NIGERIAN businesses have been hit by glitches occasioned by weak banking applications, as business transactions online suffer setbacks in the light of the currency redesign policy of the Central Bank of Nigeria (CBN).
The CBN had last October announced it would be redesigning the N200, N500 and N1,000 notes. The new notes were introduced into the system on December 15, 2022, with the CBN initially setting January 31, 2023 as the deadline, as legal tender, for the old notes being rested.
One of the reasons the CBN gave for its naira redesign decision was its resolve to strengthen Nigeria’s cashless economy.
But the policy has brought so much agony to individuals, families and businesses as the new notes have remained scarce. The CBN has not helped matters with its decision somersaults on the swap of the old with the new.
What is certain is that the CBN Governor, Godwin Emefiele, is bent on forcing the cashless policy down Nigerians’ throat, as the apex bank has ensured scarcity of cash. Even currently raging is the CBN snub of the Supreme Court judgment that directed it to allow the spend of both the old and new notes till December 31, 2023. Emefiele has so far refrained from publicly issuing a statement effecting a compliance with the court’s order.
As the people compellingly engage in the cashless policy using alternative methods of payment, especially the point-of-sale transactions and online transfers, businesses have been lamenting the many hitches they pointed out are hindering progress in the process.
Some business operators our correspondent spoke with said fund transfers sometimes took a minimum of three days before hitting the backend of the other bank, thereby causing transaction difficulties and trust breaches between business owners and their clients.
“I sell foodstuffs of all kinds, ranging from crayfish, bitterleaf and ogbono to Maggi and dried fish. Most of my customers are restaurant managers. We have been having issues with transfers since the Central Bank of Nigeria’s enforcement of the currency redesign policy. Many of them are complaining seriously about this problem,” Memunat Ruqayat, a bulk foodstuff trader at Suleija market, told The ICIR.
Ruqayat lamented that such transfer glitches had led to loss of her prominent business partners.
“Mama Ekene my grade one customer has not been coming to the market for sometime now. I spoke with her on phone and she complained of the stress of the cashless policy, worsened by weak banking app,” she added.
Another retailstore business owner at Dei-Dei, an outskirt of the Federal Capital Territory, Kaburi Mohammed, told The ICIR that the delay in business transfers had created problems for his businesses.
Muhammed said, “Many of my customers would show you their debit alerts when they had sent transfers for their purchases. However, it could take, at least, four days for a transfer to hit your own bank’s backend.”
He stressed the importance of banks updating their digital security backend to aid migration to the cashless policy as desired by the CBN.
A dealer in phone accessories at the Kubwa Central Market in Abuja, Afam Udechukwu, told The ICIR that no one was collecting the old notes in the market, which is forcing both traders and their customers to resort to online transactions.
“No, I don’t collect them (old naira notes). Businesses are still rejecting them. In the whole of the Central Market Kubwa here, no one transacts with the old notes,” Udechukwu said.
The ICIR confirmed his claim during an on-the-spot observation at the market.
A development economist, Kevin Emmanuel, did not, in an interview with The ICIR, see any sense in the naira redesign policy.
“For me, Governor Emefiele has resulted to punishing all of us for the crime of a few. We will not see the effects now till inflation and recession numbers begin to come out in the third quarter of the year,” Emmanuel said.
The Executive Director of the Centre for Promotion of Private Enterprise (CPPE), Muda Yusuf, told The ICIR that the claim by the CBN that the economy had too much cash outside the banking system had no basis in economic theory, neither can it be supported by empirical evidence. The reason Emefiele gave, Yusuf said, was not a good one for punishing businesses.
He said that by December 2022, total money supply was N52 trillion, with the cash component of the supply as N2.6 trillion, which was just five per cent. Similarly, the country’s gross domestic product (GDP) was N202 trillion, which gave a cash to GDP ratio of 1.3 per cent.
Yusuf stressed that the Nigerian cash to GDP ratios remains one of the lowest around the world, which he said shows that the Nigerian economy is not really a cash-dominant economy.
“Cashless transactions in 2022 were about N400 trillion in 2022, according to the Nigeria Inter-Bank Settlement Systems (NIBSS). The truth is that nothing is broken. And we don’t fix what is not broken. Of course, we can do better, but not by crudely mopping up of cash in the economy,” he said.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.