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The Nigerian nation has been operating a “cashless” economy since the declaration of independence; about 33.1% of its population live below the poverty line as estimated in 2013. However, this piece is not concerned about their “cashless” position but rather our cash-less status.

A cash-less economy could be said to be a country’s ability to carry out financial transactions through mediums other than cash – the likes of cheques, bank draft, debit/credit notes and electronic devices. The electronic medium is the most modern means of payment and as such lots of emphasis would be placed on it in this piece. The electronic payment is aided with the use of devices such as mobile phones, computers (internet), POS and ATMs.

Mobile Phones

The mobile phone usage became widespread in Nigeria since the introduction of the GSM (Global System for Mobile) in 2001. Almost every Nigerian owns a mobile phone at the moment for several reasons. This makes the mobile phone an easier and most convenient way of payment in Nigeria. As a result, Nigerian banks are leading a rapid campaign on ‘mobile banking’ and it is becoming an integral part of their services. Most recently one of the world’s popular mobile payment company ‘Pay-pal’ was established in Nigeria: a pointer to the great potential mobile payments possess in Nigeria. Other such mobile payment companies are; Quickteller, E-tranzact, Paga just to mention a few. There exists a major drawback in using this service; as the volume of transaction is limited to a few hundreds of thousands of naira. It is most suited for regular or recurrent transactions such as; electrical bills, subscription fees, recharge cards e.t.c. However, if a recent report of the Central Bank of Nigeria (CBN) is anything to go by, precisely 86% of Nigerians carry out transactions between ₦1 – ₦100,000, thereby making the mobile device the ideal payment medium for a large portion of the populace.

Computer/ Internet

At the moment this is a more popular payment medium than the mobile devices. More Nigerians now have easier access to internet on laptop computers and even on mobile devices thereby making this medium easy to use. Like the ‘mobile banking’, the ‘internet banking’ is largely encouraged by Nigerian banks in order to reduce congestion of the banking halls. Online shoppers and stores are major beneficiaries of this service which is usually facilitated with the use of ‘Token’ or OTP (One Time Password). The Tokens are devices as small as a key-holder issued by banks to their customers so as to provide online security, it enables the bank customers to generate unique password that can be used for each online transactions carried out by the customer. OTP is similar in function as the Token but it is not a device, it is a password generated by the bank for every online transactions carried out by its customers through debit cards. To carry out transactions using OTP, reliance is placed on the mobile device as OTP generated is being sent directly to the user’s mobile device via SMS.

POS (Point of Sale)

The POS is a device used in carrying out transactions mostly in retail shops. Looks like a big calculator, similar to the ATM in terms of functions and quite easy to carry around. All you need do is insert a debit card, type your pin and follow the prompts. It was reported sometime in October 2015 by the CBN that the usage had increased to 120,000 terminals as against 5,000 in 2011 and an average daily transaction of 1.5 billion naira is carried out on the POS. The POS machines can be acquired from the banks, either as an individual or corporate entity as long as you operate a current account with the issuing bank or banks (as the case may be).

ATM (Automated Teller Machine)

The ATM is a very common payment method in Nigeria, widely accepted by the majority of bank account holders in Nigeria. It was introduced in Nigeria as far back as 1989 but has only been well adopted by commercial banks in the post-2000 era. There are roughly over 60,000 active ATM nationwide, situated in banks, hotels, shopping malls, airports and other public areas. The use of the ATM is carried out by a debit card; Verve, Visa or MasterCard issued by the bank. Aside cash withdrawals, the ATM performs other functions such as funds transfer, bills payment and phone credit top-up. Other ATM accepts cash deposits but only a few can be found in Nigeria.

As easy and convenient as these electronic methods can be, there have been major lacunas in the use of these devices or methods in carrying out transactions. Such lacunas includes; availability and security. The latter seems to be of more concern to most people than the former, some people have even resolved never to use any of these devices or methods and stick with the regular ‘over the counter’ approach.

