The policy stipulated a cash handling charge on daily cash withdrawals that exceed n500,000 for individuals and n3,000,000 for corporate bodies. Table 1 shows the view of respond ents on benefits of cashless economy in nigeria. The cashless nigeria policy was heralded with the setting of cash withdrawal and lodgement limits the central bank of nigeria cbn introduced the policy with a pilot run in lagos implementation modalities of the cashless nigeria project the policy was meant to reduce the volume of physical cash transactions in the economy. The impact of the cashless policy on economic growth of nigeria. Abia, anambra, ogun, rivers, kano and the fct have been enlisted to do same. In a cashless economy, the third is not operative and, probably, neither is the second. In addition, the policy aimed to reduce costs related to banking and facilitate the progression of monetary policy decisions and. The response of large corporates and their value chains to government policies to shift to digital payments.
This study examines the implications of cashless banking, with a view to exposing the possible challenges and prospects it poses to the nigerian economy whilst employing aggregated approach. For example, ejiofor and rasaki 2012 have noted that the cbn commenced the pilot scheme in lagos state apparently relying on its commercial stamina as nigerias business hub. Jul 05, 20 barely a year after the central bank of nigeria, cbn, introduced the cashless policy in lagos state. Little wonder why the central bank of nigeria recently introduced a cashless policy. Cashless policy implementation has no workability in the nigerian economy. In an interview with humanipo, ifedi said electronic payment technologies which further the cashless policy must be made available to all nigerians for the benefits.
Effect of cashless policy on small and medium business in nigeria a case study of selected smes in edo state. In nigeria as it is in many developing countries, cash is the main mode of payment. Full length research article this study examined the effect of cashless monetary policy on nigerian banking. Cashless nigeria the central bank of nigeria cbn has introduced a new policy on cashbased transactions which stipulates a cash handling charge on daily cash withdrawals that exceed n500,000 for individuals and n3,000,000 for corporate bodies. According to the cbn, the cashless policy has become necessary to promote. The central bank of nigeria cbn has suspended its earlier directive on the implementation of cashless policy.
Offer huge cost savings to the government because the use of mobile payment. A critical analysis of cashless banking policy in nigeria. Cashless policy and the nigerian payment system research leap. Jul 04, 2015 a cashless economy, according to adewale 2012, simply illustrates a gradual or a radical movement of the entire payment system of an economy from the use of physical cash to a systemic adoption. In a circular signed by dipo fatokun, director, banking and payments system. Little wonder why the central bank of nigeria recently introduced a. A cashless economy is an environment in which money is spent without being physically carried from one person to the other. Cashless policy has significant impact on the economic growth of nigeria. The cashless policy was conceptualized by the apex bank to migrate nigeria s economy from cash based economy to a cashless one through electronic payment system, not only to enable nigeria monetary system be in line with international. The money laundering prohibition act mlpa of 2004 is a good step in the right direction. Enhance the central bank of nigeria cbn new policy on cashless economy. In 2012, the cbn introduced the cashless policy programme as a pilot scheme in lagos. The apex financial institution in any economy is the central bank of that country and it plays a major role in the economic advancement of that nation. The banks were directed to put a hold on these charges until a directive is given by the cbn.
Therefore, nigerian banks should utilize the benefits of the cashless policy and engage in efficient financial intermediation for enhanced bank profitability. Cashless nigeria faq on cashless nigeria point of sale pos guidelines. The impact of the cashless policy on economic growth of. As the cashless policy of the central bank of nigeria designed to reduce the amount of physical cash circulating in the economy goes nationwide on july 1 after the implementation the pilot that.
Effects of cashless economy policy on financial inclusion. This research is embarked upon to assess the pre and postimplementation period of nigerias clp with focus on the relationships between tools of clp and currency outside banks in the nigerian economy. In nigeria, efforts have been made to make the economy cashless. Apr 22, 2017 central bank of nigeria cbn, yesterday, suspended the nationwide implementation of the cashless policy indefinitely. An empirical analysis of the benefits of cashless economy on nigerias economic development, research journal of finance and accounting, 417, 20, 1116. Evaluation of prospect and challenges of cashless policy. An exploratory study musa abdullahi bayero bayero university kano, gwarzo road kano, kano, nigeria abstract empirical studies about. The nigerian governments move to implement the cashless policy clp in 2012 was just a step in this direction.
