Many bank customers in Nigeria were disappointed during the Christmas holidays as several lenders’ e-channel platforms were not efficient, leading to failed or delayed transactions.
Analysts say this has raised doubt over the Central Bank of Nigeria (CBN)’s drive for nationwide implementation of the cashless policy.
The CBN had in a letter to all banks set January 9, 2023 as the commencing date for the implementation of the cashless policy.
Some customers who carried out transactions on banks’ e-channel platforms shared their experiences with BusinessDay.
Love Ngwuta, an entrepreneur, said he tried sending his bank account to two other banks on Christmas Day but all to no avail due to network issues.
“It has been chaotic. The PoS (Point of Sale) channel has been seamless but the money transfer channel has been chaotic,” a Lagos businessman said, adding that many Automated Teller Machines (ATMs) did not dispense money.
Taiwo Oyedele, head of tax and corporate advisory services at PwC Nigeria, who was a victim of bank e-channel failures, said the biggest impediment against the adoption of e-payments and by extension the cashless economy objective in Nigeria is poor e-payments infrastructure.
“The problem has always been with us but it seems to get worse during periods of high commercial activities such as the Yuletide. I experienced this myself over the Christmas period and had to result in cash payments and bank transfers in some cases,” he said. “Unfortunately for many businesses, you can’t do bank transfers for over the counter purchases; imagine the impact on their sales if you also can’t withdraw cash to pay them due to withdrawal limits.”
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Oyedele said the CBN should prioritise the improvement of these infrastructures in collaboration with other key stakeholders within the value chain before implementing the new cash withdrawal limits. He said if not, economic activities would be negatively impacted, which could lead to low GDP growth rate or even a recession.
The Indian case is a classic reminder of what could go wrong with a hasty and poorly planned cashless economy policy, he added.
“I think it’s a temporary glitch as a result of the spike in transactions over the holidays,” Tope Fasua, CEO of Global Analytics Consulting Limited, said.
However, he said it is also an impetus for more investment in the service infrastructure by the banks. “They should anticipate such spikes and be prepared especially now that Nigeria is going into full spectrum cashless banking. I don’t believe that Nigerians should despair,” Fasua said.
In a telephone interview with BusinessDay, Muda Yusuf, director of Centre for the Promotion of Private Enterprise, said electronic transaction failures will create more problems for the citizens and businesses especially with regards to their transactions.
He said such transaction failures slow economic activities, especially at a time when the CBN is pushing people into a cashless economy.
He said: “If it must achieve a cashless policy, it must ensure readiness. That readiness in terms of infrastructure is not there, even though it has made some progress. Before you become more bullish, you must make sure that infrastructure is there.
“It is not a good thing for the economy and that also underscored the need for the government to override the CBN to slow down on the pace for the cashless policy. If the people in the urban areas are having issues with e-channel, what about people in the remote areas where there are no networks and no banks?”
The CBN introduced the cashless policy on April 1, 2012, with the overall objective of reducing the use of cash in the economy, encouraging electronic transactions and enhancing the efficiency of the Nigerian payments system.
Banks have encouraged customers to always use the e-channels for seamless, fast transactions.
One of the achievements of the cashless policy, according to Aisha Ahmad, deputy governor in charge of financial system stability at the CBN, is expansion in financial access points, including (ATM, PoS, agents and mCash), which have recorded significant increases spurred by the cashless policy.
Sequel to the naira redesign policy announced by the CBN on October 26, 2022, the apex bank suspended charges on cash deposit above specified thresholds under the cashless policy to ensure seamless implementation of the policy and to encourage the public to deposit their funds before the January 31, 2023 deadline, she said.
