Market News
Cashless policy in a poor illiterate population - THE NATION
BY Mike Kebonkwu
The convenience of carrying less bank notes in doing business cannot be overemphasized. But methinks carrying cash is not actually the major problem of the Nigerian economy with almost zero production? The colour, shape and redesigning of the naira note is the least problem of the economy, and the ease of doing business. Our currency, the naira is on the same trajectory as the Zimbabwean currency where you will carry a cart-load of cash to buy vegetable.
Cashless economy has unique characteristic features, such as reasonable literacy level, good and efficient banking system, power and internet connectivity which are grossly in short supply in our system. The literacy level in Nigeria may be well above average. The banking population may as well be reasonably high but there is no accurate statistical data on the segment of the population that operate bank accounts.
Most people in the informal sector of the economy, Small and Medium Enterprises (SMEs), the poor traders in our markets across the country do not find banking convenient and so prefer to engage in traditional banking system ‘isusu’ (a contributory system of keeping money) with someone they can trust to keep their money and return it at given time. On the use of internet and other electronic transactions as a means of exchange of value which the cashless economy revolves for the purpose of the ease of doing business, it is predominantly amongst the elites and urban traders and entrepreneurs, besides civil servants. On connectivity and availability of network, it is highly epileptic and unreliable thereby causing unnecessary stress and delays in transactions. Among rural folks, banking has not been embraced with confidence as they still perceive the integrity of banking with suspicion. The demographic spread of literacy level in Nigeria is a matter of speculation; the same is true of banking population which is predominant among the elite. There is no verifiable data collection on anything official in Nigeria as there is always the issue of integrity and politics to every official documentations and data collection.
How many Nigerians are covered in the banking networks in the banking system? The artisans, vulcanizers, the akara and pepper sellers both in the urban and rural markets know next to nothing about banking. Food vendors, the yams and garri sellers in most of our rural communities may be put out of business when you put withdrawal ceiling of N100,000.00 per week, that is for those that even operate bank accounts including big time traders in the urban areas. A sizeable percentage do not have or operate the point-of-sale (POS) machine due to inherent failures and cyber frauds that are common place because the operating networks system are susceptible to hacking and manipulations. This is in addition to the ghost of network failures even in the banking halls.
You cannot achieve a cashless economy in a system that is bogged down by power and network failures and fraud and in a predominantly illiterate population. The greatest headache you can get is using POS in business outlets is when after transactions, you are greeted with transaction decline only for your account to be debited and to get it reversed becomes the same Nigerian malaise of business frustration. The icing in the frustration is when you go to customer care service of your bank where you are referred to, you enter into an endless queue waiting for network and further confronted by rude but beautiful ladies with little or no training in courtesy and social etiquette.
Ours have remained a cash-and-carry economy driven by petty traders on hand-push carts, lock-up-stores and those who display their wares on the roadsides. This includes tomatoes and pepper sellers who do not even have access to mobile phone and banking is a dream luxury to them. Experience in our banking system discourages online transactions of any kind even with the convenience that is associated with cashless transactions. If you have ever experienced frustrations of transfers and transactional trade on the net, you will dismiss the cashless policy as a ploy to kill the business of the SMEs in their millions and collapse our economy completely. Putting weekly withdrawal limit for individuals at N100,000 will stifle the foundations of trading concerns in the major hub of the economy.
Re-designing and changing the colour of the Naira is cosmetic and does not go far enough to address the basic problems confronting the economy and the value of the Naira against major trading currencies of the world; it is academic and elitist. An economy should be founded and driven by a sound policy of production with sustainable energy sources. But here we are where the common refrain in internet connectivity is, ‘no-network’ please try again later. To sustain the tempo of business, you need continuous cash flow.
We cannot lift anybody out of poerty with the current government policy on transactional business in cashless economy which erects barriers and obstacles in business. The traders selling and buying garri, yam, okpa and vegetables cannot use the POS. We are going to bring more hardship to general citizenry struggling to eke out a living.
Tracking terrorism financing, ransom payment and illicit money is not a cure-all for the economy which probably is the strong point for the new policy. It may only impact on security which in the first place is being dealt with half-heartedly. The cosmetic change, rebranding and repackaging of the Naira notes should be the least of solution to the free fall of our currency. Our major problem is that we have never had the opportunity of getting cerebral, innovative people and technocrats to help us drive our economy. We have always had pedantic scholars parroting western economic theories and models in our own peculiar traditional economy. Government relies on borrowing and handout and hand over our economy to the same neo-colonial administrators to dictate what area of economy we should develop.
However, at the end of the day, monies borrowed and aids received go into private pockets of corrupt officials and debt servicing. Without deviating from our focus, the government should take a second look at this current cash-less policy prescription and it will be noble to reverse itself if the overall goal will visit more hardship on the people and will not advance our economy and lift people out of poverty. It is time to face the hard issues that will advance our country not cosmetic monetary policy of the colour of the Naira and withdrawal limits. It has been a most traumatic year, but thank God we made it, viva!
•Kebonkwu Esq is an Abuja-based attorney.
