Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, on Thursday, said the Nigerian payment system had recorded significant achievements since the introduction of the cashless policy in 2012. Emefiele said this while addressing the House of Representatives on CBN’s implementation of the cashless policy and new withdrawal limits.
The CBN governor was represented at the hearing by Deputy Governor, Financial System Stability (FSS) Directorate, Dr. Aisha Ahmad.
Emefiele said following the successes achieved in the payment system, Nigeria had been adjudged Africa’s undisputed real-time and digital payments leader, with over 3.7 billion real-time transactions in 2021. He also pointed out that electronic banking adoption had significantly increased among the Nigerian populace while the cashless policy had further spurred policy innovation that had expanded the breadth and depth of financial system participants, transaction channels, and financial access points.
Emefiele told the lawmakers that CBN’s recent redesigning of the N1, 000, N500 and N200 notes and the nationwide implementation of the cashless policy were intended to further sustain the achievements in the payment system. This was in line with the quest to foster a safe, credible and efficient payment system that would be the pride of all Nigerians and the envy of the world, he stated.
He insisted that the cash withdrawal policy was neither targeted at any segment of the society nor intended to disenfranchise hardworking Nigerian citizens and businesses, as insinuated in some quarters.
The House of Representatives, on Thursday, mandated the CBN and commercial banks to put in place measures to prevent the deportation of Nigerian students abroad by ensuring that forex was made available for the payment of their school fees at their various institutions of learning. The resolution of the lawmakers was sequel to the adoption of a motion sponsored by Hon. Akande Sadipe at the plenary, Thursday.
That was as a coalition of civil society organisations continued to mount pressure on the Department of State Services (DSS) to retract its unverified charges against Emefiele. They maintained that the CBN governor was not a terrorist.
However, Emefiele assured during the hearing in the House that the central bank would continue to monitor the implementation of its monetary policies and be flexible on the limits in response to feedback received.
He said, “We crave the National Assembly’s continued support as the bank continues its implementation of transformational payments and financial industry initiatives in line with its mandate.”
According to him, the CBN’s October 26 pronouncement on the redesigning of some denominations of the naira and its circular of December 6 on the revised cash withdrawal limits and nationwide implementation of the cashless policy had elicited mixed reactions by the public, as keenly noted by the bank.
He said while a segment of Nigerians applauded the policies, others raised concerns, particularly with respect to the effect of the policies on the underserved and rural communities in Nigeria.
Justifying the naira redesign policy, Emefiele stressed that it would help control inflation, as the exercise would help mop up currency outside the banking system, thereby ensuring more reliable data on money supply, which will in turn facilitate better monetary policy formulation and effectiveness.
In addition, he said the policy would boost the appreciation of the naira, as the higher denomination and the volume of banknotes outside the banking system used to speculate on the currency would reduce.
Emefiele stated that the naira redesign programme would help fight banditry and terrorism, as the large volumes of cash used to pay ransom to bandits/terrorists would be reduced.
He explained, “It will assist in the fight against corruption as the exercise would rein in the higher denominations used for this purpose and the movement of such funds from the banking system could be tracked easily.”
The CBN governor noted, “Despite the dominance of highly advanced payment systems, many countries carried out currency redesign to remain ahead of counterfeiters, ensure durability, fight corruption, and reduce the cost of currency management, among other reasons.
“It is against the backdrop of the foregoing that the CBN, in line with its statutory powers as enshrined in Section 2(b) and 19 of the CBN Act 2007, sought and obtained the approval of Mr. President to redesign and issue new series of naira notes in the N200, N500, and N1000 denominations.”
Commenting on the revised cash withdrawal limits, Emefiele noted that the CBN was not unmindful of the concerns raised in response to the new cash withdrawal policy and remained flexible to make the necessary adjustments to ensure wider public acceptance of the policy.
He said, “Consequently, we have reviewed the cash withdrawal limits upwards to N500,000 weekly for individuals (from N100,000) and N5,000,000 weekly for corporates (from N500,000). Furthermore, the applicable charges above the limit have been reduced to three per cent and five per cent, respectively.
“Mobile money agents who provide cash-in cash-out services in rural areas have also been recognised and provided for in the revised guidelines.”
