• Friday, March 29, 2024
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The common-sense case for going cashless in Nigeria amid COVID-19 pandemic

cashless policy

Among economic lessons the COVID-19 pandemic has revealed is the need to go cashless in Nigeria. This was glaring on the first day of the easing of the lockdown in Lagos and the FCT.  Cash-starved residents besieged banks, spurning social distancing and face masks to withdraw cash.

Given the sharp rise in COVID-19 cases in Nigeria, specifically in Lagos, ignoring the need for a cashless society in a period like this would further put residents at risk of contracting the disease.

As at Thursday 7 May the Nigeria Centre for Disease Control (NCDC) recorded 381 new cases of COVID-19, which saw the total number of cases rise to 3526 from 3145 a day before. Lagos state currently accounts for about 43 percent of total cases. These critical times call for critical measures like going cashless.

Cash handling has become a major concern. Health experts believe the novel coronavirus, which causes the potentially deadly COVID-19 disease, is transmittable through surfaces, including paper money, an infected person has handled. Experts belief that this virus can stay active on cash and other surfaces for at least 10 days.  It raises serious health concerns for deposit-taking financial institutions as well as their customers who handle cash transactions.

Although the World Health Organisation (WHO) has refuted claims that the virus is transmitted through cash, it advises that it is good hygiene practice to wash your hands after handling money, especially if eating or handling food.

Beyond the need to contain the spread of the virus, embracing technology and going digital has proven useful in ensuring continued activities across sectors. Cashless payments are faster as swiping or hovering a card over a terminal is more convenient than counting notes. Businesses would save money by saving the time they would otherwise use to handle cash and most importantly, thefts would decrease with the absence of money in cash registers and a better ability to track payments.

Various authorities could deposit monetary palliatives directly into bank accounts through electronic payment channels like mobile money and USSD to avoid physical sharing of cash and curb the spread of viruses.

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Making a case for a cashless Nigeria also means making a case for deepening financial inclusion. One of the major criticisms to going cashless is that it is discriminatory – it excludes people without bank accounts such as those who are young, low income, homeless or undocumented.

As at today, Nigeria has one of the highest financial exclusion rates in Africa at 36.8 percent with some 40 million unbanked population and a regulatory target of 80 percent inclusion rate by the CBN. This would mean allowing FinTech’s and digital financial services providers build a clear path towards regulation.

Telcos in Nigeria are currently awaiting the CBN for a mobile money licence although they got a nod to offer mobile money services in October 2018. Despite the introduction of new players – which also included FinTechs – into the mobile money service market, the direction of mobile money initiative remains unclear one year and half after.

It is time to modernise our financial system. Among different lessons from this crisis, one is that Nigeria must invest in its financial infrastructure to promote economic growth going forward. The right investments will yield returns beneficial to all.

While we fight the COVID-19 pandemic, we must also think of ways to propel Nigeria out of a looming recession with longer-term measures to boost economic activities. One of such is going cashless as this will help businesses recover post-pandemic.