The House of Representatives yesterday ordered the Central Bank of Nigeria (CBN) to suspend the cashless policy on bank deposits, the implementation of which began on Wednesday this week.
Adopting a motion under matters of urgent national importance sponsored by Mr. Ben Kalu at the plenary presided over by the Speaker, Femi Gbajabiamila, yesterday, the lawmakers said that the suspension of the policy would last until appropriate and extensive consultative process are concluded on the issue.
Consequently, the House mandated its Committee on Banking and Currency to interface with the CBN to ascertain the propriety of the policy in view of the prevailing economic situation of the country and to report back to the House within four weeks.
Kalu, who chairs the House Committee on Media and Public Relations, described the policy as an overbearing burden that could lead to the closing down of majority of micro, mini, small and medium businesses in the country.
He further claimed that the policy was also aimed at enriching the money deposit banks owned by a privileged few, without any known financial contribution to the consolidated revenue fund of the federation.
The lawmaker particularly accused the CBN of not considering the citizenry as the centerpiece of its policy-making, even as Section 14(2)(b) of the Constitution of the Federal Republic of Nigeria, 1999 (As Altered) provides for the security and welfare of the people as the primary purpose of government
“We are worried that the implementation of the cashless policy in Nigeria so far has led to significant decrease in deposit mobilisation and credit extension by the Nigerian money deposit banks.
“We are deeply worried that the implementation of the cashless policy on withdrawals has negative impacts on micro, mini, small, and medium enterprises which are clearly the engine room for growth of the economy and employment generation, thereby throwing many of them out of business and sending more Nigerians into poverty. The policy will force more traders and micro investors to carry cash about with its attendant security challenges,” the lawmaker maintained.
Despite the effort by Mr. Nkem Uzoma Abonta to prevail on his colleagues to tarry awhile and consult with officials of the CBN within three days to determine the veracity of the policy, the motion was widely endorsed without any dissenting voice.
To some experts who reacted to the development yesterday, a matter that is subtly involving the independence of the CBN may have arisen over the apex bank’s decision to effect charges on deposits and withdrawals in excess of regulatory limits. They faulted the House of Representatives order that the bank should reverse its decision on the matter that they described as solely a monetary policy issue.
An economist, Bismarck Rewane, described the order as inappropriate, saying the apex bank’s move was in order and globally acceptable. He maintained that “it is solely a monetary policy issue, which is not subject to legislation.’’
“We are trying to pursue financial inclusion for the benefit of all, so we must discourage full cash-based transactions to the extent possible. Cashless system is good for transparency and payment efficiency.
“Besides, the lawmakers are not to legislate on issues that are purely monetary, because the CBN Act prohibits such. The much they can give is advisory,” he said.
For the Managing Director of Cowry Assets Management Limited, Johnson Chukwu, it is doubtful whether the order is binding or advisory because CBN is expected to be autonomous.
“We are all living witnesses to the benefits of minimal keeping of cash at homes. It is long we heard that thieves made away with millions from people’s homes and that is courtesy of the cashless initiative.
“The only point that I would caution about in the whole scheme is the tax on payment platforms. You cannot ask people to be cashless and at the same time tax them on the use of the platform. That is double jeopardy and I think they should think seriously about that planned online tax,” he said.
The Chief Research Officer of Investdata Consulting Limited, Ambrose Omodion, said the cashless policy of the CBN had encouraged more transparency and accountability in the system, thereby making fund available for developmental projects.
He noted that the full implementation of this policy would go a long way to curb corruption, especially in the payment processes in government agencies.
However, he admitted that corporate businesses are currently operating under harsh economic environment, but added that the policy would help minimise cash transactions and improve the operations of the commercial banks.
“The cashless policy will bring a lot of transparency into the system when people pay cash. Not only that, the full implementation of this initiative will checkmate money laundering,. I will only urge the CBN to enhance interest rate on savings account to encourage people to save more money.”
The Director-General of the Nigeria Employers’ Consultative Association (NECA), Timothy Olawale, described the policy as laudable in moving the economy to be at par with other emerging economies.
Olawale, who re-iterated the need for wide consultation and stakeholders’ engagement on an ongoing basis before policy statements are made or concluded, however, stated that the current business environment and available infrastructure are not ready for such deployment. He called for a review of the policy
According to him, the CBN should ensure that all money deposit banks improve their facilities as against inefficiency in our payment platforms and reduce fraud. The NECA boss noted that several sub-sectors of the economy would be negatively impacted by the policy, as they are still predominantly cash dominated.
The Managing Director of Highcap Securities, Imafidon Adonri, also argued that the cashless policy is not feasible in an economy that is still dominated with cash transactions.
According to him, the electronic platform and infrastructure that make the policy operate efficiently are not readily available.
“The economy does not have the efficient infrastructure to operate a cashless payment system. This is why the penalty seems very harsh and unreasonable. The CBN should allow the automation of the system to lead its efficiency so that people would gradually migrate to a cashless system on their own without any punitive measures. Imposing penalty is unnecessary.”