The nationwide implementation of the cashless policy, being driven by the Central Bank of Nigeria, is hampered by a number of challenges, according to industry stakeholders.
The policy, which started in Lagos in 2012, is aimed at reducing the amount of physical cash circulating in the economy and encouraging more electronic-based transactions for payment for goods and services and transfers.
The cashless policy was implemented in Lagos State in 2012 as a pilot scheme and extended to Abia, Anambra, the Federal Capital Territory, Kano, Ogun and Rivers states in 2013.
It was later rolled out in the remaining states of the federation in July 2014.
An efficient and modern payment system is a key enabler for economic growth, according to the CBN.
Stakeholders and operators said the adoption of electronic and mobile payments had grown in the past three years.
They however agreed that infrastructure remained the single biggest factor limiting the transition to a cashless society, stressing the need for collaboration among all the players and the regulators.
Other challenges they listed comprised lack of understanding of the policy by many; prevailing cash culture in the country; illiteracy; poverty and scepticism in the banking system.
The Executive Director, Business Development, NIBSS, Christabel Onyejekwe, said, “Electronic payments are essential to the functioning of modern economies and are critical in helping the Central Bank of Nigeria to achieve its major objective of monetary and financial stability. Hence, there is the need for the payment infrastructure to be operationally resilient and reliable.”
She said as the Nigerian payment industry evolved into globally respectable standards with increasingly high level of investments in Information Technology by stakeholders, it was extremely critical that the continued survival of payment business and operations were supported by resilient infrastructures.
“Traditionally, Nigeria was cash-based, but now, we have seen great adoption with more and more people using their cards to make payment rather than use cash. The benefit of this is that it reduces the cost of cash. I think it is also a more effective banking system. Now, you are able to do things online. A lot of online businesses are springing up. More people are becoming more comfortable trading online,” the Partner, Reach Consult, Henrietta Abraham, said on the sidelines of the All Stakeholders Cashless Conference, organised by the CBN and Reach Consult last week.
The value of POS transactions increased from N38m a month in January 2012 to N27bn monthly as of September 2014, and the NIP transfers monthly increased from N51bn at the start of the policy to N1.7tn a month in September, according to the CBN.
The Executive Director, Sales and Marketing, Unified Payment, Mr. Babatunde Okeniyi, said technology and regulatory policies were key drivers for the cashless society.
“Policies will drive investment and if wrong policies are made, it will drive investors away. Investment in infrastructure requires a lot of money. Policies that should drive investment are important and there should be enforcement of policies. Investors will like to play by the rules and they watch out for frequent changes in policies, which do not aid investment,” he said.
The Head, Shared Services, CBN, Mr. Chidi Umeano, said, “The cashless policy has gained a lot of traction. It is moving in the right direction and we are continuously making sure that progress is continuous. You can see it in the figure in terms of the value and volume of transactions that we do on a daily basis. I am talking about instant payments, mobile banking, and point of sales terminal. There is clearly a massive improvement from where we started this.”