Experts and stakeholders have picked holes in the implementation of the Central Bank of Nigeria’s cashless policy, with the imposition of charges on cash deposits and withdrawals.

Some experts, who spoke to our correspondents in separate telephone interviews on Wednesday, said that the charges were unnecessary as they added to the burden that customers already bore.

Some other experts urged the apex bank to review downwards the cash handling charge on daily cash withdrawals that exceed N500, 000 for individuals and N3m for corporate bodies.

The apex bank had in a circular to Deposit Money Banks stated that from Wednesday, September 18, it would impose three per cent processing fees for withdrawals and two per cent processing fees for lodgements of amounts above N500, 000 for individual accounts.

For corporate accounts, the apex bank said that DMBs would charge five per cent processing fees for withdrawals and three per cent processing fee for lodgements of amounts above N3m.

The apex bank said charges were introduced to drive development and modernisation of the country’s payment system in line with the vision 2020 goal of being amongst the top 20 economies by the year 2020.

Too many charges can discourage savings

But reacting to the development, finance experts said that the move would discourage the culture of savings among Nigerians.

The Registrar, Chartered Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, called for a downward review of the charges to 0.5 per cent for individuals and 1.5 per cent for corporate organisations.

He said bank customers were already suffering the burden of various charges from DMBs for carrying out various banking transactions.

He gave some of the charges as card maintenance fee, Automated Teller Machine withdrawal charge, stamp duty, Commission on Turnover and SMS alert.

Eohoi said with all these charges, it would be unfair for the apex bank to impose additional charges on cash withdrawal and deposit in a bid to promote cashless economy.

He said, “The move by the CBN to promote cashless policy is commendable because it has some benefits such as reducing the amount spent by the apex bank in cash management.

“However, the Nigerian economy is still fragile and at a time when the CBN is promoting financial inclusion, it would not be fair to impose additional charges on bank customers that are already overburdened with different types of charges from banks.

“The cash deposit and withdrawal fee announced by the CBN is too high. They should reduce it to 0.5 per cent for transactions involving individuals and 1.5 per cent for corporate companies.”

A former Director-General, Abuja Chamber of Commerce and Industry, Chijioke Ekechukwu, said the imposition of the charges should be reviewed downwards considering that many Nigerians were still unbanked.

He said, “The policy is aimed at reducing cash transactions and if you reduce cash transactions, it becomes easier for banks and CBN to manage cash.

“Each time cash is moved from one location to another, it involves a lot of costs. So, this cashless policy will help the CBN and the Nigeria Financial Intelligence Unit to track transactions.

 

“Above all, it may not ultimately reduce the need to withdraw cash. When the benefit of the cash you are going to pay is far above the charges you are going to get, then you will definitely ignore the charges, withdraw the cash and make the payment.

“If they maintain the kind of charges and remove automatically what they call maintenance charges, stamp duty and others, it will help to promote the cashless policy.”

 Greatest impact on small business – NECA 

The Nigeria Employers Consultative Association and the Lagos Chamber of Commerce and Industry said the latest charges would increase the burden on bank customers.

It said that the implementation of the policy would signal the imposition of charges on deposits in addition to already existing charges on withdrawals.

The Director-General, NECA, Mr Timothy Olawale, who though said the directive was purportedly to move the country into a cashless economy, and reduce crime involving cash, said there should have been enough notice before implementation.

Olawale added that it would also have the greatest impact on retail businesses and other medium-scale retailers in the Fast Moving Consumer Goods sector.

He said, “Though the overall aim of reducing cash transactions is good, the policy will, however, increase the cost of doing business and force organisations and individuals to start multiple deposits and withdrawals in order to beat the charges.”

Implementation notice too short – LCCI

On his part, the Director-General, LCCI, Mr Muda Yusuf, said the notice given by the CBN was too short and that it would have disruptive effects on bank customers and other stakeholders. He suggested a much longer notice.

He said, “The latest circular by the CBN should have given a much longer notice to economic players. The notice given for the effective date is extremely short. The circular was dated 17th of September while the effective date was 18th of September.

“This is just a notice of one day.  This would have short-term disruptive effects.  We implore the CBN to give at least two months to allow for players in the economy to adequately prepare themselves. This is particularly so for investors who are major players in the retail segment of the economy.”

