on Friday by the organisation’s Secretary General, Nwada Amaka, urged the House to rescind its resolution asking CBN to suspend the exercise.

The youths alleged that the Speaker of the House of Representatives, Femi Gbajabiamila and other lawmakers who opposed the CBN policy were dancing to the tune of their godfathers with the resolution.

“We are convinced that alleged agents of vote buyers are the ones behind the illegal and baseless House of Representatives’ resolution on CBN cash limits.

“We are therefore calling on the Gbajabiamila-led House of Representatives to reverse the illegal anti-cash withdrawal limit resolution and apologize to Buhari”, the youths said.

Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.