Follow Us on Google
By Chinenye Anuforo, [email protected]
As Nigeria pushes towards a cashless economy, the fact that a significant number of bank transfers are being reversed and sometimes transferred money doesn’t reach the receiver has called for concerns.
Recall that in October 2022, the Central Bank of Nigeria, CBN, announced its intention to redesign the currency, which it said was in the best interest of Nigerians, to check terrorism financing, counterfeiting and imbalances in the fiscal space, and to enable the apex bank to take control of the currency in circulation.
The currency redesign and revised cash withdrawal policy were aimed at steering the country into a full-fledged cashless economy by end of January 2023.
But, the implementation of the policy has caused Nigerians more pains than gains. This, according to experts, was because the country is not fully prepared to go cashless.
They argued that, the increased reliance on cashless transactions has led to a rise in failures and issues in banking applications and channels.
Adding that technical challenges, such as inadequate technology infrastructure and weak public telecom connectivity, contribute to the unreliability and scalability of these applications and channels.
In his words, the Chief Executive Officer Jidaw Systems Limited, Mr. Jide Awe explained, “Internally, poor network robustness and overloaded systems are major issues. The increased demand could strain technology infrastructure and systems if they’re not equipped to handle the traffic.
With more people using banking applications and channels, the likelihood of technical faults and issues increases, and the demand for digital financial services puts pressure on the personnel who support these systems. A shortage of trained IT personnel in some banks can make it challenging to address technical issues promptly. This, combined with a rise in demands for support, can bog down call centers and tech teams, leading to longer wait times and reduced reliability.”
Awe noted that increased failures and issues in banking applications and channels suggest a need for a more robust and well-developed regulatory framework for digital financial services, with greater oversight regarding service delivery and performance.
“It’s important to acknowledge the advantages and benefits of digital financial services, such as increased convenience and accessibility, resulting in a more efficient and smart economy. The promotion of point-of-sales machines and digital bank transfers is therefore understandable. However, the increased failures and issues in banking applications and channels pose a challenge for sustainable cashless growth. Those who are more comfortable with traditional banking practices and less familiar with digital financial services may find it difficult to adopt or trust these services.
Our financial institutions must address these challenges posed by the rapidly evolving industry strategically to keep up with the increased demand, increase reliability, and plan ahead.
This requires the right investments in technology, infrastructure, strategy, and regulation. Financial institutions should invest in robust and up-to-date technology and systems, train their staff to handle increased demand, insist on top-notch service from vendors handling critical services, and continuously monitor and improve their own services to meet the needs of their customers.”
For Charles Omole, a national security policy reform expert, said that the CBN cannot run ahead of the infrastructure limitations of Nigeria. To achieve a cashless policy, the apex bank needs to ensure the expansion of the banks’ physical infrastructure. He recommended one bank for every local government area, the number of base stations needs to at least double, and reversal of declined but debited transactions should be within 48 hours.
The number of base stations in the country stood at 53,460 in 2020. In December 2022, President Buhari said the country grew the number of 4G base stations from 13,823 in August 2019 to 36,751.
“When all these are in place; Nigerians will embrace cashless transactions without any problem,” Omole said.
In his on part, the Head of Tax and Corporate Advisory Services at PricewaterhouseCoopers Nigeria, Taiwo Oyedele, narrated how he fell victim to bank e-channel failures as he said the biggest impediment against the adoption of e-payments and by extension, the cashless economy objective in Nigeria, is poor infrastructure.
“ I experienced this myself over the Christmas period and had to resort to cash payments and bank transfers in some cases. “Unfortunately for many businesses, you can’t do bank transfers for OTC purchases. Imagine the impact on their sales, if you also can’t withdraw cash to pay them due to withdrawal limits.”
Unarguably against the backdrop of his experience, Oyedele urged the CBN to prioritise the improvement of this infrastructure, in collaboration with other key stakeholders within the value chain, before implementing the new cash withdrawal limits. “If not, economic activities would be negatively impacted, which could lead to a drop in Gross Domestic Product or even a recession,” he added.
