OPINION By: Ogakwu Julius Ogbaji
The cashless policy is a complement to the Naira Redesigned strategy; they are just twin brothers though with four legs but two hands and one head.
The cashless policy will benefit the poorer masses (proletariat) more than the ruling class (Bourgeoisie).
The cashless policy is another best policy of this administration thus far and should be embraced by all and sundry.
The cashless policy if well managed and implemented is capable of fighting inflation to a standstill.
Nigeria is projected by the United Nations to be the third most populous nation in the world taking over from the USA by 2050, if this measure is not taken now the country will be worse off.
H.E President Muhammadu Buhari might have lost his re-election bid if this policy was implemented before the 2019 general elections because over 70% of his party men may neither work nor vote for him for the fear of the unknown as we have started seeing the jittering from so many high profile persons and institutions already.
The cashless policy does have some disadvantages as well.
According to PRASANNA, an Indian Author and Editor-in-Chief with Aplus Topper, a cashless economy is an economic system where digital transactions such as net/ mobile banking, digital wallets, and paying by debit or credit cards substitute the traditional payment method made through cash.
A cashless policy is an economic policy aimed at reducing the amount of produced currency in the economy; it involves more electronic-based payments.
The right strategies, incentives, infrastructure, and regulation can encourage innovation and boost public confidence in noncash systems.
Public and private partnerships can also be critical in marshaling the expertise and creating momentum.
Numerous examples around the world illustrate how cashless payments are economic propellers.
Cash is no longer king. Economies that are more cash-intensive tend to grow slowly and miss out on significant financial benefits.
Conversely, BCG research shows that economies that switch to digital are more successful; the switch can boost annual GDP by as much as 3 percentage points.
The Good About Cashless Policy
Reduction in the Printing of Cost of Physical Currency.
According to the USA Board of Governors of the Federal Reserve System, each year, the Federal Reserve Board projects the likely demand for the new currency and places an order with the Department of the Treasury’s Bureau of Engraving and Printing, which produces U.S. currency and charges the Board for the cost of production.
The 2022 currency operating budget is $1,060.0 million. Just like in the US, every naira note produced attracted a cost. Before now, just like crude oil that we export before importing the PMS back with a severe trade imbalance on our current account, we were equally told that naira is being produced outside the country with a serious cost.
The Nigerian Security Printing and Minting Limited will henceforth print naira as they did for the newly redesigned naira notes which will make the country one out of the four African countries that print their currencies locally and not import from foreign countries, and this is a plus to Nigeria.
Although, the real point here is that, if the cashless policy is effectively implemented physical notes will be printed which means less expenditure on the cost of printing currency in Nigeria.
A Tool to Fight Corruption And Ensure A Transparent System.
Theft or fraudulent acts concerning cash will be reduced to the bare minimum. Following the note ban, nobody would dare to steal money, which will promptly hinder the theft since the banks won’t accept that money anywhere.
As opined by the World Economic Forum, cashless technologies could be a game changer and some of the greatest assets in the fight against corruption and organized crime too.
If everyone were connected to an end-to-end payment infrastructure-a cashless environment-there would be transparency in money flows. Whether it’s international aid or private investment, if everyone in the chain were connected digitally, you could see where the money went and how it was spent.
Any sums appearing outside of that framework could immediately be flagged and investigated. This would narrow the focus for law enforcement and forensic accountants, making it easier to target and recoup hidden money.
Less Hoarding and Forged Currency.
An unconfirmed report has it that Nigerians had returned over 1 trillion naira since the inception of the naira redesigning policy. A lot of people who are afraid of returning money to banks on their own are using the same to buy properties, farmland, and other investments, all of these actions directly or indirectly lubricating the economy through effective liquidity circulation.
And since you can no longer hoard currency the forged currency values will be declared worthless. People involved in socially evil practices generally involve in social evil practices tend to accumulate their wealth in cash.
With the process of a cashless economy coming into effect, this accumulated cash will be useless due to the note ban. If people invest money in the bank, the government will question them about that particular income source.
Fewer Issues of Taxation.
A cashless economy will translate to a digital economy which means Financial Technology (FINTECH) will play a vital role in financial and economic development.
The illegal non-payment or under-payment of taxes, usually by deliberately making a false declaration or no declaration to tax authorities – such as by declaring less income, profits, or gains than the amounts earned, or by overstating deductions will be reduced drastically because every payment made in the system through any Fintech platform will be easily tracked and trace. More people will be employed at superstores and other pay points because there will be multiple points of sale (P.O.S.) even in our local farmers markets.
Other benefits include; Limited Cash Fraud, Effortless Payment, and Easy International Payment.
Not to forget some of the CONS of a Cashless Economy; Low Literacy Rate, Chances of Economic disparity, Cybercrime, overspending, identification fraud, and others but all of these can be handled or brought to the barest minimum by a strong political will, uncompromised institutional framework, proper Fintech system that is being managed and monitored by relevant regulatory and anti-grafts agencies in the country.
Today if you visit china, there is a strong chance that you will see people paying for things using facial recognition on their phones while others just sweep their cards on the POS machine at a go without a pin. Nigeria should not just follow the rest of the developed and industrialized economies of the world but match toe-to-toe with China and India’s footsteps towards a cashless economy. Therefore, a cashless economic Policy should be embraced by all if we expect any clear and meaningful departure from the past.
Ogakwu Julius Ogbaji is an upcoming Energy and Finance Economist whose research interests cut across sustainable community development, Macroeconomic Policies, Political Economy, and sustainable energy.
A well researched and incisive write-up
Well researched and incisive write-up!