Appraisal of cashless policy on the nigerian financial. A cashless economy is an environment in which money is spent without being physically carried from one person to the other. Nigerias cashless policy better than cash alliance. Nigerias aim to be among the biggest economy by 2020 has driven her to gradually move from a pure cash economy to a cashless policy. The impact of the cashless policy on economic growth of. In china and elsewhere in asia, the digital economy and associated investments in infrastructure and payment systems, designed with financial inclusion in mind, drive cashless transactions.
The central bank of nigeria cbn has suspended its earlier directive on the implementation of cashless policy. Cbn suspends cashless policy, asks banks to refund charges. Pdf returns of the cashless policy in nigeria mpho. The introduction of the policy in nigeria therefore brings up issues. Pdf impact of cashless economy in nigeria researchgate. Abstract this study discussed in details the structure, importance, challenges and consequences of the newly adopted cashless policy programme in the. The cbn and pro cashless policy activists have asserted reduction in crime rates, minimized risk associated with carrying huge sums of money, reduction in political corruption, reduction in banking cost, improvement on monetary policy in management of inflation and the overall growth and development of the economy of nigeria as advantages. Ensuring the success of cashless policy in nigeria. Since nigeria gained her independence in1960, there have been different constitutional reforms, change in economic and banking policies mainly aimed at stabilizing the economy, enhancing social welfare and. Aug 28, 2016 the cbn and pro cashless policy activists have asserted reduction in crime rates, minimized risk associated with carrying huge sums of money, reduction in political corruption, reduction in banking cost, improvement on monetary policy in management of inflation and the overall growth and development of the economy of nigeria as advantages. A cashless economy does not mean the absence of cash.
It prescribed a cash handling charges on daily withdrawal above five hundred thousand naira n500,000. The ease of conducting financial transactions is probably the biggest motivator to go digital. According to cbn, the new cashless policy was introduced for a number of key reasons, including, to drive development and modernization of our payment system in line with nigerias vision 2020 goal of being amongst the top 20 economies by the year 2020. Mar 14, 2014 this makes the country to be heavily cash based economy. A cash based economy is a setting where retail and commercial payments are primarily made in cash. Cbn suspends nationwide implementation of cashless policy. This means banking is entirely relying on monetary transactions that use electronic means rather than cash. The impact of central bank of nigeria cashless policy in. Dimensions of electronic fraud and governance of trust in. The impact of the cashless economy policy on nigerian. This device enables customers to carry out transactions with their bankers through connection. As part of our ambition to be one of the best 20 economies before the year 2020, cbn informed the world that nigeria would commence the process of changing to a cashless economy by january 2012. This research is embarked upon to assess the pre and postimplementation period of nigerias clp with focus on the relationships between tools of clp and currency outside banks in the nigerian economy. Central bank of nigeria, 2014 since july 1, 2014 when cashless policy became fully operational in nigeria, a major downside of its introduction has been pervasive electronic banking fraud efraud.
In this connection, more studies focusing on africa in general and nigeria in particular are warranted. The introduction of cashless economy policy in nigeria since april 2012 aimed at stimulating economic development and modernization of the nigerian payment system in line with vision 2020, reduce the cost of banking services and drive financial inclusion by providing more efficient transaction options and greater reach. Further, appropriate infrastructures such as improvement on the power sector should be made to enhance the smooth operation of the policy. Given the policy s objectives, the paper xrayed the associated benefits of the policy. It is in this regard that the central bank of nigeria cbn introduced the cashless policy with the objective of promoting the use of electronic payment channels instead of cash. Impact of cashless policy on business in nigeria one of the aims of the cashless policy is to work in line with nigerias vision 2020 goal of being among the top 20 economies of the year 2020. The new policy by central bank of nigeria cbn on cashless system of payment has raised a lot of concern to the growth of nigerian economy, with the.
This study is one of the recent works addressing the effectiveness and impact of the cashless policy on money deposit bank trasactions in nigeria although previous studies have shown that works have been done on it in other countries and this anticipated will help bridge the gap between current perceptions about the cashless economy and the. This study covers cashless policy adoption in nigeria. This study examines the implications of cashless banking, with a view to exposing the possible challenges and prospects it poses to the nigerian economy whilst employing aggregated approach. Theoretical background cashless economy is not the complete absence of cash, it is an economic setting in which goods and services are bought and paid for. Central bank of nigeria the cashless nigeria project. In nigeria as it is in many developing countries, cash is the main mode of payment. Abstract prior to this time, nigeria economy was largely described as cash.
