The New CBN’s Cashless Policy: Exploitation In Disguise.

The New CBN’s Cashless Policy: Exploitation In Disguise.

“Our Central Bank still thinks we are in the military era. If, for whatever reason, you are going to introduce charges for deposits, will you just issue a circular? No explanation? No justification? No sensitization? You just issue a circular and call it cashless policy?”

This is how the former DG of Bureau of Public Reforms (BPSR), Dr. Joe Abba, responded to CBN’s circular to all Deposit Money Banks entitled: RE: IMPLEMENTATION OF THE CASHLESS POLICY. Where all the deposit banks were directed to charge 3% for withdrawal and 2% for lodgment in transactions at the excess of N500, 000, for individual accounts.

And for corporate accounts: it’s 5% for withdrawal and 3% for deposit in transactions that are more than N5 million. The directive takes effect on the 18th of September, in Lagos, Ogun, Kano, Abia, Anambra, Rivers States and the FCT. The nationwide implementation will take effect from March 31, 2020.

Read: The CBN’s Gift

Dr. Joe Abba isn’t the only prominent Nigerian who expressed the sentiment of concerned Nigerians, Senator Shehu Sani did so also. He tweeted:

“The new directive to Banks amounts to selective corporate extortion.”

This is not the first time that Nigerians will have to complain about CBN’s enabled extortions in the guise of implementation of Cashless Policy. The pilot of this policy was first implemented in January 2012, following the same pattern of a few selected states first, then it took effect nationwide on the 1st of July, 2013. It was relaxed in no time only to be resurrected in 2015, with adjusted figures and charges. It has been intermittent since then. The only thing that has consistently improved over the years has been the frivolous transaction charges sanctioned by the CBN.

  • ATM charges
  • POS charges
  • Online Transaction Charges
  • Account Maintenance charges
  • Card Maintenance Charges
  • SMS Charges.

Read also: Nigerian Banks Hitting Record Numbers on Arbitrary Charges and Fees

In 2018, spurred by the outcry of Bank customers, the Nigerian Senate waded in and summoned the CBN Governor, Emefiele. In a motion sponsored by Olugbenga Ashafa, on the illicit and excessive bank charges on customers’ accounts. An issue the Senate acknowledged that it affects the flotsam and jetsam as long as you operate a bank account in Nigeria.

Senator Emmanuel Bwacha, while responding to the motion noted.

“Banks declare profits and you wonder where these profits are coming from – it’s from the sweat of the common man. Let’s come up with a law that puts banks on their toes.”

The truth in this statement doesn’t need a telescope, you only need to visit the page of the Nigerian Consumers Protection Agency to see things for yourself.

The then Senate President, Dr. Bukola Saraki, didn’t hide his disappointment either.

“For me this is a major step that we are taking.” He said. “This is because I introduced the first ATM that came into Nigeria over 25 years ago. Now, after 25 years, we should have grown out of these excessive charges and move on. So I believe that this is something that we must address to create an environment that protects all Nigerians, because these kind of charges in this economy affects everyone.” He lamented

Unfortunately, the efforts of the Senate did little to change the extortions. In the CBN’s circular directing banks to implement the 3% and 5% charges, the Apex Bank boldly noted that the newly introduced charges do not affect the existing ones. So we are talking about encouraging cashless policy through charges skewed in favor of the banking institutions as against their customers.

Compared to banking practices in the rest of the world, the CBN policy has been rigged against the Nigerian people. It has been nothing but a calculated decision to rip bank customers off in the name of encouraging digital transactions.

You pay the banks for keeping your money, you pay the banks for trying to keep more money with them, you pay them for helping them do their job (DIY, online transactions) etc. A Nigerian bank customer doesn’t hope for interests, not even in a savings’ account.

Though there is an argument that the policy will help digital startups, especially fintechs. That’s true, every bad policy has those it favors. But in this case, there are people who have suffered more losses from the existing chagrin, and need no more losses.

“Why do I need to pay an extra 2% when I deposit over N500, 000 or pay 3% when I withdraw same? Asked Dr. Dipo Awojide, the Founder of BTDT Hub, a career advisory organization. “After paying account maintenance charges monthly, ATM maintenance charge, stamp duty charges and transaction charges when I transfer to other banks? This cashless policy is confusing.”

The most confusing aspect of it comes from the Federal Inland Revenue (FIRS)’s announcement that stipulated banks to collect taxes (VAT) on online transactions on behalf of FIRS. That means, if you do cashless, you will pay taxes, if you do cash, you will pay charges. A good way to encourage people to keep their money away from the bank.

Read also: Online VAT Where The Nigerian Govt. Got It Wrong

The Director General of the Nigeria Employers Consultative Association (NECA), Mr. Timothy Olawale told PUNCH:

“Though the overall aim of reducing cash transactions is good, the policy will, however, increase the cost of doing business and force organizations and individuals to start multiple deposits and withdrawals in order to beat the charges.”

A sentiment that many Nigerians have expressed in various social media platforms.

A professor of Economics at the Department of Economics, Olabisi Onabanjo University, Ago Iwoye, Sheriffdeen Tella, also told PUNCH:

“The Charges are becoming too many that people may decide to not to take their money to the banks anymore. They may begin to look at other options.

“The new charges will not in any way encourage the cashless policy the CBN is trying to promote. I see it as being more contradictory. Government should look at other ways of making money for the banks.”

Another bone of contention in implementation of cashless policy over the years has been failed transactions. From the ATM to online transfers, leaving bank customers at a loss now and then. The CBN, in its quest to encourage a cashless society, has failed to address these issues head on. Even though it is apparent that the distrust emanating from transaction failures is more deterrent to the cashless policy implementation than the exploitative charges being imposed by the CBN.

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