Further justifying the cashless policy, Emefiele pointed out that the CBN carried out an in-depth analysis of over-the-counter intra-bank cash transactions over 12 months (November 2021- October 2022) to assess the impact of the policy on the generality of citizens.
He said the outcome showed that a significant volume of cash transactions was below the maximum thresholds indicated under the extant cashless policy and was, thus, not subject to the cash processing charges.
He added, “It is worthy to note that 94.04 per cent and 62.63 per cent, respectively, of volume and value of cash transactions by individuals were below the threshold while 82.36 per cent and 39.38 per cent of the volume and value of cash transactions by corporates was below the threshold.
“Transactions at agent locations are also below the thresholds. For instance, 99 per cent of cash withdrawals at agent locations are below N300, 000, average cash out transaction size per individual is N18, 000, whilst average cash withdrawals by agents is between N1, 000,000 and N2, 150,000.”
According to him, “The proliferation of financial access touch points and e-payment channels across urban and rural areas, which presents citizens with ample alternative for financial transactions further justifies the nationwide implementation o the policy.”
Emefiele said there were 6,500 branches of deposit money banks, and OFIs, 1.4 million agent locations, 900,000 POS and 14,000 ATMs, including 31 commercial banks with 4,603 branches; 878 MFBs with1,966 branches; 1.4 million agents; 899,642 PoS Terminals and over 14,000 nationwide.
According to him, it is in the public interest to promote an efficient payment system via the cashless policy, which helps reduce the punitive costs of cash processing, often passed on to bank customers.
Emefiele added, “It is instructive to note that the implementation of the cashless policy in six states resulted in a reduction in the cost of currency management by 15.20 per cent, from N36.97 billion to N31.35 billion between 2013 and 2014.
“The trend, however, reversed in 2014 following the suspension of cash deposit charges in the six states currency handing cost increasing by 17.20 per cent between 2014 and 2015 following the suspension.”
The CBN governor also said the cost of currency management had been on the increase, reaching N47.25 billion between January and October 2022.
Among other things, he said the CBN cashless policy was in line with the bank’s quest to adopt international best practices and international conventions, especially in view of recent reputational damage with some Nigerians perpetuating advance fee fraud.
He added that the CBN’s mandates and responsibilities under the CBN Act 2007 as amended empowered it to promote a sound and stable financial system and credible efficient payment system- Section 2d, Section 47 of the CBN Act and the policies were issued pursuant to these legal provisions, adding that actions are well within its mandate.
He said, “It is also important to note that extensive engagement continues across multiple stakeholders since the cashless policy was first launched in 2012. By January 2023, the initiative will be entering its 11th year and stakeholders would have been adequately enlightened. The initial go-live date for its implementation nationwide was 2015.”
On the misconceptions about the cashless policy, Emefiele told the lawmakers that there were many fallacies about the naira redesign and cashless policy, which needed to be resolved.
He said currency denominations of N5, N10, N20, N50, and N100 remained legal tender and were unaffected by the naira redesign policy. The denominations were available for use across the country, including at markets in rural areas and the informal sector of the economy, while there were currently no processing fees applied to cash deposits, he stated. He stressed that unlimited amounts could be deposited without charge, to enable seamless and unrestricted deposit of any notes affected by the currency redesign.
The CBN governor said, “The processing fees on cash withdrawals are not new, as these have been in place in Lagos, since 2012, and in the five other cash-less states and FCT, since July 2013.
“The charge applies on the excess over the prescribed limit only, not on the entire transaction amount. For instance, a withdrawal of N550,000 by the individual- fee is excess over the N500,000 limit (i.e. N50,000x 3%= N1,500); Withdrawal of N6,000,000 by a corporate- fee is excess over N5,000,000 limit (i.e.N1,000,000 x 5%= N50,000).
“The policy does not prohibit cash transactions above the prescribed limits. Such transactions shall attract the processing fees to serve as an incentive for account owners to embrace more efficient electronic payment channels.
“The policy applies nationwide in recognition of the plethora of financial touchpoints that are available in all the States of the Federation. Nationwide implementation is effective January 9, 2023.”
