If you have a tenant that keeps coming home in the middle of the night, and you’re not comfortable with it, there are two ways to curb the issue; it’s either you get confrontational and threaten him with a quit notice, or you find ways to make coming home late inconvenient for him. The latter is the better option.

On the 1st of July 2014, the Central Bank of Nigeria henceforth referred to as CBN rolled out its cashless policy nationwide. Some key reasons for this policy include;

To drive development and modernization of our payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020.

To reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.

To improve the effectiveness of monetary policy in managing inflation and driving economic growth.

I really can’t say how effective the cashless policy has been, but I don’t think I would be wrong for saying it probably hasn’t been as successful as intended. One of the key reasons I believe is a wrong strategy.

One of the key tactics the CBN had intended to use to push the cashless policy was basically charging people for transactions above a certain amount. In other words, the CBN wanted to discourage people from using cash by simply raising the costs of executing certain transactions. The major problem with that approach is that although it may push some people to consider using cash less, it however will get others agitated, but after a while, people get used to it and revert to using cash.

The Truth is this; you can’t force people to use cash less, it’s not a coherent approach as long as cash is the most convenient way to get most things done in Nigeria. If you want to make people use cash less, you have to make it inconvenient to use cash.

If you’re opportune to travel to China, especially Beijing, you’ll observe certain things; one of which is that spending cash is largely inconvenient, the cab driver may not take it, the local grocer may not accept it, you may have a good amount of money with you, but without Wechat or Alipay, you’re going to find using cash largely inconvenient. If you want people to use cash less, make using cash inconvenient.

If someone flew into Nigeria with a thousand US Dollars, except he intends to purchase something specific that the merchants only accept dollars for, you don’t have to force him with any kind of fee’s to convert that money to Naira, it would be largely inconvenient not to do so. He can’t pay the Taxi Driver in Dollars, he can’t pay the market woman in Dollars, he can’t buy a snack from a local retailer in Dollars, it’s really common sense for him to convert that money to Naira to avoid the inconvenience.

When I was an undergraduate, and my parents sent my weekly allowance, I would usually withdraw everything to use, why? Because 90% of everything I needed to do could be done by cash. Some weeks back I needed to pay an artisan for some work he had done, so I requested for his bank account to do a transfer. I was surprised when he told me his account was dormant and had been dormant I think for a while. Here we have a matured man, probably married, who can live his life, do business, and conveniently move around without a bank account, and running primarily on cash.

As long as using cash is the most prevalent way of getting things done in Nigeria, raising charges on transactions will really be pouring water in a basket.

What To DO

The real strategy lies in making using cash for transactions inconvenient. These are what can be done:

• Grass root outreaches to Market women and Local retailers

In Design, there’s something we call empathy. The root and foundation of empathy is a deep understanding of the user, or rather stepping into their context of use, not assuming you understand them. If you want to buy a car in Nigeria, it’s very likely you’ll perform a bank transfer or issue a cheque, if you want to buy a phone that costs anywhere above #100,000, chances are you’ll use a POS terminal, but if you want to buy the everyday things people spend money on daily, you’re much more likely to use cash. Most of the transactions made in Nigeria are done in cash, because that’s the only option the retailers who are usually the last mile between the customers and that specific product subscribe to.

Performing a comprehensive study, and user research with these local retailers would help bring out their major concerns about using digital financial services, and help decide whether the solution would be a re-education campaign, or redesigning the digital products they will need to interact with to address their concerns.

• Support the Ecosystem (Impact Investing into Startups in that field)

Today, there are a huge array of startups in the Fintech space whose major focus is on helping to solve or promote the idea of using less cash and performing more transactions digitally. The CBN could invest into startups in this field whose mission most closely aligns with theirs. This could act as a catalyst to both speed up the work of the Startup involved, and encourage more Startups to get into that space.

• Making it easier for people to send money between themselves

If the process of transferring money from one user to another using digital services becomes easier and more convenient, users would be encouraged to utilize them more.

The CBN could herald or authorize a product design initiative that prevents a savings account user from having to interact with more than two (or at most three) pages of web page or application before performing a transfer.

• Heavy Investments in cyber security with real proofs

Some people tend to use digital financial services less because of a belief that banks can be hacked and their monies can be stolen. To avoid this sentiment, the CBN could mandate commercial banks who are already investing in cyber security operations to publish successful cyber security attacks that have been thwarted, this could help quell public opinion about the safety of funds used in digital finance.

• Create incentives for using non-cash alternatives for merchants

Humans tend to be very loss averse. Creating incentives, especially financial incentives for people to use digital services could help encourage the merchants to become advocates for using digital services and push for more people to use them. These incentives may include a financial rebate for transactions over a certain amount monthly.

Supplying the devices required to perform online transactions; small and portable POS terminals for free or at most at a subsidized price and making it easy to acquire them will go a long way in encouraging merchants to purchase them.

It is very important that all progress is monitored. A way to do so could include data sharing agreements between the CBN and commercial banks that helps the CBN with information in regard to ATM withdrawals and Cash Deposits. Ideally, the lesser the amount of ATM withdrawals, the lesser the cash in distribution, and the more Cash deposited, the lesser the amount of cash in distribution.

Conclusion

Applying the strategies listed above would take both time and significant resource investment. However, if the CBN intends to make the Cashless policy a reality and achieve some of the reasons for the policy, some of which include; making Nigeria among the Top 20 economies in the World, a concerted approach must be encouraged, one that involves partnerships between all the stakeholders involved to make the success of this policy a reality.