In recent years, Nigeria has been moving towards a cashless economy. The government and the Central Bank of Nigeria (CBN) have been working hard to reduce the use of cash for transactions. This is called the cashless policy. Many people still do not fully understand what this means and how it affects them.
This blog post will explain the cashless policy. You will learn what it means, why the government introduced it, how it works, and the many benefits it brings to individuals, businesses, and the country as a whole.
What is a Cashless Policy?
A cashless policy is a plan by the government to reduce the use of physical cash for buying and selling. Instead of using cash, people use electronic payments such as bank transfers, mobile banking, debit cards, credit cards, and online payment platforms.
The idea behind this policy is to make financial transactions faster, safer, and more convenient. With a cashless system, you do not need to carry cash everywhere. You can pay for goods and services using your phone, ATM card, or other digital methods.
Why Did Nigeria Introduce the Cashless Policy?
Nigeria introduced the cashless policy to solve many problems caused by the heavy use of cash. Some of these problems include:
• Cash-related crimes like robbery and theft.
• High cost of printing and managing cash.
• Corruption and money laundering.
• Delays and stress in handling cash transactions.
• Difficulty in tracking illegal money transactions.
To address these problems, the Central Bank of Nigeria (CBN) introduced the cashless policy in 2012, starting with a few states before expanding it to the entire country.
How Does the Cashless Policy Work?
The cashless policy encourages people to use electronic payment systems instead of cash. It does this by:
• Placing limits on the amount of cash individuals and businesses can withdraw from banks daily.
• Charging extra fees for cash withdrawals above the limit.
• Promoting the use of digital banking and mobile payments.
• Supporting the growth of financial technology (fintech) companies that provide digital payment services.
For example, if a person withdraws more cash than the allowed limit, they will pay extra charges. This is to encourage them to use electronic payments instead.
Benefits of the Cashless Policy in Nigeria
The cashless policy has many benefits. It helps individuals, businesses, and the government in different ways. Below are the key benefits.
1. Reduces the Risk of Theft and Robbery
When people carry large amounts of cash, they become easy targets for thieves. With a cashless system, people do not need to carry much cash. This reduces the chances of being robbed.
For example, if a trader accepts mobile payments instead of cash, there is no money for thieves to steal from the shop. This makes businesses safer.
2. Makes Payments Faster and Easier
With cash transactions, people need to count money, wait for change, or even go to the bank to withdraw cash. This takes time.
With cashless payments, transactions happen instantly. You can pay for goods or services with just a few clicks on your phone or by using a bank card. This saves time for both buyers and sellers.
3. Encourages Financial Inclusion
Many people in Nigeria do not have bank accounts. The cashless policy encourages them to use digital banking services. With mobile banking and digital wallets, people in remote areas can send and receive money without needing a physical bank.
For example, a farmer in a rural area can receive payment for his crops directly into his mobile wallet without having to travel long distances to the bank.
4. Reduces Corruption and Money Laundering
Cash transactions are difficult to track, making it easy for corrupt individuals to hide stolen money. The cashless policy ensures that money passes through banks and digital platforms, making it easier to monitor transactions.
When all financial transactions are recorded, it becomes harder for people to steal public funds or engage in illegal activities without being noticed.
5. Lowers the Cost of Printing and Managing Cash
The government spends a lot of money printing and distributing cash. Banks also spend money on transporting and storing cash safely.
By reducing the use of cash, the government and banks can save billions of naira. These savings can be used for important things like building roads, schools, and hospitals.
6. Helps Businesses Keep Better Financial Records
Many small businesses do not keep proper financial records because they deal mainly with cash. With digital payments, businesses can easily track their sales, expenses, and profits.
This makes it easier for business owners to plan for the future, apply for loans, and grow their businesses.
7. Improves the Economy
A cashless economy is more efficient. Money moves faster, and businesses operate more smoothly. When businesses grow, they create more jobs, leading to a stronger economy.
With better financial records and digital transactions, banks can also offer better services like loans and investment opportunities.
8. Reduces Queues in Banks
Many people visit banks just to withdraw or deposit cash. With a cashless system, people can do most of their banking activities online or through ATMs.
This reduces long queues in banks and makes banking services more convenient for everyone.
How to Adapt to a Cashless System
If you are new to cashless transactions, here are some steps to help you adapt:
1. Open a bank account if you do not have one.
2. Download and learn how to use mobile banking apps.
3. Get a debit or credit card for payments.
4. Use reliable digital wallets like Opay, PalmPay, or Paga.
5. Be careful of online fraud and only use secure platforms for transactions.
The more you use cashless payment methods, the easier it becomes to handle money without cash.
Conclusion
The cashless policy in Nigeria is a step towards a modern and efficient financial system. It helps reduce crime, improves financial inclusion, makes transactions faster, and supports business growth.
Although there are challenges, the benefits outweigh the difficulties. With time, better technology and increased awareness will make the cashless system more effective for everyone.
By adopting digital payments, Nigerians can enjoy a safer, faster, and more convenient way of handling money.
