Cashless Economy With Tears!, by Hameed M. Bello

Cashless economy is the vogue in many digital economies of the world, and Nigeria does not want to be caught napping, or so it seems. Countries that have since gone cashless include India, Sweden, Denmark, USA, UK, Finland, Singapore, Netherlands and Norway. In Africa, South Africa, Kenya and Egypt are implementing the cashless policy with little or no crisis. How Nigeria blends with the digital trend matters a lot in view of the peculiar nature of the country’s economy which has an active Small and Medium Enterprises, SMEs, most of which rely on physical cash for their daily transactions.

The Central Bank of Nigeria, CBN, holds the task of working out the modalities for a cashless economy, but the apex bank has come under intense storm in the last couple of weeks following its chaotic Naira redesign and swap leaving on its trail hardship for the commoners. The elite care less since they can find their way. The African economic giant, Nigeria’s desire to migrate to a cashless economy where financial transactions can proceed with little or no cash is demonstrated by the introduction by the CBN of the Bank Verification Number, BVN, the digital online banking facilities including the electronic transfer window, the e-Naira, and now the redesigning of the currency. The bitcoin is also gaining popularity.

The e-Naira, for instance, is a CBN-issued digital currency that provides a unique form of money denominated in Naira. It serves as both a medium of exchange and a store of value, supposedly offering better payment prospects in retail transactions when compared to cash payments, according to the enaira.gov.ng.

No doubt these policies can boost the economy in the long run, but their timing and implementation seem to have cast a dark shadow on their likely benefits. A case in point is the new Naira redesign adjudged necessary but received as wrongly timed and haphazardly implemented, due to its short notice and nearness to the general elections just about 19 days away on February 25. To say that Nigerians have come under untold hardship in the last couple of weeks on account of the new Naira policy is to put it mildly. From the cities to the villages, the story is not any different, of widespread liquidity crunch making SMEs to be grounded, and survival to become difficult for the ordinary folks. The regulatory agency, the CBN, is insisting it had pushed out a substantial amount of the new Naira notes, indirectly pointing accusing fingers at the commercial banks for not servicing the customers.

However, the reality is that the banks are not issuing enough new notes, neither are the Automated Teller Machines, ATMs dispensing reasonable cash. The deposit money banks, otherwise known as commercial banks, are either not happy with the new notes and are holding them back, or they are making some brisk business behind the scenes with the notes. The new notes have become even more scarce than petrol, notorious for its recurrent scarcity. This, for many Nigerians, is like jumping out of the frying pan into the fire with the attendant suffering on the people.

There have been public outrage and anger over the frustrating experience of not being able to access legitimate funds to push businesses through, to cater for daily feeding needs, or to pay bills. For example, last week, I met a young man in his early twenties in one of the banks who was threatening that Nigerians have not seen anything yet, that the ENDSARS protest would be a child’s play to what he said was going to come. Whether he was blarbbing out of frustration, or was driven by hunger or some inexplicable condition, only God knows.

Except that the tone of his threats was laden with a bold determinstion. According to him, he had been to countless banks in Utako where he lived to access money from his account to no avail. “What sort of country are we operating,” the young man thundered repeatedly while walking around aimlessly from one corner of the Bank area to another. He was not in a hurry to leave the bank premises where the ATMs were located. I quickly took my leave quietly, although I too had enough reason to be as angry as the young man was. Before my exit, I also heard the angry young man threatening to storm the bank the following day to show them his real colour. I was wondering what he was going to do. Was he going to mobilise his friends to cause mayhem, or he was going to forcibly demand the bank manager to give him money by all means, I reflected. I concluded that he might have been prompted by frustration, coupled with his youthful exuberance.

And last Thursday also, a coalition of Civil Society Groups on Marina Road, Lagos protested with banners reading “Banks are Saboteurs of CBN’s new naira notes” with the protesters chanting “Enough is enough”. The demonstrators’ spokesman who wielded a loud speaker said roughly: “We have gone to ATMs, we cannot access the naira new notes, we have gone to banks, we are here at the Central Bank of Nigeria, who said they have given the new naira notes to the banks, and that is why the Civil society leaders have taken it upon themselves to storm various banks and tell them to stop suffering Nigerians.” Analysis of the speaker’s words suggests that he believed in the claim by the CBN that it had issued enough new notes to the deposit banks. He accordingly exonerated the CBN and pointed accusing fingers at the deposit banks he took to task to ‘stop suffering Nigerians.’

