There is Excess cash in circulation- CBN Deputy
The apex bank in Nigeria has said the nation runs a cash-based economy and this informed the Central Bank’s Cash-Lite Policy which aims to reduce the amount of cash in circulation.
The Deputy Governor, Operations, CBN, Dr. Kingsley Moghalu, who said this in Lagos during a seminar on cashless Nigeria, stated that the amount of cash in circulation as of 2011 was 41 per cent of the nation’s Gross Domestic Product. He said the nation’s GDP as of 2011 was less than $400bn.
This, he said, was in sharp contrast to Indonesia’s which has only 4.3 per cent of its $800bn GDP as the amount of cash in circulation.
Moghalu, who was represented by the Principal Manager, Shared Services, CBN, Mr. Aaron Yaduma, spoke at a conference entitled ‘Cashless Nigeria; Progress, issues and prospects’ organized by Wilson & Wiezman Associates Limited.
He said the development formed one of the major reasons the CBN launched the Cash-Lite Policy in January 2012.
The CBN deputy governor said, “Nigeria is predominantly a cash-based society and this is not good for us. This is why the CBN decided to launch the Cash-Lite Policy; so that Nigeria can join other developed economies that adopted cashless society.
“Other reasons for introducing the policy are the need to meet Vision 2020, the need to modernize Nigeria’s payment system; reduce the cost of banking services, drive financial inclusion, improve effectiveness of monetary policy, reduce the high security and safety risks, reduce high subsidy, and foster transparency and curb corruption.”
He recalled that the CBN had in collaboration with the Bankers Committee in 2010 commissioned a study to identify possible ways to enhance service delivery in the financial sector by reducing the industry cost to serve and also institutionalize operational efficiency in banks.
Moghalu, however, said the Cash-Lite Policy, which commenced in January 2012 had gained traction and had been adjudged as largely successful.
He said the support of the Federal Government, Lagos State and other states in the country had made the first and second phase of the project to be successful in the states where they had been introduced, namely Lagos, Abia, Anambra, Ogun, Rivers and Federal Capital Territory.
The deputy governor expressed optimism that the project would be successful when it is rolled out nationwide in July this year.
He said, “While the CBN is playing a leading role in the development and implementation of this policy, the cooperation among our respective stakeholders (operators, merchants, government etc) is extremely important if we are to ensure the improved efficiency of Nigeria’s payment system to contribute to the country’s economic and social development through increased financial resources.”
He explained, “Given the experiences gained from the pilot in Lagos and the ensuing acceptance of the policy in the new states under phase 2 of the policy, we have every reason to be optimistic. We have received cooperation and support from political leadership of the states under the policy with records of improved revenue generation after embracing the e-culture. The issues of infrastructure gap are being addressed and collaboration with NIGCOMSAT in leveraging on cloud technology is being pursued in this regard.”
“Operators with the payments space have also brought in on the policy and have commenced aggressive marketing of customers in areas of operation. The business community is also coming on strong in adopting the policy.”