However, the cost of cash to nigeria financial system is high and increasing. Pdf this paper studied the impact of cashless policy in nigeria. The study shows that the cash policy is reduction in the costs of printing the period post the cashless policy has generally been and managing large sums of money. Preface why the central bank of nigeria made the cashless policy. Nigeria goes cashless april 1 as cbn insists on policy. Africas quest for a cashless economy gains momentum. Corruption has been identified as a complex, endemic, and multilayered problem that threaten the very existence of nigeria and various efforts have been made by nigerian government to curb the menace. Cashless economy, cashless policy, national development, nigeria 1.
A cashless policy was recently initiated to curb corruption among other objectives. For example, ejiofor and rasaki 2012 have noted that the cbn commenced the pilot scheme in lagos state apparently relying on its commercial stamina as nigerias business hub. Given the policy s objectives, the paper xrayed the associated benefits of the policy. This makes the country to be heavily cash based economy. This study therefore assessed the perceptions of stakeholders on the types of corruption that can be reduced. Cbn suspends nationwide implementation of cashless policy. A critical analysis of cashless banking policy in nigeria. It is in this regard that the central bank of nigeria cbn introduced the cashless policy with the objective of promoting the use of electronic payment channels instead of. This is because the central bank of nigeria has reintroduced its cashless policy which stipulates a cash handling charge on daily cash withdrawals that. The banks were directed to put a hold on these charges until a directive is given by the cbn. This is known to have several negative implications for an economy, which is the reason why the central bank of nigeria 2011 introduced the cashless policy in 2011 with the hope of curtailing. The impact of central bank of nigeria cashless policy in nigeria economy. The cashless policy initiative of the central bank of nigeria is a move to i mprove the financial terrain of the economy.
In a cashless society, the unit of account example, naira is seen as a national affair that is provided by the state. You just need your mobile phone or debit card to make payment these days. Effect of cashless policy on small and medium business in nigeria. A cashless economy is a shift from cashbased transactions to electronicbased transactions. The impact of adopting cashless payment on economic growth can only be significantly observed in the long run. Nigeria goes cashless april 1 as cbn insists on policy implementation barring any changes, nigeria is set to fully go cashless across the country as the central bank of nigeria cbn has said there is no going back on the full implementation of the federal governments cashless policy which is expected to commence from april 1 across the country. In a circular signed by dipo fatokun, director, banking and payments system. Cashless economy pros and cons of cashless society in india. An empirical analysis of the benefits of cashless economy on. Section 5 and 6 highlights the expected benefits and the challenges facing the cashless policy in nigeria and section 7 discusses the policy implications of cashless banking in nigeria. Cashless nigeria the central bank of nigeria cbn has introduced a new policy on cashbased transactions which stipulates a cash handling charge on daily cash withdrawals that exceed n500,000 for individuals and n3,000,000 for corporate bodies.
In nigeria as it is in many developing countries, cash is the main mode of payment. Cashless definition is not having or involving cash. Theoretical background cashless economy is not the complete absence of cash, it is an economic setting in which goods and services are bought and paid for through electronic media. Effect of cashless banking on unemployment rate in nigeria. The main reason for the policy was to reduce the amount of. The impact of central bank of nigeria cashless policy in. Cashless nigeria is a policy established in the year 2012 by the central bank of nigeria to curb excesses in the handling of cash in the nigerian federation. As part of our ambition to be one of the best 20 economies before the year 2020, cbn informed the world that nigeria would commence the process of changing to a cashless economy by january 2012. The first issue in the cashless economy is the issue of electronic purse.
This policy seeks to turn a money economy to what can be regarded as a cashless economy. The policy stipulates a free cash withdrawal and lodgments by individual and. In 2015, the central bank of nigeria issued a notice to all banks that began collecting charges on withdrawals above the threshold in the remaining 30 states. The ease of conducting financial transactions is probably the biggest motivator to go digital.
Effects of cashless economy policy on financial inclusion in. Through the help of the cashless policy, financial transactions are initiated and completed without the need for cash. It is in this regard that the central bank of nigeria cbn introduced the cashless policy with the objective of promoting. This study titled central bank of nigeria cashless policy and nigeria economy a study of cbn enugu intends to drive development and modernization our payment system in line with nigerias vision 2020. A behaviourial change to economic growth cashless economies are those that use mostly plastic or digital money and thus minimal cash or money in paper form. The policy was introduced by central bank of nigeria cbn in december 2011 and was kickstarted in lagos in january 2012. This paper studied the impact of cashless policy in nigeria.