In terms of availability; as much as almost every single Nigerian has a mobile communication device, the mobile banking services has not been readily available to Nigerians, it is either been poor, complicated or simply unused by both individuals and businesses. Therefore, more awareness should be made on mobile banking.  Computers /internet are more readily available, but Nigerians suffer a lack or poor network services from their internet providers, this makes internet banking a bit frustrating at times and of course time consuming. A better internet service would do much good to Nigerians especially in terms of our banking system. As earlier stated we have about 120,000 POS terminals nationwide as at October 2015 (as reported by the CBN), tough this number is growing by the day, with a population of over 160 million people and millions of registered businesses it is grossly inadequate. In this time of fuel scarcity and price hike one can imagine how frustrating it is driving pass a filling station selling at ₦87 because you have no cash and the filling station has no POS. An ATM would have been a good option but only if it is close or you didn’t have to stand in a long queue. This has been the fate I have had to endure and I guess most Nigerians too. Making more POS available in businesses would be ideal especially businesses with high influx of customers. This could be done either statutorily or conventionally. The ATM on the other hand is characterised by long queues, low cash and poor network, which makes it not readily available in some occasions. More ATM outlets, better network and of course making cash available would put a smile on the faces of Nigerians.

If these payment methods were readily available it would become a matter of choice and convenience to carry out transactions on any of these platforms. But for it to be just a matter of choice and convenience the issue of security has to be settled or at least mitigated. In recent years security has been a major talking point in Nigeria not just financially, but also economically, politically, socially and in terms of lives and property. For the time being our focus and major talking point would be restricted to financial security; specifically banking security. Over the years, there has been rampant fraud in the banking sector. Nevertheless, some measures have been taken by the banks in reducing these fraudulent activities, such measures include awareness campaign in keeping debit cards and pins secured, provision of more secured debit cards and employment of ‘credit investigation officer’ dedicated to fraud cases.

Despite the effort of banks in mitigating external fraud, there has been increased internal fraud amongst the bank staff; they could adopt the Salami approach by taking small amount of money from different accounts that could amount to millions of naira over a period of time or it could be outright stealing. The reason for this increased fraudulent activity by bank staff cannot be unrelated with the employment policy adopted by most Nigerian banks in employing contract staff who enjoy no benefits and are underpaid; you can’t have a hungry dog guarding bones. A better pay and proper monitoring should be adopted; bank staff accounts should be scrutinised on daily basis, all fund transfers should be carefully scrutinised and verified and transfers to relatives of bank staff from the staff’s bank should be scrutinised as well.

Security has been an impending issue to achieving a cash-less economy in Nigeria. I believe with a little more investment by the banks to tackle the niggling security issues, we would have a more robust economy, better investments, swift transactions and of course many happy Nigerians. Unfortunately, so far that has not been the case and it does not seem likely to change soon, banks are taking advantage of government frailties and have not taken the responsibility of providing a more secured banking system as customers have no one to run to and are left with no choice than continue banking with them despite their inadequacies. Yes, it is true that there is nowhere in the world without banking fraud or security breech, nevertheless, I think it is high time for Nigeria to play the role of leaders and not satisfy itself measuring up with the inadequacies of the rest of the world. Yes, fraudsters are very intelligent but there is no cyber crime that cannot be traced, a more rapid response and being proactive would keep them on their toes.

At a time of low crude prices, political changes, dwindling economy, less cash circulation and other economic hardship, I believe it is the right time to diverge to other areas that can improve the economy of the nation. In Kenya, the mobile banking package launched by Safaricom in March 2007, the M-PESA is contributing a good percentage to the country’s GDP; in 2013 it was recorded to have contributed 31% of Kenya’s $33.62 billion GDP. This was achieved from just about 15 million M-PESA subscribers, in a country like Nigeria of over 160 million people compared to Kenya’s 45.8 million, one can imagine the potentials that a successful cash-less economy will tend to possess in upturning the country’s dwindling fortunes. Rather than increased taxes, service charge paid via these cash-less economy devices or methods would be more welcoming by the masses and the Government. At the moment, the POS attracts a charge of 1.25% or ₦2,000 maximum for every transaction so also does the ATM; internet and mobile banking attract charges for each service too. In pooling revenue derived from each source the country would have increased resources to tackle other problems like power, unemployment e.t.c.

In 2016, Nigeria can be a cash-less economy hub.


Oma Gegere is an Accountant who can be reached via: +2348061241817.

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