The recent ‘re-colourisation’ of the Naira and associated statements and experiences have once more brought to the fore, the issue of the cashless policy. And it appears so far that the CBN wants to make it difficult for people be ‘cash-ful’. Consequently, I persuaded myself to upload an article I wrote in 2019 on this matter. The thesis of the article was and is that people should be encouraged, rather than coerced, to go cashless.
Kindly read along bearing in mind that this was written almost 4 years ago.
Cashless-policy is not new; it started in Nigeria in 2012 and it started with charges for deposits and withdrawals above given thresholds. Since the policy was introduced (2011) and became operational (2012), I have been an ‘interested party’ playing from the sidelines. My interest was and is due to two factors: my banking and change-management expertise and my self-imposed responsibility to mind other peoples’ business.
Since 2011, I have written about 6 general articles on cashlessness and two published academic papers. The first one was and probably the first empirical work on the policy was based on a study conducted three months after the commencement of the programme (Ik Muo et al 2013); Managing Social Change: The Case of CBNs cashless Policy. Journal of Applied Finance and Banking3(2) 75-87). The second one was published in June this year, 3 months after the CBN governor declared that the policy was on its way back and three months before the recent cashless big-bang (Ik Muo(2019) Strategic Options for Nigeria’s cashless Policy.
Journal of Research in National Development. 17(1),1-10). I have shared the contents of some of my general commentaries on this policy in the past two weeks. I want to share the contents of my intellectual work on this policy as stated above before giving my verdict. But before I do so, a word on KITA. KITA, an acronym for Kick in the ass, was introduced into managerial lexicon by Hertzberg when he propounded his two-factor theory of motivation. It is the process of using threats of punishment to coerce somebody into doing something. It is coercion because while force can compel somebody to do something, it can never motivate!
The first paper (2013) reviewed the cashless policy and assessed peoples’ behaviours and attitudes towards it in Lagos where it first became operational. It was found that 72 percent of the respondents believed that the cashless policy was necessary; only 40 percent believed that the CBN approach to its implementation was the best but only 36 percent believed that the policy would succeed. The 64 percent who believed that the policy would fail justified their doomful predictions on the power supply situation, poor implementation and non-availability of cashless channels in the rural areas.
A disturbing feature of this policy since its inception has been the several reversals, which indicated that the CBN did not do its homework well or is not surefooted about it. The date for its take-off, the pilot states, the cash thresholds and punishments have all been fiddled with. In effect, it has been one step forward, two steps backwards, three steps inside the bush and back to square one! The latest and most disturbing of these amoebic developments occurred in February 2017. The CBN had reviewed the policy, revised its charges upwards and directed that these should become operational in the pilot states on 1/4/17 and staggered its nationwide implementation from 1/5/17 to 1/10/17.
Surprisingly on 20/4/17, it reversed itself on the new charges and on the nationwide roll-out and reverted its implementation to the pilot states. My recent intellectual intervention, which was based on the postulations of Seth & Fraiser (1982) and Christensen, Marx and Stevenson (1986) concluded that inducement and leadership tools are the most optimal strategies for the effectiveness of the cashless policy. Inducement (persuasion and economic incentives) becomes the preferred strategy when people have positive attitude towards the desired change but do not or cannot change. Leadership tools (negotiation and salesmanship) are preferred when people agree on what they want but disagree on how to go about it.
Nigerians are not opposed to the cashless policy per se; they are opposed to the knee-jerk, KITA approach! The fact that electronic transactions increased from N56.3 trillion to N138.7 trillion between 2015 and 2018 is an indication that some progress has been made; but it would have been more awesome if we had done the right things.
My verdict then is simple and emphatic: AWAY WITH KITA. You cannot force people to change unless you want them to pretend to have changed. My argument since 2011 is that Nigerians should be encouraged (not forced) to embrace the cashless policy through persuasive communication and incentives. Customers should be paid to go cashless and this payment can be done through CBN’s regulatory intervention or from the cashless-induced savings by the banks.
Furthermore, communication should focus on the benefits of the policy, not on the punishment for contravention. When you see the crowds at our ATM machines all over the country, including Lagos, it becomes obvious that the banks should up the ante. So, no to punishment-based strategy, which is what KITA is all about.
I also believe that it is WRONG to punish people for depositing their money in the banks. Transporters, fuel-stations, supermarkets and traders in general will surely find this very herculean. The other day, a woman nearly went berserk at a bank where she was charged almost N40000 because a customer had lodged cash into her account! I don’t know whether she made up to N40,000 from that transaction. Let people pay in the cash and then hold them by the jugular when they want to withdraw the money by insisting on cashless withdrawal.
Of course, the government should walk the talk. Just the other day, our Vice President was openly sharing cash to traders in the name of ‘tradermoney’ and then, how did Lagos State give the N20000 to the South African returnees? In the next 10 years, we shall review the situation and I can bet as sure as day follows night that if the CBN does not ‘repent’ and change this punitive approach, we should be where we are today.
I.K Muo is a writer, columnist, socio-political commentator and a lecturer at Olabisi Onabanjo University, Nigeria
(First published in BusinessDay newspaper)