The Arewa Consultative Forum (ACF) says the Central Bank of Nigeria’s (CBN) cashless policy would lead to the collapse of the informal sector of the country’s economy.
The Star recalls that the CBN had announced N500,000 as the maximum withdrawal by corporate organisations and N100,000 by individuals with effect from January 9, 2023.
It also limited daily cash withdrawal at Point of Sale (PoS) terminals to N20,000 and ordered banks to load only N200 and lower denominations into their Automated Teller Machine (ATM).
However, the ACF, while speaking on the development via a statement issued on Friday by its Secretary General, Murtala Aliyu, said the CBN’s cashless policy would throw Nigerians into “a bottomless pit”, until the apex bank is able to address the challenges surrounding the policy.
The forum stated that scores of traders do not have a bank account or internet skills, noting that cash remains their (traders) medium of exchange in the country, particularly in the North.
It said: “If the CBN insists on implementing this wholly unrealistic policy of restricting individual’s cash withdrawal from the banks to N20,000 per day and N100,000 for a week or N500,000 in the case of corporate bodies, it won’t be long before we suffer a catastrophic collapse of the informal sector of the economy. More than anyone, CBN knows that transactions in commodity markets especially in the rural areas are entirely cash-based.
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“The villager that brings to the market his chickens, beans, onions, goat or cows does not typically have a bank account or internet skills. Cash remains the overwhelming medium of exchange for much of the country particularly in the North. This should surprise no one as bank offices are largely unavailable even for people who are keen and have the skills to use them.
“Even by the CBN’s reports, over 38 million adults in Nigeria do not currently have access to banking services with ‘women, rural dwellers, Micro-Small and Medium-Sized Enterprises and Northern Nigeria’ being among the most disproportionately excluded.
“And despite its pious pretensions, it is on record that the CBN under the present management, apparently out of desire to safeguard the interests of the commercial banks, has done much to undermine and stifle the progress of financial inclusion in Nigeria.
“Thanks to the decisions taken by the CBN, Nigeria, today, despite its size, has the dubious record of having the lowest financial penetration in all of Africa, perhaps in the world. Under the circumstances, the CBN will do itself and the country a world of good if it invests more efforts at addressing these challenges. It should start by ensuring that various financial institutions are created in sufficient numbers and in all parts of the country.
“It should allow a level playing field for a wide range of financial providers and encourage partnerships between them. Furthermore, the CBN must enforce strict regulations that protects people’s money. It must inform, encourage and prepare the public adequately for the transition.
“Until the CBN is able to address these challenges substantially, a preemptive move or a ‘frog-jump’ into a cashless payments system, however well intentioned, will only land us into a bottomless pit,” the ACF noted.
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