While he noted that it was difficult to justify the decision to penalise cash depositors, he said the emphasis of the policy should be on discouraging cash transactions and withdrawals, which was more in consonance with its objective.

Policy could spur multiple withdrawals and deposits

A professor of economics at the Department of Economics, Olabisi Onabanjo University, Ago Iwoye, Ogun State, Sheriffdeen Tella, also decried the new policy, stating that it was contradictory to the cashless policy mantra of the CBN Governor, Godwin Emefiele.

While he noted that there already existed many charges heaped on individuals and corporate clients by banks through withdrawals and management of accounts, among others, he said the addition would be an overkill.

He said the directive would only encourage multiple withdrawals and deposits, in order to beat what it aimed to achieve. He described the new policy as favouring commercial banks and disfavouring their customers.

He said, “The charges are becoming too many that people may decide not to take their money to the banks anymore. They may begin to look at other options.

“The new charges will not in any way encourage the cashless policy the CBN is trying to promote. I see it more as being contradictory.

“Government should look at other ways of making money for the banks.”

CBN, FIRS directives contradicting

Maritime logistics expert and the Chief Executive Officer of Hermonfield, Mr Tunji Olaosun, said there was a lot of contradiction in the directives coming from the CBN and the Federal Inland Revenue Service.

He said, “It appears they don’t talk to themselves because of the conflicting signals coming from them.

“From the CBN’s instruction, it shows that the CBN wants to discourage cash transactions and encourage cashless transactions. But at the same time, the FIRS is saying it will impose tax on transactions done online.

“So in essence, if we carry cash, CBN penalises us; if we do cashless, FIRS taxes us. So, which one do they want us to do? Both are agencies of the Federal Government which means the ministry they are confusing Nigerians.”

 

Olaosun, who is also an Information and Communications Technology expert and the co-founder of Flink Teshnik Concept, suggested that the Minister of Finance should come out with a clear-cut directive to resolve the confusion.

The National Coordinator, Save Nigeria Freight Forwarders, Dr Osita Chukwu, condemned the policy in strong terms.

He said the government was bent on imposing more hardship on Nigerians with the recent policies that were being churned out.

“He said, “First, they increased Value Added Tax; then they are now imposing charges on both cashless and cash transactions.

“The reason is because they get everything free. They don’t buy fuel, they don’t pay for amenities. Why won’t they impose more hardship on tax payers who are funding their lifestyle?”

Implement aggressively, reduce PoS transactions’ costs

The Managing Director, Financial Derivatives Company Limited, Mr Bismarck Rewane, who was recently named in President Muhammadu Buhari’s Economic Advisory Council, said the initiative should be lauded as it aimed to further drive the CBN’s cashless policy.

According to him, the CBN cashless policy should have been more aggressive and long implemented with full force.

He said, “I think that anything to encourage people to use electronic means of banking is good. If you go to advanced countries, even in Kenya, nobody carries cash.

“Cash is unsafe and it impedes regulation of circulation of money. Anything the CBN is doing on cashless policy should be supported. As a matter of fact, I am surprised that they confined it to only about five states.

“The CBN ought to step up and actually extend it to other places; but this is like a pilot, I guess. It is a way of making sure that people drop cash migration to electronic payments.”

Rewane said the charges on PoS transactions should, however, be reduced, but not abolished in order to drive financial inclusion.

Make online, PoS transactions free

The Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr Johnson Chukwu, said, “The fact that we are also imposing taxes on online payments is a negation of the drive to encourage people to move away from cash.

“At this point in time, we should make all online transactions free of taxes so as to encourage that migration in terms of cultural orientation.

“Our culture is that we use cash to make payment. So if you want people to move away from cash, we need to remove charges on electronic payments.

“If you impose tax on electronic payment, and at the same time you are also imposing charges on cash deposits and withdrawals, you will basically be pushing people to begin keeping their cash at home.

“Given the overriding need to encourage cashless transactions, the government or the CBN and the tax authorities should avoid, in the meantime, imposing taxes on electronic payment platforms and allow that sector to mature.”

A professor of finance at the University of Lagos, Sunday Owualah, said the CBN initiative would definitely not augur well because presently, any transfer or third party deposit into any current account attracted a stamp duty of N50.