The Central Bank of Nigeria (CBN) governor, Godwin Emefiele, has given assurance that the recent policy of the bank, including the cash withdrawal limit and the redesigning of naira notes, were not done for political reasons.
Emefiele also disclosed that the apex bank had ordered 500 million pieces of currency for the printing of the redesigned Naira notes.
Emefiele said this yesterday in Abuja while briefing members of the House of Representatives on the new policies of the bank during plenary.
The CBN governor, who was represented by the deputy governor in charge of Financial Systems Stability, Mrs Aisha Ahmad, said the policy was the outcome of critical thinking, research and other considerations.
“There was never a time when the CBN made policy decisions out of political considerations,” he said.
He explained that the new notes were ordered from the Nigerian Security Printing and Minting Company Limited.
Addressing the issue of fake currency, he said, “We are doing a lot of sensitisation because we believe that sensitisation can’t just be the newspapers, the television and radio. We need to go into the rural areas, and the markets and use people in the communities to actually drive home the message. It takes time but over time it improves.”
The CBN governor disclosed that electronic transfers in the country as of October 2022 stood at N300 trillion from N3 trillion in 2012 when the cashless policy was introduced, representing a 7, 000 percent increase.
He also said in 2012, the country had N48 billion in Point-of-Sale transactions, but today it has climbed to N6 trillion.
He said the policy pronouncement on December 5 was a continuation of the cashless policy that started 10 years ago and in recognition of the positive changes recorded in the financial and payment system since it first launched.
According to him, “Today, we have a very robust payment system that includes bank branches, branches of micro-finance banks, POS machines, ATM machines, agent banking, e-Naira and many other options.
“To be specific, between the bank and the micro-finance banks, we have 6,500 locations, 900,000 POS terminals, 14,000 ATMs across the country and 1.4 million agents nationwide and every single local government in Nigeria has an agent represented. We also have a proliferation of electronic transactions. Just by way of a quick example, in 2012, we had N48 billion in POS transactions. Today, we have N6 trillion in POS transactions.
“On electronic transfers, we had N3 trillion in 2012. Today, we have N300 trillion as of October 2022. That’s a 7,000 per cent increase. We have also seen an improvement in financial inclusion to 54.1 per cent and, lastly, perhaps, more importantly, we have seen the evolution of the Nigerian payment system on the global stage. Nigeria is ranked 6th in the world for instant real payment and we are only behind countries like India, China, Thailand, Brazil and South Korea. We are the only African country in the top 10 and this has been a result of some of the initiatives that have gone on. Also, electronic payments and real-time data payments have been estimated to contribute about 0.67 per cent to our GDP.”
Speaking on the cash withdrawal limit, he said in response to the feedback from Nigerians and the lawmakers, “We have since reviewed the limit significantly from N100,000 that we had per week to N500,000 per week for individuals; from N500,000 per week for corporates to N5 million per week for corporate.
“We have also amended the processing from 5 and 10 per cent downward to 3 and 5 per cent. We have clarified the strategic importance of agents as important participants in the financial system because they play a key role in certain underserved segments in the rural areas and in certain market areas and they as well would be covered by this newly revised rule.
Giving justifications as to why these limits are required now and why it is time for to get cashless nationwide, he said data available to the CBN showed that 94 per cent of all cash transactions fall below the N500,000 limit and this includes areas in the country that are not part of the cashless policy, while 82 per cent of corporate transactions also are below this limit.
“What this means that 94 per cent of all individual transactions will not be affected by this fee that we have talked about,” he said.
He went on: “During the COVID-19 period, we saw the negative impact of physical cash. No one could go anywhere. We couldn’t go to the banks. People couldn’t leave their homes. It was the electronic banking system that protected and served those below the poverty lines that had their livelihood at risk.
“To clarify some misconceptions, I think it is also important to mention from the data that we have, we have seen the denominations that are not going to be redesigned, the N100, N50, N10 and N5 are predominantly used in the hinterlands and in the rural areas and those are not going to be affected by the policy.”
He said the cash withdrawal limit will help tackle kidnapping and reduce the cost of minting new notes.
Speaking on the overall benefits of the cashless policy, Emefiele said it will reduce cash processing costs, minting costs, the cost of destroying old notes and the cost of moving the physical cash from place to place.
“All these costs are passed on typically to the banking public. Getting rid of these costs means that charges will be less in that respect. Also, this is an opportunity to promote Nigeria’s positive image from a money laundering perspective.
“Even the recently passed anti-money laundering law has limits for cash for a reason because cash is usually the medium by which some of these nefarious activities are done. Suffice it to say that the advantages of protecting people from armed robbery, kidnapping, and terrorism financing go without gainsaying,” he added.