Nigeria’s journey towards a digital economy is a multifaceted success story, largely attributed to the pivotal Cashless Policy introduced by the Central Bank of Nigeria (CBN) in 2011. This policy has been instrumental in transitioning the nation from traditional cash transactions to a digital financial landscape, stimulating economic growth, reducing corruption, and enhancing financial inclusion. As summed by Dr Adebanjo, a financial analyst:
“The Cashless Policy has undeniably shifted Nigeria’s financial landscape. By reducing the dependence on cash, we’ve seen more transparent transactions, which is crucial in tackling corruption. However, the surge in digital transactions demands a robust cybersecurity framework to safeguard consumer trust.” Dr Olumide Adebanjo, Financial Analyst.”
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Experts have extensively debated the implications and effectiveness of the cashless policy. Some argue that it has significantly contributed to economic expansion by reducing the reliance on tangible currency and controlling inflation. They highlight the policy’s role in fostering ethical commerce by adding transparency to financial dealings, which aids in combating illicit activities such as money laundering. Furthermore, proponents emphasise that the policy has broadened financial service accessibility to the unbanked, driving societal progress and empowerment. One such expert is the former Nigerian finance minister, Dr Okonjo-Iweala, who opined that:
“Financial inclusion is a cornerstone of economic growth. The Cashless Policy is a significant step towards ensuring that every Nigerian, irrespective of their socioeconomic status, has access to financial services. This policy has the potential to uplift marginalised communities and drive inclusive development.” Ngozi Okonjo-Iweala, Former Finance Minister of Nigeria.”
Conversely, critics point out the challenges associated with the policy, particularly regarding cybersecurity. They argue that the shift to digital transactions has heightened the risk of cyber threats, necessitating robust cybersecurity measures to protect consumer trust. Additionally, there are concerns about the readiness of the entire population to adapt to digital financial systems. While younger demographics may readily embrace these innovations, older individuals might require targeted educational programs to ensure smooth integration. The director of Financial Inclusion Advocates, Josephine Igbokwe, highlighted that.
“ In promoting these values, the policy aims to enhance efficiency in transactions and build trust among Nigerians.”
“The Cashless Policy has opened doors for many unbanked Nigerians, allowing them to participate in the formal economy. However, it is essential to address the digital divide to ensure that everyone, including rural populations, can benefit from these advancements.” Josephine Igbokwe, Director at Financial Inclusion Advocates.”
The Cashless Policy exemplifies the transformative power of visionary leadership. Its effects permeate Nigeria’s socio-economic fabric, altering consumer habits, encouraging transparent transactions, fostering inclusive finance, and propelling sustainable development. As we navigate the implementation hurdles, the call for ethical stewardship becomes paramount, anchoring our endeavours in solidarity, fairness, and integrity. Here are a few areas where the policy promotes ethics, leadership, and good governance.
The economic and social ripple effects
The Cashless Policy significantly impacts governance and leadership, aligning with the CBN’s ambition to elevate Nigeria among the top global economies. This contributes to economic expansion by reducing reliance on tangible currency and controlling inflation. On a societal level, this fosters ethical commerce by adding transparency to financial dealings, aiding the fight against illicit activities like money laundering. Importantly, it broadens financial service accessibility to the unbanked, driving societal progress and empowerment.
Adeola Adebayo, CEO of a Leading Nigerian Bank: “Our institution has seen a significant increase in digital transactions since the implementation of the Cashless Policy. While this is a positive development, we must continue to innovate and improve our digital services to meet the evolving needs of our customers.”
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Championing inclusive finance and ethical governance
The core of the Cashless Policy is its unwavering commitment to financial inclusion and the enhancement of Nigeria’s payment systems. This policy is dedicated to ensuring that all Nigerians have equal access to financial services while following the principles of ethical governance. In bridging the gap in banking access, the policy helps create a more inclusive financial system. It focusses on transparency, accountability, and fairness in providing financial services. In promoting these values, the policy aims to enhance efficiency in transactions and build trust among Nigerians.
Chinedu, Small Business Owner in Lagos: “Switching to digital payments has made managing my finances easier and more secure. However, there are times when network issues disrupt transactions, which can be frustrating. We need better infrastructure to support this policy fully.”
Active participation in advocating for these inclusive financial practices and supporting the widespread adoption of cashless methods has been instrumental to the policy’s current success.
Navigating security and technological frontiers
The policy’s transformative nature brings inherent challenges, particularly in cybersecurity. Protecting the confidentiality of digital transactions is paramount amidst escalating cyber threats. Financial entities and policymakers bear the responsibility to implement robust cybersecurity defences to safeguard consumer trust. The policy’s triumph also depends on reconciling technological progress with societal adaptation. While young people may readily embrace digital innovations, older demographics might require targeted educational programs for smooth integration. This highlights the ethical duty to ensure no community is excluded from the financial evolution.
Collaborative efforts for financial stability
The Cashless Policy has delivered concrete advantages, including broader financial inclusion and operational cost reductions for businesses and banks. Yet challenges like network dependability and intermittent service disruptions signal the need for ongoing improvements.
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Case study: Network reliability
A study conducted by the Nigerian Interbank Settlement System (NIBSS) in 2021 reported that transaction failures due to network issues affected 10 percent of POS transactions, highlighting the need for infrastructure improvements.
Therefore, leaders who prioritise stakeholders’ interests and customer well-being—ethical leaders—must proactively fortify infrastructures and enhance connectivity to solidify a stable, inclusive financial environment. Ethical business leaders and the citizenry must help support the cashless policy to ensure the provision of a good environment for the policy to thrive. Ethical leaders should cultivate partnerships, encourage dialogue, and work together towards communal benefits.
Envisioning a principled digital economy
As Nigeria’s Cashless Policy unfolds, it harbours immense promise for the future. Fulfilling this vision requires steadfast adherence to ethical norms and a commitment to excellence. Leaders must adopt a holistic view that prioritises societal betterment and human prosperity.
About the Authors:
Adewumi Otonne is a Research, Programme Design, and Management Associate at the Christopher Kolade Centre, Lagos Business School.
Clinton Obinna Ogwuike is a Director at Michelle Michael Kevin, a leading consulting firm based in Abuja, Nigeria. He also serves as the lead research consultant for multiple economic, strategy, and education projects.
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