The impact of cashless policy on the economic growth of nigeria, free undergraduate project topics, research materials, education project topics, economics project topics, computer science project topics, hire a data analyst. Central bank of nigeria the cashless nigeria project. This study is poised to investigate and appraise to the best of the researchers ability the impact of the cashless economy policy on nigerian citizens and the economy at large. The policy aims at reducing not eli minating the amount of physical. This is an economic system where all the business transactions in a particular country are performs with physical cash. The cashless policy in nigeria international journal of humanities. The economy is being reformed, the institutions are being reshaped and laws are. Hence, any policy that promotes cashless payment will not affect the economy immediately. This study when completed will add to the body of knowledge in the area of banking and finance as literature on cashless policy in nigeria is scarce. The central bank of nigeria cbn cashless policy and the. Cashless payment and economic growth financial innovation. D department of accountancy, university of nigeria nsukka. Sc department of banking and finance, university of nigeria nsukka abstract.
Sep 19, 2019 this is because the central bank of nigeria has reintroduced its cashless policy which stipulates a cash handling charge on daily cash withdrawals that exceed n500, 000 for individuals and n3m for. The central bank of nigeria cbn cashless economy policy is of no doubt an essential to the development of nigerias economy. Financial transactions involving the use and movement of physical cash are gradually declining with the introduction of the cbnas cashless policy. This page sells the central bank of nigerias cbns new policy on cashbased.
Cashless policy could often be affected by physical challenges such as high rate of illiteracy, inadequate sensitizationeducation of the benefits of cashless policy, and inadequate logistics such as the provision of internet connections in commercial areas, computers and point on sale pos machines. Princewell 20 examined issues in economic policy drift in payment systems with reference to nigerias shift from a cashbased economy to a cashless society. In a circular released on friday, the apex bank instructed banks to revert to old. Aug 28, 2016 the impact of the cashless policy on economic growth of nigeria. A cashless economy is an environment in which money is spent without being physically carried from one person to the other.
Nigeria abstract the paper discussed the effects of cashless policy on the nigerian economy, how it was kickstarted in lagos, means of payments both manual and electronic, positive and negative effects of cashless policy, benefits to the economy and stakeholders, suggestions were made. The cashless nigeria project central bank of nigeria. High cash usage enables corruption, leakages and money laundering, amongst other cashrelated fraudulent activities. It prescribed a cash handling charges on daily withdrawal above five hundred thousand naira n500,000. Cashless policy and contradictory fiscal policies punch. Prior to this time, nigeria economy was largely described as cash and paper based. Table 1 shows the view of respond ents on benefits of cashless economy in nigeria. This study examines the cashless economic system so as to assess its. Pdf impact of cashless economy in nigeria researchgate.
The cashless policy makes the process of payment seamless hence there would no longer be the need to move large sums in expensive highlevel security vehicles. Cashless economy is very good for stress free life. Abstract prior to this time, nigeria economy was largely described as cash. Cashless policy aims to curb some of the negative consequences associated with the high usage of physical cash in the economy, including high cost of cash, high risk of using cash, high subsidy, informal economy, inefficiency and corruption cbn,2011. Commencing from june 1, 2012, a daily cumulative limit of n150,000 and n1,000,000 on free cash. Nigeria is not left out of this trend as the cashless policy is the latest innovation of the central bank of nigeria, among its numerous efforts to reform the nigerian financial system. Omotunde et al 20 posits that cashless economy policy initiative of the central bank of nigeria cbn is a move to improve the financial terrain but in the long run sustainability of the policy will be a function of endorsement and compliance by endusers which can which can be aimed at reducing bank liquidity risks. Cashless economy and financial statement reporting in nigeria emengini, steve emeka ph. There was the recapitalization agenda, then the redenomination of the naira, the noninterest islamic banking and most recently the cashless economy. The adoption of one type of cashless payment will affect another type of cashless payment in the short run. Apr 21, the central bank of nigeria cbn has suspended its earlier directive on the implementation of cashless policy. The effect of cashless policy of government on corruption in. The central bank of nigeria cbn has suspended its earlier directive on the implementation of cashless policy. Cashless policy and financial performance of deposit money.
Jul 02, 2019 apr 21, the cbn in february announced its plan to extend the cashless policy to all the remaining states of the federation by oct. The impact of the cashless economy policy on nigerian. The purpose of this study is to expose the merits of the cashless economy to nigeria populace, and as well the pains of a cashbased economy. Africas quest for a cashless economy gains momentum africa. That policy will help modernize nigerias payment system, says gsma. A cashless economy simply illustrates a gradual or a radical movement of the entire. Pdf returns of the cashless policy in nigeria mpho. The impact of the cashless policy on economic growth of nigeria. Since the declaration of cashless economy policy by the central bank of nigeria, many scholars have written on this subject matter. This article examined development and challenges of cashless policy in. Cashless economy does not refer to an outright absence of cash transactions in the economic setting but. High cash usage results in a lot of money outside the formal economy, thus limiting the effectiveness of monetary policy in managing inflation and encouraging economic growth.
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