As the nationwide date for implementation of the Central Bank of Nigeria’s cashless-policy draws near, Uzoma Dozie, CEO of Sparkle has said business and retail will be most affected by the policy.
The last Group Managing Director of Diamond Bank said everyone is practically exempted from the cashless policy except for business and retail that are financially excluded.
According to him, only a small percentage of the country’s population will be impacted by this policy; estimates suggest 5-10 percent.
“There are two key segments that will be impacted the most; business and retail. Those who have, to-date, actively chosen to remove themselves from the financial system and who have chosen not to succumb to paying taxes,” Dozie said in a mail response to BusinessDay.
The CEO explained that the policy will not affect a lot of Nigerians due to the poor state of Africa’s largest economy.
With the most population in the continent, Nigeria has one of the highest per-capita rates of poor people in the world. Data by the World Poverty Clock puts about 95million of the people in Nigeria to be living in extreme poverty.
While applauding the first step by the apex bank, the CEO said the next thing would be to ensure the private sector is empowered and incentivised to build a pan-Nigerian infrastructure that will deliver on a cashless policy.
“We have sufficient capacity in terms of potential providers installed in Nigeria already – now we need the impetus, a catalyst, for them to scale their infrastructure,” Dozie said recommending “government engagement with both segments.”
The founder of Sparkle, mobile-first platform focused on the country’s retail sector said that while the intentions are there, and the policy has been implemented and tested in a number of states (Lagos, Ogun, Kano, Abia, Anambra, Rivers State, and the FCT), “without additional coordinated efforts to provide the required infrastructure, the cashless policy will not see the light of day.”
Dozie asked if the CBN and private sector can achieve this alone? “No – this must be a deliberate and co-ordinated roll-out, which also takes into consideration the on-going identity agenda for Nigeria”
He advised that retailers who want to scale would have to consider the cost of cash and the operational risks that comes with managing cash; by this, he meant the cost of moving cash around, storing cash, insuring cash, and also having a lightweight and potentially ambiguous paper trail of cash.
“What businesses of all sizes should be thinking about, and this needs to be supported and pushed by the CBN, is investing in the digitization of their customers – looking at the many opportunities that this presents. This requires education at all levels, to engage businesses and customers, highlighting the many benefits of moving away from cash.”
Furthermore, by creating a digital footprint for a business, owners of businesses can build a credit line with their banking institutions, and unlock capital for future expansion opportunities, the CEO said.
He further said that investment in the value chain and education of customers of the various businesses will save billions of Naira in the long term. “They may not know it yet, but it is our role to educate them, as well as provide financial incentives.”
“By making cash more expensive, which is what the CBN is attempting with this policy, they are actively driving people and businesses into the financial system. This is a longer-term play to bring more people into a financially inclusive system where the benefits are felt by many, and not by the few.”
Estimated at 37 million, Nigerian Micro, Small & Medium Enterprises (MSMSE) are said to have a finance gap of $158.13 billion, data compiled from the 2017 MSMEs report by the World Bank and Finance Forum read.
According to the Washington-based financial institution, MSMEs play a huge role in facilitating economic development due to their flexibility and affinity to innovation. “Even more so in emerging economies with a high contribution from the informal sector.”