This and other reasons made the central bank of nigeria cbn introduced a new policy referred to as the cashless policy. The expert also expressed optimism that nigeria would truly move on progressively as a cashless society. The central bank of nigeria cbn has introduced a new policy on cashbased transactions which stipulates a cash handling charge on daily cash withdrawals that exceed n500,000 for individuals and n3,000,000 for corporate bodies. According to cbn, the new cash policy was introduced for a number of key reasons. Adoption of mobile banking in nigeria james adetunji odumeru lecturer, osun state college of technology, esa oke, nigeria abstract the central bank of nigeria recently introduced the cashless policy to reduce the volume of cash used for business transactions and thereby reduce cash handling costs by banks amongst other objectives. Imperatives of advancing a cashless nigeria nigeria. An analysis of cashless policy implementation in nigeria.
Nigerias cashless policy this case study features four large businesses that have derived clear benefits by early adoption of digital payments, including the nigerian bottling company contracted to cocacola, and the nigerian. The new policy by central bank of nigeria cbn on cashless system of payment has raised a lot of concern to the growth of nigerian economy, with the objective of reducing robbery, high cost of. The first issue in the cashless economy is the issue of electronic purse. Decock1998 defines a central bank as a bank which constitute the apex of the monetary and banking structure of a country and which performs as best as it can be in the national economic interest the following functions of regulations of. Cbn suspends nationwide implementation of cashless policy. He said that effective implementation of the policy would curb corruption in all forms of transactions.
The statistical evidence provided by central bank of nigeria 2012 revealed that, cash related transactions accounted for 99% of customers activities in nigeria banks as at december, 2011. Effects of cashless economy policy on financial inclusion in. Cashless nigeria is a policy established in the year 2012 by the central bank of nigeria to curb excesses in the handling of cash in the nigerian federation. The main reason for the policy was to reduce the amount of. Cashless policy could often be affected by physical challenges such as high rate of illiteracy, inadequate sensitizationeducation of the benefits of cashless policy, and inadequate logistics such as the provision of internet connections in commercial areas, computers and point on sale pos machines. Ensuring the success of cashless policy in nigeria. A cash based economy is a setting where retail and commercial payments are primarily made in cash. The central bank of nigerias cashless policy is the key to the countrys fast economic development, according to charles ifedi, chief executive officer of verve international. It is in this regard that the central bank of nigeria cbn introduced the cashless policy with the objective of promoting the. To address these challenges, the cash policy was introduced to encourage cashless payments, while ensuring. Conceptual overview of cashless policy in nigeria money is often described as having three functions. Preface why the central bank of nigeria made the cashless policy.
In this connection, more studies focusing on africa in general and nigeria in particular are warranted. The impact of central bank of nigeria cashless policy in nigeria economy. The central bank of nigeria cbn adopted the cashless economy policy initiative that was already in use globally for a number of key reasons. Since the declaration of cashless economy policy by the central bank of nigeria, many scholars have written on this subject matter. Nigerias cashless policy a cornerstone of economic. An inclusive merger mechanism became one option for the nigerian banking industry in response to a central bank of nigerias policy to increase the minimum. Analytically, this study employs descriptive statistical to highlightsoverview the effectiveness of the cashless policy of the cbn in nigeria. Imperatives of advancing a cashless nigeria nigeria south. The impact of the cashless economy policy on nigerian. Nigerias cashless policy better than cash alliance. Jun, 2011 he said that effective implementation of the policy would curb corruption in all forms of transactions. Without society being able to understand the pros and cons of electronic cash, the full benefit of the cashless society may never be realized.
A cashless economy, according to adewale 2012, simply illustrates a gradual or a radical movement of the entire payment system of an economy from. Cashless policy, cash based economy, commercial banks, point of sales. The impact of cashless policy tools on money circulating. Mar 14, 2014 this makes the country to be heavily cash based economy. The introduction of the cashless policy in march 2012 aimed to drive development and advance payment systems in nigeria. Cashless policy has no significant impact on economic growth of nigeria. It is in this regard that the central bank of nigeria cbn introduced the cashless policy with the objective of promoting the use of electronic payment channels instead of cash.
