Nigeria is moving toward a full-fledged cashless society with the Central Bank of Nigeria’s introduction of the cash swap policy.
According to the apex bank, weekly and daily withdrawals from over-the-counter and ATM/PoS services for individuals are now limited to N100,000 and N20,000 respectively.
Although implementing a cashless policy provides benefits to economies, a smooth transition to a cashless society depends more on how prepared the economy is, experts say.
According to Mondato Insights, the country’s population’s readiness as well as the physical and digital infrastructure required to support non-cash payments determine how prepared an economy is for a cashless policy.
The number of people in rural areas without many banks, the number of people with bank accounts, the population of people with NINs, and the number of individuals who prefer using digital technology all contribute to a country’s readiness for a cashless system, analysts say.
Rural and Urban Population
Generally, households in rural areas are significantly more affected by poverty than those in urban areas. Nigeria’s urban and rural populations stands at 53 percent and 47 percent of the total population. According to the result of EFInA’s survey in 2021, rural adults in Nigeria are still more excluded as banking services are not getting to the communities.
Number of Nigerians with bank accounts
Bank customers receive personal bank identification numbers (BVNs) which are linked to all their bank accounts. An individual can hold only one BVN. The number of people with BVNs indicate how many have bank accounts.
Only 56.5 million of the estimated 216.7 million Nigerians have BVN numbers. This means that only 28.84 percent of Nigerians have bank accounts. A cashless policy is supported by several parts of electronic banking such as e-payments, online/internet banking, point-of-sale terminals (POS), mobile banking, etc, which are difficult to carry out without valid bank accounts.
Digital inclusion
Ensuring that everyone can take advantage of the internet and other digital technologies is the aim of digital inclusion. People not included in the digital world lack access to connectivity. Broadband, wi-fi, and mobile access all affect Nigeria’s level of digital inclusion. People that are digitally excluded have restricted access to financing options that could increase their productivity, experts say.
According to data on broadband penetration, only 47.36 percent of Nigeria’s total population have access to high-speed internet.
National Identification Number (NIN)
NINs are used to link people’s records in the national identity database andestablish or authenticate their identity. Registration for NINs is open to all Nigerian citizens and residents over the age of 0 (birth).
A NIN is required to register an account, enrol for BVN and get SIM cards, As of January 2023, only 95 million Nigerians, or 43.7 percent of the population have NIN numbers. That means only 95 million Nigerians have aactive SIM cards.
Cash is king
The CBN cashless policy experiment has shown that cash is king is Africa’s largest economy. Most of the nano and micro businesses have struggled to accept electronic transfers either because of lack of bank accounts or constant payment failures.
Many households have had to get cash from POS agents at exorbitant rates. Nigeria’s N200 trillion economy is shutting down as banks temporarily close down, leaving customers stranded.
A policy expert, Ronke Onadeko, told Dataphyte that Nigeria was not ready for a cashless policy.
But Onadeko emphasised that Nigerians themselves were ready, especially the youthful population.
“The way Nigerians have embraced cryptocurrency, an intangible asset, gives a glimpse of what realities could be if only the right mix were available.”
She noted that the depth of the Nigerian economy had not been tapped.
She further said that infrastructure for seamless transfers on electronic platforms was sporadic and epileptic, which wqs defeating the cashless policy.
“’No network” is a common phrase in our electronic payment lives in Nigeria, and failed transactions and reversals are attendant results,” she noted.
She further explained that much must be done to ensure internet infrastructure permeated every nook and cranny of our country. She explained that the onus was on the government to set penetrative targets and ensure they were incentivised to back this up with policies and laws.
She said, “Citizen sensitisation is necessary before policies are put into effect, but it hasn’t happened yet. These possible issues could result in mistrust, a lack of understanding, and reluctant adoption of the policy down the road when it is implemented.”