By Adekola Afolabi & Babatunde Ayedoju
Economists have cautioned the Central Bank of Nigeria, CBN against introducing cashless policy and making Nigerians to be banked by fiat.
They advised that the CBN could rather lower the volume of the higher denominations of the Naira to be released into circulation.
They spoke in reaction to the CBN policy on limit on cash withdrawal made by individuals and organisations with effect from January 9, 2023.
While some were of the opinion that it is good for the Nigeria’s economy, others said the timing is wrong.
They said the policy will cause a lot of financial hardship to the citizens, while it will adversely affect small scale businesses in the country and the economy.
The apex bank had directed that over-the-counter cash withdrawals by individuals and corporate entities should not exceed N100, 000 and N500,000, respectively, per week. It also directed that only N200 and lower denominations should be loaded into banks’ ATM machines.
The CBN said maximum cash withdrawal per weekend via ATM should be N100,000 subject to a maximum of N20,000 cash withdrawal per day.
While the Senate, resolved to deliberate upon the subject this week, the lower chamber had summoned the CBN Governor, Godwin Emefiele, for explanations. They also asked that the policy be reviewed.
Speaking in an interview with The Hope at the weekend, Dr Chris Ofonyelu from the Department of Economics, Adekunle Ajasin University, Akungba-Akoko described the move by the CBN as a good one, adding that the National Assembly is however considering the implications on their chances of using money to woo voters at the next election.
Dr Bayo Fasunwon from the Department of Political Science, Adekunle Ajasin University, Akungba-Akoko pointed out that government is trying to mop up the old currency and bring in the new ones, ensure that all Nigerians are banked and introduce by fiat the cashless banking system.
He, however, questioned the rationale behind the decision. He said, “If inflation is caused by increase in the prices of goods, when you curtail the supply of currency, it means the highest bidder gets the goods. It will still worsen inflation. I wish the government could just do a survey and know the inflation rate now and after the policy is implemented.”
He said, “What the government wants citizens to do now is that if you want to buy anything, transfer money.
He recommended that government should allow the currency interchange go on for three months before introducing a policy like this.
He added that government could also reduce the supply of N500 and N1000 notes in circulation, saying, “If you reduce these currencies and pay people in the available currencies that are not meant to be changed, gradually you will still achieve the same purpose.”
On the other hand, Dr Edamisan Ikuemonisan said that the National Assembly lack the power to interfere with the CBN’s new policy.
Talking about the implication of the policy, he said, “to a large extent, it will curb vote buying. It can also mar the success of the election if it is difficult to raise enough money to mobilise people to their designated areas to either vote or monitor the election.”
Senior Advocate of Nigeria and immediate past Attorney-General and Commissioner for Justice in Ondo state, Adekola Olawoye, said the policy will cause a lot of financial hardship to the citizens while it will adversely affect small scale businesses in the country, and the economy.
According to the legal icon, the multiplier effects of the policy may be very cumbersome and unpalatable to the economy of the nation vis-a-vis the political activities in the country ahead of the February 2023 general elections.
Olawoye believed that there are merits and demerits in the CBN’s withdrawal limit directive, saying one merit is that the CBN is trying to control the volume of money in circulation and bring sanity into the nation’s security architecture.
He said; “the way these marauding Fulani herdsmen, bandits and terrorists are going about kidnapping calls for concern. So, the Central Bank is trying whether we can inject monetary regulations into the system to curb banditry, ransom payment and terrorism. With this kind of policy, I doubt if business of kidnapping for random will be lucrative again, but remember kidnappers may want to kill their victims if ransom is not paid.
“But I think they (CBN) should not overlook the financial hardship the policy will force on, especially small trading and contractual relationship among the populace. The people who are in urban cities may not feel the effect of this directive but what of the rural dwellers. A rural dweller who is trading with just N20,000 whether the trading is buying and selling Garri, Tomatoes or Pepper and earns a living on it, how do you want them to progress with their business activities.