Reiterating the benefits of the cashless policy, Emefiele said, “Reduction of cost of cash management (processing, movement, security, destruction of old notes) which is often passed on indirectly to Nigerians including eliminating the physical risk of cash – robbery, kidnapping, terrorism.
“Promote Nigeria’s positive reputation for fighting money laundering and terrorist financing. Cash limits are recognised in Anti Money Laundering Laws due to their role in advancing these illegal activities.
“Reduction in incidences of crime – armed robbery, kidnapping, terrorism financing, advance fee fraud, graft, ransom payment and extortions. Deepening the Nigerian payment system through more innovation and cheaper costs.”
On the way forward, Emefiele said the CBN had commenced nationwide stakeholder engagement and sensitisation to promote understanding of the cashless policy, particularly in rural areas, markets, and underserved communities across the six geopolitical zones of the country that stood to benefit the most.
He also said the CBN, Bankers Committee, and SANEF would intensify agent rollout across the country (especially in underserved locations) and enhance agents’ ability to carry out a wider variety of financial services in addition to cash in and cash out (electronic card distribution, wallet/account opening, BVN onboarding, bills payment, etc), which would also be enhanced.
He added that the CBN would continue to be flexible in its implementation of a cashless policy and monitor its impact, especially on vulnerable segments of society, but ensure the multiple advantages were achieved.
He disclosed that the CBN had ordered the printing of N500 million pieces of currency from the minting company.
Emefiele also said the apex bank worked with the National Bureau of Statistics, banks and other financial institutions to generate the data it used in making certain decisions.
He stated, “We have to make it very clear that the CBN is an independent institution. Our decisions are taken based on research, data and it is the work of many teams working together across the different directorates. At no time do we make decisions based on any political consideration and I think it’s important that I state that. We are trying to work with the National Orientation Agency (NOA), local religious leaders and market leaders and people in the local communities.”
In his remarks, House Speaker, Hon. Femi Gbajabiamila, said it was obligatory for the CBN under Section 8 of its Act to brief the House on monetary policies, stressing that there is a reason for the provision.
Gbajabiamila stated that 94 per cent of the banking population the apex bank said was not affected by the withdrawal limit policy was dependent on the six per cent adversely affected.
While frowning on the two months’ notice given by the regulator, he opined that even when the policy takes effect, the apex bank should allow the continuous use of the old notes at the same time until it was completely phased out.
Gbajabiamila said, “It took the prompting of the House, not once, not twice, but three times to have the CBN come for this briefing that we are not even asking for. It is an obligatory briefing under the CBN Act Section 8. The reason why the House needed to be briefed under the contemplation of the law was because this House represents the people out there. So by briefing the House, we can now go back, assuming we agree with your policy, to our constituents and let them know what is going on and why it is going on.
“We could have worked with you if we agreed with you. So, the question remains, how come the CBN did not brief the House and moving forward, that should never happen again. That is number one.
“All your policies may be of good intentions, but they say the road to hell is sometimes paved with good intentions. We are aware of the Bank of England, we are aware of the US. Just recently the Bank of England changed their notes to the King Charles notes, and the bank made a publication that it would not come into effect until 2024. In other words, they gave a year’s notice in a cashless society.
“You said only six per cent of the banking populace are affected adversely by this policy, 94 per cent are not because they withdraw below that limit weekly. Now that is in percentage terms. Can you tell us in numerical terms what that percentage means?
“In other words, how many people are in the banking sector, how many citizens are captured? I think I heard you say earlier that they were 60 or 70 million Nigerian or thereabout. So six per cent of that figure comes to how many people?”
House Urges CBN, Commercial Banks to Remit School Fees of Foreign-based Nigerian Students
Meanwhile, the House of Representatives mandated the CBN and commercial banks to put in place measures to prevent deportation of Nigerian students abroad by ensuring the seamless processing of their school fees.
The resolution of the House followed the adoption of a motion sponsored by Hon. Akande Sadipe at plenary.
Moving the motion, Sadipe said the House was aware that some Nigerian international students across the world were having hard times processing payments provided by the beneficiaries.
According to her, top Nigerian banks have failed to process the payment transfers either for settling school fees, accommodation and other required expenses.
