News

Nigerians question country's readiness to go cash-free

April 3, 2012

Nigeria implemented the pilot for its cashless policy Monday in Lagos, the country's largest city. According to a report at momentng.com, the result was confusion and frustration among citizens about the rules of the country's cashless policy due to last-minute changes.

A key element of the policy aimed at pushing Nigerians into digital transactions is the imposition of fines for cash withdrawals or deposits over certain limits, but Nigerians have strenuously objected to the limit and penalty amounts. In response to criticism, the CBN late last month reduced fine amounts and increased withdrawal and deposit amounts.

A flyer distributed on March 19 announced that daily cumulative limits of N150,000 ($952) for fees and N1 million ($6,347) for deposits by citizens and corporations was increased to N500,000 ($3,174) and N3 million ($19,040), respectively.

Fees for withdrawals above the limit were reduced from 10 percent to 3 percent for individuals and from 20 percent to 3 percent for corporate entities. Fees for deposits over the limit declined from 10 percent to 2 percent for individuals and from 20 percent to three percent for companies.

Financial analyst Patrick Osahon said the follow-up revisions showed that the CBN failed to think through the implications of its policies before instituting them.

"[W]hat people are saying is that the CBN should have taken into consideration the realities of the Nigerian economy and environment. Banks’ customers were already complaining of excessive bank charges and instead of the CBN fully addressing this issue, it is giving banks an opportunity to further hit customers with charges," Osahon said.

The IT director for a leading bank, who wished not to be named, told The Moment that he worried about the county's readiness for a cashless policy. "[E]ven the 40,000 POS terminals that have been brought in for this phase of the project in Lagos are not likely to be adequate. And once there are not enough POS terminals and the rate of complaints about [ATMs] does not reduce, customers will protest being charged for withdrawing and lodging funds."

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