The Central Bank of Nigeria, under Godwin Emefiele, tried to compel those with so-called idle funds to set up brick-and-mortar enterprises, by crashing the interest payable on savings accounts, fixed deposits and Treasury Bills.
This CBN policy is almost unmindful of the failure of the Minister with the longish title of Finance, Budget and National Planning, to carry out her responsibility to initiate pragmatic macroeconomic policies.
Whether the CBN raises or lowers the interest rate is no longer having any effect on inflation. “Imported inflation,” which cannot be controlled because of Nigeria’s excessive dependence on imported strategic consumer products, like petroleum products and foodstuffs, won’t go away.
Actually, it is not the job of the CBN Governor to run the economy; it’s that of the Minister of (Economic) Planning. The CBN, whose policies should be in reaction to tame the extremities of government’s macroeconomic policies, is caught in a catch-22 situation. And it appears that the Minister and her team are sleeping on the job. Also, the President, who should provide the required direction and leadership, appears to be rooted to one spot, motionless.
This should remind those partial to literary things, of “Shuttle in the crypt,” a poem where Nobel laureate Wole Soyinka relives the reality of practically staying in one spot in a solitary prison cell. Some would say, it’s motion without movement.
The animal that the CBN calls “cashless policy,” is trying to limit physical cash in circulation and create traceable electronic trails for financial transactions, as part of anti-money laundering and other financial crimes measures. But the policy may harm the overall economy if the details aren’t well aligned.
Whoever said that the devil is in the details knows too well that failure to pay adequate attention to the fine details of a policy can overwhelm a country’s entire economic structure. It would lead to unintended economic consequences. The Yoruba say the little rat creates a hole in the sack.
The CBN policy of merely changing the colour, wrongly described as a redesign of N200, N500 and N1000 notes is carried out to reduce cash in circulation, avoid spoilage of the Naira, stave off hoarding of cash, and check counterfeiting.
This sounds like fishing for explanations for changing the currency. But some think the policy may be security a plan to prevent kidnappers who have been paid billions of old Naira notes by families of kidnap victims from being able to exchange them for new notes.
Some others suggest that one of the intentions of the policy to redesign the Naira is to make it impossible for kidnappers to bring ransom paid to them for exchange. Deposit beyond a certain amount has to be reported to the CBN.
The argument that the policy is also intended to disable politicians from paying cash to induce voters to cast their votes for them is a little farfetched. Politicians have even resorted to using the American dollar for this purpose. Rumour says that even kidnappers and bandits are now requesting for ransom to be paid in American dollars: So you could say that what is good for the compromised voter goose is also good for the bandit gander.
A more recent policy of the CBN is the pegging of the amount of money that an individual can withdraw from a bank in cash to N20000 and N100000 for a corporate organisation in one day, and N100000 for an individual and N500000 for a corporate organisation in a week.
Also, an individual cannot cash a cheque of more than N50000 on the bank counter, but after certain due diligence by the bank, and provision of certain information by the customer, there may be exemptions for cash withdrawal of N5 million by the individual and N10 million by corporate organisation only once in a month. CBN claims that about 85 percent of cash is outside the banking system, in the hands of the citizens. It, therefore, thinks this is not exactly good for the economy. And it must therefore be remedied.
From January 9, 2023, any withdrawals beyond the fixed amount will attract a fine of 5 per cent, for the individual, and 10 per cent for corporate organisations. Some think the government is looking for a way to raise revenue.
But the concern is that, with the consistent deterioration of the Naira, you never can tell if you are going to need more than N100,000 to buy groceries for one week in your household, depending on the size. After spending N100000 on one expense item, you will not be able to conduct any other transactions for that week. So the CBN Governor, Emefiele needs to take a second look at the suggestion by the Senate for an upward review of the amount of withdrawals.
The Senate should be commended for asking the CBN to review the cash withdrawal limit upward because a high volume of business is conducted by a lot of Nigerians who are in rural areas, whose businesses are almost totally conducted with cash.
Kola Ayeye, a former Managing Director of National Bank of Nigeria (now merged with WEMA Bank) thinks although the withdrawal policy is not exactly bad, he wonders if it is necessary to dissipate so much energy on controlling cash in circulation at this time.
Ahmad Lawan, President of the Nigerian Senate, thinks the policy can destabilize the economy, though he didn’t elaborate on how that will happen. He however, suggests that all stakeholders in the banking ecosystem should engage the CBN in further discussions.
You would have seen the public enlightenment advert of the Economic and Financial Crimes Commission that threatens arrest and prosecution of anyone who breaches the provisions of Nigeria’s Money Laundering Act.
The Act prohibits individuals and corporate bodies, except in a transaction through a financial institution, from respectively making or accepting cash payment exceeding N5,000,000.00 or its equivalent and N10, 000,000.00 or its equivalent
The content of this advertorial and its intention are both ridiculous. A government should not use threats to compel citizens to comply with the economic policy of a cashless economy, however laudable the policy may be. It adds up to the use of brute physical force to implement a fiscal policy.
Of course, everyone knows there is a good security reason for the enablement of the government to trace the movement of money electronically. There is no doubt that the cashless policy of CBN will significantly curb acts of bribery, graft and embezzlement of public funds
The high wire financing of international terrorism, kidnapping, narcotics trade, counterfeiting, corrupt enrichment and advance fee fraud have more than eloquently made the case for a money laundering law. For instance, the limitation to the withdrawal of cash should make it more difficult for an Accountant General of the Federation to withdraw billions of Naira without an electronic trail revealing his evil deed.
But what collaboration can the CBN, the banks, the Ministry of Communication and Digital Economy and the telecommunications service providers make to ensure regular telecommunications and internet services to run the digital economy throughout the country?
Yes, the CBN has licensed about 1.4 million super agents to provide at least basic banking services of collecting and paying cash to customers in the under banked and rural areas. But the appropriate infrastructure must be available to run that service for all.
