Mixed reactions trail CBN’s cashless policy implementation

Mixed reactions have continued to trail the Central Bank of Nigeria (CBN) cashless policy implementation that starting from September 18, 2019, customers operating bank accounts will begin to pay charges for deposits and withdrawals.

While some stakeholders commended the apex bank for its efforts in ensuring implementation of cashless policy in the country, others faulted the regulator for inadequate sensitisation.

The Central Bank had on Tuesday in a circular signed by its Director, Payments system management Department, Sam Okojere that the implementation of the new policy would signal the imposition of charges on deposits in addition to already existing charges on withdrawals.

According to the circular, the charges would attract three per cent processing fees for withdrawals and two per cent processing fees for lodgments of amounts above N500, 000 for individual accounts.

For corporate accounts, the apex bank in the circular said that Deposit Money Banks (DMBs) would charge five per cent processing fee for withdrawals and three per cent for lodgments of amounts above N3 million.

However, it stated that the charge on deposits would apply in Lagos, Ogun, Kano, Abia, Anambra, and Rivers states as well as the Federal Capital Territory, while the nationwide implementation of the cash-less policy would take effect from March 31, 2020.

Reacting to this development, an economic expert and Managing Director of Cyber1 Systems Network International, Mr. Momoh Aliyu, said that the full implementation of the policy meant to enhance transparency was long overdue.

Aliyu, however, said it was wrong for the policy to commence on Wednesday without adequate sensitisation of the citizenry.

“Many have invoiced their transaction taking into cognizance taxes before today. This will create a loss in some businesses and such inconsistencies in government policies do not give investors confidence.

“There is always the need to give ample notice for all charges or taxes. This will help corporate bodies and individuals make proper adjustments to invoicing and other negotiations,” he said.

Another economic expert, Dr. Samuel Fogbonjaiye, also said the policy was good and it was in furtherance of the cashless policy introduced by the apex bank.

Fogbonjaiye explained that the policy was meant to monitor cash movement and basically to mop up excess liquidity meant to develop the sector.

“Do you know some money bags have huge cash at hand and refused to pass it through bank accounting procedure? It is rather sad that not everyone in Nigeria has a genuine and functional bank account.

“To me, not giving enough time is obviously not important, the earlier you start, the better,” he said.

On the contrary, PwC Nigeria’s Tax Lead, Taiwo Oyedele, who reacted through his official Twitter handle, pointed out that the extra charges that will be incurred by individuals and companies for withdrawing and depositing money will have some negative impacts.

He explained that going forward, what the policy implementation entails is that an individual hoping to withdraw or deposit N1 million, for instance, will pay transaction fees of N30, 000 and N20, 000; respectively.

In the same vein, companies wishing to withdraw or deposit, let’s say N5 million, would incur a transaction cost of N250, 000 and N150, 000 respectively.

For example, as an individual or unincorporated business, if you deposit N1 million cash, your bank will deduct N20, 000 and N30,000 for withdrawal. For a company account, you will pay N150, 000 to deposit N5 million cash and N250,000 for withdrawal.

According to Oyedele, this development couldn’t possibly augur well for supermarkets and retailers who take in huge cash on a daily basis.

He, then, went further to observe that the situation could also impede the Federal Government’s financial inclusion agenda, whilst frustrating ease of doing business for SMEs. This is because when traders have to pay a lot of money to deposit money in the bank, some might as well think twice about it and keep the money under their pillows.

He said: “Without careful implementation with relevant exemptions, this policy will negatively affect financial inclusion and further complicates ease of doing business for small businesses.

“And what happens where there is “no signal” or “network not available” for pre-payment? Plus the taxman may seek to disallow the charge as an unnecessary fine”.

There are some bright sides: As the CBN already claimed, the cashless policy is intended for good.

Oyedele agreed to that to some extent. Some of these advantages include the following: Engender more transparency in the Nigerian financial industry; especially for the purposes of tracking and taxation; the situation will also benefit POS operators, as many people may want to avoid the charges by using POS.

He concluded by saying that the apex bank should have given more advance notice to enable businesses to gradually adjust to the system.

“On the positive side, this will help curb illicit financial flows, reduce CBN’s cost of cash management and bring more transactions within the banking system for tracking and tax purposes.

“It would have been more tenable for the CBN to give sufficient advance notice, and phase the implementation with progressive charges to enable people doing legitimate businesses make necessary adjustments”, he stated.

Meanwhile, some banks customers have expressed disappointment on the directive of the CBN on the new charges on certain lodgements and withdrawals.