Cashless policy: Non-issue, waste of Nigeria’s resources, time, says expert

Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, says the controversy over the new drive of the Central Bank of Nigeria’s cashless policy is a non-issue, a distraction, and a waste of the country’s resources and time.

He claimed that the vast majority of Nigerians are already doing cashless transactions and that only a small minority of Nigerians using cash, especially in rural Nigeria, should be left alone.

Dr. Yusuf who spoke in Lagos said the issues about cashless policy and withdrawal limits are not necessary concerns because inflation cannot be curtailed with naira redesign.

He said: “Cash to GDP in Nigeria is 1.8 per cent, while cash to GDP in many advanced countries is between 5 and 10 per cent. Hence, when you relate the cash in the Nigerian economy to GDP, it is nothing to worry about.”

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He stressed that as of today much of the transactions carried out in Nigeria are done by transfer.

He queried the people saying that 80 percent of cash is outside the banking system, noting that it is the money supply that influences monetary policy and inflation.

Yusuf said as of October, the money supply in Nigeria was about N50 trillion and the cash component of the money supply is about N3.3 trillion. He stated that in terms of cashless transactions Nigeria has made more progress than many countries, stressing that the policy is the least of Nigeria’s problems.

He said electronic payment transaction as of October was N272 trillion; POS was over N6 trillion while mobile money transactions were almost N9 trillion.

He said it will disrupt the economy of rural Nigeria, as it seems there is a gross underestimation of the rural economy.

Dr. Yusuf claimed that the cashless policy is not going to improve, but instead, slow down the economy, stressing that it is completely unnecessary because it will affect the velocity of transactions as the informal economy constitutes a large part of the economy.

He said there is very little value the limited withdrawal and naira redesign will add to the economy. “If anything, it’s going to impede the growth of the economy,” he said.

According to him, Nigeria is a transactional economy, not a productive one as many of the goods traded in the country are imported, not produced.

He noted that the rural economy is not adequately captured in the banking loop, which may pass to some extent as an underground economy.