Cashless economy, cashless policy, national development, nigeria 1. This study when completed will add to the body of knowledge in the area of banking and finance as literature on cashless policy in nigeria is scarce. Table 1 shows the view of respond ents on benefits of cashless economy in nigeria. However, the cost of cash to nigeria financial system is high and increasing. The policy was introduced by central bank of nigeria cbn in december 2011 and was. The cashless policy was conceptualized by the apex bank to migrate nigerias economy from cash based economy to a cashless one through electronic. Challenges facing the sustainability of cashless policy. The first issue in the cashless economy is the issue of electronic purse. Effect of cashless monetary policy on nigerian banking. Cashless policy has significant impact on the economic growth of nigeria. This indicates that businesses and economic transactions cannot be underestimated.
High cash usage results in a lot of money outside the formal economy, thus limiting the effectiveness of monetary policy in managing inflation and encouraging economic growth. Full length research article this study examined the effect of cashless monetary policy on nigerian banking. The impact of the cashless policy on economic growth of nigeria. The statistical evidence provided by central bank of nigeria 2012 revealed that, cash related transactions accounted for 99% of customers activities in nigeria banks as at december, 2011. In 2015, the central bank of nigeria issued a notice to all banks that began collecting charges on withdrawals above the threshold in the remaining 30 states. Article history abstract received 10 september, 2014 received in revised form 08 october, 2014 accepted 16 october, 2014 key words. Abstract this study discussed in details the structure, importance, challenges and consequences of the newly adopted cashless policy programme in the nigerian banking sector. The paper examined the effect of cbns cashless policy on nigeria economy. Cashless policy could often be affected by physical challenges such as high rate of illiteracy, inadequate sensitizationeducation of the benefits of cashless policy, and inadequate logistics such as the provision of internet connections in commercial areas, computers and point on sale pos machines.
Since the declaration of cashless economy policy by the central bank of nigeria, many scholars have written on this subject matter. An analysis of cashless policy implementation in nigeria. The user has requested enhancement of the downloaded file. The new policy by central bank of nigeria cbn on cashless system of payment has raised a lot of concern to the growth of nigerian economy, with the objective of reducing robbery, high cost of. Abia, anambra, ogun, rivers, kano and the fct have been enlisted to do same. This study is poised to investigate and appraise to the best of the researchers ability the impact of the cashless economy policy on nigerian citizens and the economy at large.
Large volumes prosperous for nigeria considering rapid economic ofcash need intense security and transportation is growth. Cashless policy has no significant impact on economic growth of nigeria hi. As the cashless policy of the central bank of nigeria designed to reduce the amount of physical cash circulating in the economy goes nationwide on july 1 after the implementation the pilot that. This and other reasons made the central bank of nigeria cbn introduced a new policy referred to as the cashless policy. In a circular released on friday, the apex bank instructed banks to revert to old. Little wonder why the central bank of nigeria recently introduced a cashless policy. Nigerias cashless policy this case study features four large businesses that have derived clear benefits by early adoption of digital payments, including the nigerian bottling company contracted to cocacola, and the nigerian. This study was carried out in order to appraise the implementation of the. The recent of such economic reforms in the financial sector is the formal introduction of cashless financial policy in january, 2012. Central bank of nigeria cbn, yesterday, suspended the nationwide implementation of the cashless policy indefinitely.
Cashless policy aims to curb some of the negative consequences associated with the high usage of physical cash in the economy, including high cost of cash, high risk of using cash, high subsidy, informal economy, inefficiency and corruption cbn,2011. Pdf this paper studied the impact of cashless policy in nigeria. High cash usage enables corruption, leakages and money laundering, amongst other cashrelated fraudulent activities. Apr 22, 2017 central bank of nigeria cbn, yesterday, suspended the nationwide implementation of the cashless policy indefinitely. Preface why the central bank of nigeria made the cashless policy. A cashless economy is an environment in which money is spent without being. According to cbn, the new cash policy was introduced for a number of key reasons. In a circular signed by dipo fatokun, director, banking and payments system. Cashless nigeria the central bank of nigeria cbn has introduced a new policy on cashbased transactions which stipulates a cash handling charge on daily cash withdrawals that exceed n500,000 for individuals and n3,000,000 for corporate bodies. It xrays the issues, challenges faced by customers and banks and. Ppt cashless economy powerpoint presentation free to. The benefits of adoption of cashless economy include reduction in corruption and.
