CBN to implement cash-less policy in stages

Governor of the Central Bank of Nigeria, Mallam Lamido Sanusi
With the pilot scheme ending in Lagos by December 2012, CBN is set to implement the cash-less policy in stages, by extending it to five states and the Federal Capital Territory on January 1, 2013.

Contrary to initial plan to introduce the cash-less policy to all states of the federation by January 1, 2013, the Central Bank of Nigeria has said it will restrict the roll-out to five additional states and the Federal Capital Territory.

The Head, Shared Services, Central Bank of Nigeria, Mr. Chidi Umeano, who disclosed this to our correspondent on Friday, said the CBN would introduce the cash-less system to other parts of the country in stages.

The proposed states, according to him, are Kano, Ogun, Anambra, Rivers, one other state in the North East and the FCT.

He said, “The whole idea is that by January 2013, the cash-less initiative should go live all over the country, but for implementation purposes, we are phasing it. We are starting that with about five states and they are Kano, Ogun, Anambra, Rivers, a state in the North East and the Federal Capital Territory.”

The pilot scheme of the cash-less policy commenced in Lagos State on April 1, 2012 and the initiative had been scheduled to go nationwide by January 1, 2013.

The Deputy Governor, Operations, Central Bank of Nigeria, Mr. Tunde Lemo, during a workshop on the cash-less policy in Lagos, had hinted that the CBN would consider all options before introducing the policy to other states.

The PUNCH, on Friday, had quoted him as saying, “We are looking at all options, I can assure you. What we want to do is to ensure we perfect everything that we do in Lagos before rolling out nationwide. I won’t make any policy statement on whether we will postpone the nationwide roll-out because a decision has not been taken; but if need be, why not. Lagos is miniature Nigeria, where we have cluster of high value transactions.

“We want to clear all the challenges in Lagos, so that when we roll out, we would have perfected the policy and then it will be very easy for the roll-out.”

Speaking further, Umeano said that security remained a major concern in the cash-less milieu but stressed that the CBN was doing everything possible to address the issue.

He said, “The CBN is doing a lot. We have migrated from magstripe to chip and PIN. That singular action has reduced fraud by at least 90 per cent and we have also set a lot of things in motion, which we expect banks to meet, such as the PCIDSS compliance.”

He said, “In line with the Bankers Committee’s desire to increase the PoS density, the Shared Services Office embarked on a number of initiatives to achieve the set objective. Notable among them are the issuance of POS guidelines, negotiation of discounts with POS manufacturers, licensing of PTSPs and PTSA and encouragement of banks to order and deploy POS.”

As a result of this, he said POS deployment had been on the increase since December 2011, adding that the cumulative number of POS deployed/connected to the Nigeria Inter-Bank Settlement System Plc had reached 88,622 as of July 1, 2012.

“This represents an increase of over 100 per cent above the 5,992 POS recorded at end of January 2012. The target of purchasing at least 10,000 POS terminals per vendor has been met for three vendors,” he said.
However, he decried that poor POS connectivity and downtime were creating disaffection among consumers in the state.

He said, “We have identified a lot of things and we are working on them. One of them is infrastructure. Connectivity is a major problem because we rely on cheapest way of communication, which is the GPRS technology. We are engaging the telcos on how to get that done effectively.”

To further reduce POS downtime, Umeano said the POS being deployed now had 24 hours battery life, in case of power outage; two SIM slots for better connectivity; and car charger  for alternative charging.
He added that the POS were multi-functional for various transactions such as payment, airtime top-up, and cash-back option.

Umeano listed some of the challenges facing the cash-less scheme in Lagos as lack of understanding of the policy among the banked and unbanked, resistance due to prevailing cash culture, technophobia (literacy vs numeracy), and infrastructure deficit.

Others, according to him, are distrust of the banking system, lack of clarity in communicating content of policy, lack of POS at priority locations, Customs challenges for clearing, and exorbitant bank charges on e-payment products.

The Managing Director and Chief Executive Officer, NIBSS, Mr. Adebisi Shonubi, said the Nigerian populace possessed the numeracy acumen required for the success of the cash-less project.

He said, “The adoption and continued encouragement of the use of POS terminals is a major step for the success of the cash-less project. We strongly believe that the enhancement of POS adoption relies on high POS availability and connectivity consequently the expansion of Telco facilities beyond the conventional GPRS to CDMAs.”

The CBN had said cash-less policy was introduced for a number of reasons, such as to drive development and modernisation of a payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020.

It is also to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.
It is meant to improve the effectiveness of monetary policy in managing inflation and driving economic growth.

Under the new policy, only CIT licensed companies would be allowed to provide cash pick-up services.
The apex bank had said when starting the pilot scheme in Lagos, “Banks will cease cash in transit lodgment services rendered to merchant-customers in Lagos State from December 31st 2011. Any bank that continues to offer cash in transit lodgment services to merchants shall be sanctioned.

“Third party cheques above N150, 000 shall not be eligible for encashment over the counter. Value for such cheques shall be received through the clearing house.”

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