February Newsletter – A Fistful of Naira
This month’s newsletter is dedicated to the elucidation of the Central Bank of Nigeria’s Cashless policy.
Even though the policy is probably the only policy in the country that had been announced well over a year before commencement, the policy still crept up on most people. This was because Nigerians were distracted by the increase in fuel price, the accompanying inflation and the incessant bombing occurring in the northern part of the country which sadly, is becoming more commonplace. As the CBN moves to ensure that Nigerians never need to carry more than a fistful of Naira as bulk of transactions must be cashless, we heartily volunteer to enlighten as many people as possible that read this newsletter on the policy.
First, it is important to note that the aim of the Cashless policy is to REDUCE not ELIMINATE the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.). The policy commenced in Lagos in January (Cash-less Lagos) and would commence nationwide in July. The policy stipulates that a ‘cash handling charge’ on daily cash withdrawals or cash deposits that exceed N150, 000 for Individuals and N1, 000,000 for corporate bodies must be charged by the bank.
At the time of submission of this article, we could not confirm the exact figure of the ‘cash handling charge’. However it should be noted that the service charges/fees will not apply until March 30th, 2012. This is to provide adequate time for people to migrate to electronic channels. Also 3rd party cheques above N150, 000 shall not be eligible for encashment over the counter. You need to pay such amounts into your bank account.
Please note that the policy does not prohibit withdrawals or deposits above the stipulated amounts, but that such transactions will be subject to cash handling charge. The daily limit for withdrawal and deposit applies to the account so far as it involves cash, irrespective of channel (e.g. over the counter, ATM, 3rd party cheques, etc) in which cash is withdrawn or deposited. For example if an individual withdraws N50,000 over the counter, and N150,000 from the ATM on the same day, the total amount withdrawn by the customer is N200,000, and the service charge will apply on N50,000 – the amount above the daily free limit.
While the cons of this policy are a slight inconvenience in the way most people are used to doing business, the pros are enormous. Electronic transactions offer convenience as it works 24 hours a day, seven days a week. It also reduces transfer/processing fees and increases processing/transaction time. It would also save people money. A practical example is that you can make purchases for N7.50 without the seller needing to round it up to N10 and still have the balance left in your account. All these little savings would eventually add up to something.
We must not also forget the safe guarding of lives as it would ensure relative peace from men of the night (not that they only move in the night) as they are usually after cash. Definitely, the policy would also benefit the Government. It would lead to easier documentation and transaction tracking. The government will benefit in the area of adequate budgeting and taxation, improved regulatory services, improved administrative processes, and reduced cost of currency administration and management.
Even looking at it from the VALENTINE angle, from a quick office survey, people find cash gifts to be unromantic. Here comes the irony- Cash gifts are only romantic when in excess of N150, 000.
HAPPY VALENTINE IN ADVANCE
