Earlier today, Nairametrics reported that the Central Bank of Nigeria’s cashless policy has partially commenced in the FCT and some states. Full implementation across the country is expected by March 2020. In the meantime, Nigerians are not very pleased with this development. One of those who has expressed his misgivings is PwC Nigeria’s Tax Lead, Taiwo Oyedele.
[READ: CBN introduces new policies, commences charges on money deposits]
Reacting on Twitter, the tax expert argued that the extra charges that will now be incurred by individuals and companies for withdrawing and depositing money will have some negative impacts. With illustrations, he explained that going forward, what the policy implementation entails is that an individual hoping to withdraw or deposit N1 million, for instance, will pay transaction fees of N30, 000 and N20, 000; respectively.
In the same vein, companies wishing to withdraw or deposit, let’s say N5 million, would incur a transaction cost of N250, 000 and N150, 000 respectively.
For a company account, you will pay N150k to deposit N5m cash (N250k for withdrawal).
— Taiwo Oyedele (@taiwoyedele) September 18, 2019
Bad for businesses: According to Oyedele, this development couldn’t possibly augur well supermarkets and retailers who take in huge cash on a daily basis. He then went further to observe that the situation could also impede the Federal Government’s financial inclusion agenda, whilst frustrating ease of doing business for SMEs. This is because when traders have to pay a lot of money to deposit money in the bank, some might as well think twice about it and keep the money under their pillows.
And what happens where there is "no signal" or "network not available" for pre-payment? Plus the tax man may seek to disallow the charge as an unnecessary fine.
— Taiwo Oyedele (@taiwoyedele) September 18, 2019
[READ: CBN to issue N1 trillion treasury bills by fourth quarter 2019]
There are some bright sides: As the CBN already claimed, the cashless policy is intended for good. Oyedele agreed to that to some extent. Some of these advantages include the following:
- Control illicit flow of money
- Reduce CBN’s cost of cash management
- Engender more transparency in the Nigerian financial industry; especially for the purposes of tracking and taxation
- The situation will also benefit POS operators, as many people may want to avoid the charges by using POS.
He concluded by saying that the apex bank should have given more advance notice to enable businesses to gradually adjust to the system.
It would have been more tenable for the CBN to give sufficient advance notice, and phase the implementation with progressive charges to enable people doing legitimate businesses make necessary adjustments.
— Taiwo Oyedele (@taiwoyedele) September 18, 2019