She also said the banks had refused to refund the affected students to enable them search for alternative means of payments.
Sadipe lamented that several students were on the verge of being deported to Nigeria if urgent steps were not taken to remedy the situation, adding that the CBN and commercial banks involved have kept mute.
Again, CSOs Protest in Abuja, Caution DSS on Charges against Emefiele
The coalition of civil society organisations continued to press the DSS to retract what it described as the unverified charges against Emefiele.
The civil society organisations under the auspices of Coalition of Civil Society Group and Youth Coalition (CCSGYG), which stormed Abuja on Thursday, in a massive protest, maintained that Emefiele was not in any way a sponsor of terrorism.
The coalition led by its president, Bassey Etuk Williams, and secretary, Abubakar Ibrahim, made their position known during a rally held in Abuja, where they insisted the apex bank’s governor was not a terrorist as alleged.
They also said unscrupulous and disgruntled politicians were behind the move to heap charges on Emefiele, because they were being exposed as regards their evil deeds via the recent implementation of CBN policies.
The coalition expressed its displeasure over the desperation of politicians manipulating a noble organisation such as the DSS to sell a fake and unfounded charges against Emefiele who they said had successfully fought money laundering, financing of terrorism and other financial crimes through his policies and innovations.
William said it was a shame to mention that Emefiele was sponsoring terrorism even when those making the allegations had no evidence to prove it.
In a statement read at the protest ground, William said, “Our attention was once again drawn to the recent motion ex parte brought before a Federal High Court in Abuja by men of DSS where-in they sought relief to arrest and detain the CBN governor, Godwin Emefiele, based on trumped up charges of financing terrorism, economic crime, and crime of national security.
“This motion was surprisingly done without concrete evidence to prove the frivolous allegations against the workaholic CBN governor that the country can’t forget easily based on his several positive impactful economic and monetary policies approved by President Muhammadu Buhari for implementation.
“We are surprised to note the division that exist among top government officials of this regime. While the CBN governor was in faraway US on the entourage of President Buhari, another arm is seeking his arrest back home on trumped up charges without the consent of the president.
“The questions that beg for answer is, who gave such directive, is Mr. President aware of this allegation before moving in to effect arrest via a court order? On whose interest is the DSS really working?
“The civil society movement has great respect for the DG DSS who we know as a fine gentleman but we feel that the trumped up charges are a product of unfounded petition generated by unscrupulous politicians whose fraudulent activities have been caught short by the wonderful and brilliant policies of central bank governor.
“We wonder why they left their main mandate and allowed the troubled political class to influence their professional ethics.
“The coalition is surprised on the high level of plot to frame the CBN governor at this time. There has been coordinated attempt to rubbish him, as we all note that this started via one Hon. Kazaure, when he went about screaming missing N89 trillion stamp duty money traceable to same man, even though Presidency has come out to disown the said committee the political class didn’t rest as they moved again using the men of DSS.
“We are shocked that this can happen even while he was away with President Buhari. The question is, why then did they allow someone allegedly financing terrorism be on the delegation of Mr. President.
“The CBN governor has served diligently for seven years and the DSS within this period didn’t discover this until the recently introduced monetary policy, a policy that majorly affects most of our political class.”
The coalition pointed out, “This is an affront on the government of President Buhari and we implore the presidency to get to the root of the move aimed to further ridicule and bring to disrepute office of the president.”
The coalition warned that it would not sit back and allow any security agency to detain Emefiele against the policy approved by Buhari to block loopholes created by corrupt Nigerians and take the advantage to perpetrate their evil at the detriment of the masses.
It said, “This flip flop in government activities must stop now. We, as a group, hereby reiterate our unalloyed support for President Muhammadu Buhari and CBN Governor, Godwin Emefiele, while urging the CBN governor to further the implementation of his policies aimed at further combating inflation.
“While we warn the detractors and naysayers to allow him deliver on his mandate, the era of cash stuffing at home has gone and won’t come back again.
“We won’t be deterred to take further actions if this blackmail to remove him from office did not stop now.”
James Emejo, Udora Orizu, Emameh Gabriel in Abuja