Cashless society, issues, prospects and challenges in nigeria. According to cbn 2012 a key reason for the introduction of the cashless policy is to drive development and modernization of nigers payment system in line with nigerias vision 2020 goal of being amongst the top 20 economies by the year 2020. The cashless policy is a policy on cashbased transactions, which 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. In june 2014, the central bank of nigeria, while announcing the takeoff of the third and final phase of the cashless policy, said charges on withdrawals for both individual and corporate account. The paper examined the effect of cbns cashless policy on nigeria economy. Pdf returns of the cashless policy in nigeria mpho. It is in this regard that the central bank of nigeria cbn introduced the cashless policy with the objective of promoting. However, the policy was an offspring of the indigenisation policy at the time. However, the cost of cash to nigeria financial system is high and increasing. The study will give various insights into the various implications the introduction of the cashless policy will have on the economy of nigeria. As part of our ambition to be one of the best 20 economies before the year 2020, cbn informed the world that nigeria would commence the process of changing to a cashless economy by january 2012. These banks barclays and uba on joining bbwa in the nigerian. According to cbn, the new cashless policy was introduced for a number of key reasons, including, to drive development and modernization of our payment system in line with nigerias vision 2020 goal of being amongst the top 20 economies by the year 2020.
Without optimal it compliance, a country cannot attain speedy socioeconomic. Cashless policy and economic activities in developing. Nigeria abstract the paper discussed the effects of cashless policy on the nigerian economy, how it was kickstarted in lagos, means of payments both manual and electronic, positive and negative effects of cashless policy, benefits to the economy and stakeholders, suggestions were made. Article history abstract received 10 september, 2014 received in revised form 08 october, 2014 accepted 16 october, 2014 key words. Given the policy s objectives, the paper xrayed the associated benefits of the policy. This research is embarked upon to assess the preand postimplementation period of nigerias clp with focus on the relationships between tools of clp. Cbn suspends cashless policy, asks banks to refund charges. According to the cbn, the cashless policy has become necessary to promote the. Before the introduction of the cashless policy by the central. The benefits of adoption of cashless economy include reduction in corruption and. Pdf a critical analysis of cashless banking policy in nigeria. Nigeriaas aim to be among the biggest economy by 2020 has driven her to gradually move from a pure cash economy to a cashless policy.
It prescribed a cash handling charges on daily withdrawal above five hundred thousand naira n500,000. The impact of central bank of nigeria cashless policy in. This is electronic information transmitted to a device which reveals the information about how much a person has stored in the bank and how much he can spend. This makes the country to be heavily cash based economy. In a circular released on friday, the apex bank instructed banks to revert to old. Effect of cashless monetary policy on nigerian banking. Barely a year after the central bank of nigeria, cbn, introduced the cashless policy in lagos state. Thus, as part of its regulatory functions, the central bank of nigeria, issued a circular dated april 20, 2011 in which it conveyed to operators and the banking public its decision to introduce a cash less banking policy into the nigerian financial system with. This study examines the cashless economic system so as to assess its feasibility and. Nigeria is a cash based economy with retail and commercial payments primarily made in cash. Further, appropriate infrastructures such as improvement on the power sector should be made to enhance the smooth operation of the policy. According to him, the time is ripe for nigerians and the economy as whole to reap the benefits of a cashless society. Central bank of nigeria the cashless nigeria project. The cashless policy introduced the use of debit or credit card as well as electronic transfer in financial transactions.
In 2015, the central bank of nigeria issued a notice to all banks that began collecting charges on withdrawals above the threshold in the remaining 30 states. Theoretical background cashless economy is not the complete absence of cash, it is an economic setting in which goods and services are bought and paid for through electronic media. The central bank of nigeria cbn is the central bank and apex monetary authority of nigeria. Since nigeria gained her independence in1960, there have been different constitutional reforms, change in economic and banking policies mainly aimed at stabilizing the economy, enhancing social welfare and.
365 1147 956 29 740 323 1388 496 1438 1615 498 1494 1497 1128 1407 184 1255 162 85 648 316 604 896 1140 967 228 1526 472 525 141 1363 982 503 1493 1216 1068 477 149 1176