According to emecheta 2012, the cashless economy policy of the central bank of nigeria cbn was designed towards providing mobile pa yment services, breaking down the. The paper discussed the effects of cashless policy on the nigerian economy, how it was kick. The policy is destined to reduce the volume of cash circulation in the. According to cbn, the new cash policy was introduced for. Conceptual overview of cashless policy in nigeria money is often described as having three functions.
You just need your mobile phone or debit card to make payment these days. Theoretical background cashless economy is not the complete absence of cash, it is an economic setting in which goods and services are bought and paid for through electronic media. The cashless policy is a policy on cashbased transactions, which stipulates a cash handling charge on daily cash withdrawals or cash deposits that exceed n500,000 for individuals and n3,000,000 for corporate bodies. The banks were directed to put a hold on these charges until. This makes the country to be heavily cash based economy. It is in this regard that the central bank of nigeria cbn introduced the cashless policy with the objective of promoting. Pdf prior to this time, nigeria economy was largely described as. Therefore, nigerian banks should utilize the benefits of the cashless policy and engage in efficient financial intermediation for enhanced bank profitability. According to cbn 2012 a key reason for the introduction of the cashless policy is to drive development and modernization of nigers payment system in line with nigerias vision 2020 goal of being amongst the top 20 economies by the year 2020.
Cashless policy encourages electronic transactions with a view to reducing physical cash in the economy and thereby reduces the. Pdf evaluating nigeria cashless policy implementation. The impact of central bank of nigeria cashless policy in nigeria economy. Enhance the central bank of nigeria cbn new policy on cashless economy. The study shows that the cash policy is reduction in the costs of printing the period post the cashless policy has generally been and managing large sums of money. The main reason for the policy was to reduce the amount of. A behaviourial change to economic growth cashless economies are those that use mostly plastic or digital money and thus minimal cash or money in paper form. A critical analysis of cashless banking policy in nigeria oer. Thus, as part of its regulatory functions, the central bank of nigeria, issued a circular dated april 20, 2011 in which it conveyed to operators and the banking public its decision to introduce a cash less banking policy into the nigerian financial system with. However the current transition to cashless economy raises a lot of concerns with no substantial evidence yet to justify its implementation. Adoption of mobile banking in nigeria james adetunji odumeru lecturer, osun state college of technology, esa oke, nigeria abstract the central bank of nigeria recently introduced the cashless policy to reduce the volume of cash used for business transactions and thereby reduce cash handling costs by banks amongst other objectives. The apex bank said it made the decision during the 493rd bankers committee meeting, which held on february 8th in lagos.
In recognition of this fact, managers of the nigerian economy have targeted the banking sector as a channel for implementing economic policy reforms and policy shift. As the cashless policy of the central bank of nigeria designed to reduce the amount of physical cash circulating in the economy goes nationwide on. In a cashless economy, the third is not operative and, probably, neither is the second. According to cbn 2012 a key reason for the introduction of the cashless policy is to drive development and modernization of nigers payment system in line with nigerias vision 2020 goal of being. Offer huge cost savings to the government because the use of mobile payment. Cashless policy and economic activities in developing. Effect of cashless policy on small and medium business in nigeria a case study of selected smes in edo state chapter one. An empirical analysis of the benefits of cashless economy on nigerias economic development, research journal of finance and accounting, 417, 20, 1116. Effect of cashless policy on small and medium business in nigeria a case study of selected smes in edo state. Cashless nigeria is a policy established in the year 2012 by the central bank of nigeria to curb excesses in the handling of cash in the nigerian federation. Effects of cashless economy policy on financial inclusion.
Little wonder why the central bank of nigeria recently introduced a. The central bank of nigeria cbn has been active in the inauguration of policies and schemes to foster the implementation of the cashless policy in nigeria. The cashless policy makes the process of payment seamless hence there would no longer be the need to move large sums in expensive highlevel security vehicles. Www browsing, file download, virtual private networks and remote system. For example, ejiofor and rasaki 2012 have noted that the cbn commenced the pilot scheme in lagos state apparently relying on its commercial stamina as nigerias business hub. The banks were directed to put a hold on these charges until a directive is given by the cbn. The response of large corporates and their value chains to government policies to shift to digital payments. This research is embarked upon to assess the pre and postimplementation period of nigerias clp with focus on the relationships between tools of clp and currency outside banks in. Barely a year after the central bank of nigeria, cbn, introduced the cashless policy in lagos state. Analytically, this study employs descriptive statistical to highlightsoverview the effectiveness of the cashless policy of the cbn in nigeria.
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