The experience in so many banking outlets had been depressing. Apart from the noisy, long and rancorous queues, the old notes were not accessible, neither were the new ones. Buying and selling have been inconclusive because the buyers won’t accept transfer of money, and the Point of Sale, POS, machine operators had no cash to give. The buyers were desperate but had to go away in pain and anger. Unfortunately, the e-payment services like transfers also became problematic due to all kinds of error messages. There were connectivity or network failures either from the issuing or the receiving banks. This has been the sorry state of so many Nigerians.

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, last Tuesday said before the House of Representatives ad-hoc committee on the review of the Bank’s cashless policy that the project was for the overall interest of Nigerians and the economy. Emefiele said the old notes would lose their legal tender status on February 10, 2023, and that about N1.9 trillion had so far been collected since the commencement of the exercise. He said that the currency redesign policy had so far recorded about a 75 per cent success rate.

Recall that Kaduna state Governor, Nasiru el Rufai had last week raised the poser as to whether there were any nexus between 2023 elections and the Naira notes swap. el-Rufai had claimed that some persons at the presidential villa wanted the All Progressives Congress (APC) to lose the presidential election. The Federal Government and the Presidency however debunked the claim, saying that the President was fully in support of the success of the APC and its presidential candidate. Responding to the issue of the Naira swap policy, el-Rufai said “Nigerians should know that these policies are not policies of our party but some economists who are bent on making sure that we lose the election. Policies purposely designed to crash the political process.” This suggests that Emefiele may be working in cahoots with some ‘unknown’ persons in the President’s kitchen cabinet who are against the success of the APC in the presidential election. These are weighty allegations that should not be swept under the carpet on grounds of reconciliation.

In October, the CBN had announced that the old 200, 500 and 1000 naira notes would cease to be legal tender by January 31. But the bank extended the deadline to February 10 after protests by citizens. And last Thursday, the CBN had directed deposit money banks (DMBs) to commence the payment of the redesigned naira notes over the counter, subject to a maximum daily payout limit of N20,000. This, too, is counterproductive to open market transactions in remote areas.

Meanwhile, President Muhammadu Buhari last Friday at a meeting with some governors urged citizens to give him seven days to resolve the cash crunch that has become a problem across the country from the policy of the CBN to change high value Naira notes with new ones. “I will revert to the CBN and the Minting Company. There will be a decision one way or the other in the remaining seven days of the 10-day extension,” the President said.

The Governors had told the President that while they agreed that his decision on the renewal of currency was good and they were fully in support, its execution had been botched and their constituents were becoming increasingly upset.

Later that Friday, the President while tweeting via @MBuhari at 1:32 pm on February 3, 2023 said interalia: “I am aware of the cash shortages and hardship being faced by people and businesses, on account of the Naira redesign. I want to assure you that we are doing everything to resolve these issues. Nigerians should expect significant improvements between now and the February 10 deadline.

“I met with a delegation of Governors today, on the matter. All the complaints about the execution of the currency change are being seriously looked into. I will ensure that everything is resolved in a lasting manner, and we will all enjoy the long-term benefits of the decision.”

A reply by @quincypetersjr to Mr President’s tweets at 2:34 pm reads:” Your excellency Sir, please allow more time for these new notes to circulate. I know it might be in our best interest but of what use will that be when there is chaos everywhere and people are hungry. I pray thee to kindly extend the deadline even further and allow both to coexist for now.”

Another reply to the President’s tweet from @FreemAn_Jiw at 2:48 pm said: “There can never be positive change without sacrifice. We have endured changes that were to our detriment and we survived. If this will benefit us in the long run as you have said, then let’s endure a bit more.”

I have no reason to doubt the authenticity of the tweets by the President because they have not been denied to have come from him by his handlers. The success of the cashless policy, including the redesign and swap of the Naira, is lofty and welcome because Nigeria cannot operate in isolation from the rest of the world. However, its implementation by institutions of government should aid the growth of the economy, and not to stifle it. A lot of money has been lost since the announcement of the new Naira policy due to inconclusive transactions and businesses. As said by one of the tweets in response to the President, it is not impossible to allow the old notes and the new ones to coexist side by side for a reasonable time until much after the elections, after which the public and the deposit banks must have psychologically prepared themselves for the final withdrawal of the old notes.

The President should act fast to restore sanity in the financial sector since the buck finally stops at his desk as the ‘Governor General’ of the CBN. The 7 days window he promised should bring about a change that Nigerians can relate with, and not the one that will make them frown at his legacies on the economy. The President may also consider reversing the N20, 000 maximum daily over the counter withdrawal announced by the CBN. This will kill SMEs and petty trading in the open markets in the rural areas which have proved to be reasonable economic drivers.