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Tips on the cashless policy

Published by Punch on Wed, 28 Dec 2011


With the implementation of the Cashlite or Cashless policy with effect from January 1, 2012, the alleged subsidy on cash transactions which the Central Bank of Nigeria claims runs into hundreds of billions of naira yearly, will be withdrawn in some selected states across Nigeria including Lagos, home to 65 per cent of commercial transactions in the country.The principal complaint of the deposit money banks is that handling cash which is supposed to be their main business now constitutes 30 per cent of their operating costs, which in turn results in the high rate of interests these banks charge for loans and other facilities they extend to their customers, which in turn affects funding of the real sector of the economy.To drive home its determination to enforce the policy and supposedly encourage the utilisation of electronic payment systems, the CBN has directed banks to strictly enforce the penalties for exceeding the limits on cash withdrawals or lodgment by individuals and corporate which have been fixed at N150,000 and N1,000,000 respectively.With banks given authorisation to deduct N100 for every N1000 above N150,000 withdrawn or lodged by individual customers, and N200 for every N1000 above N1,000,000 withdrawn or lodged by corporate customers, prices of goods and services conducted above the cash threshhold will increase by 10 per cent and 20 per cent respectively.While the CBN and banks are poised to kick-start the implementation of the punitive charges for conducting cash transactions with effect from January 1, 2012, the same cannot be said regarding the widespread deployment of the electronic payment solutions that should keep commercial transactions in Lagos State on an upswing.Similarly, the same cannot also be said about the efforts being made by the CBN, banks and other interested parties in enlightening Lagosians and residents of other states being used as the guinea pigs to test run the policy before its full adoption in Nigeria by July 1, 2012.When the removal of the supposed subsidy on handling cash by banks is taken together with the proposed removal of fuel and fertiliser subsidy, additional tariffs on wheat and rice, ban on the importation of cement, increase in electricity charges, re-introduction of toll collection in some Federal Highways across Nigeria, 2012 is going to be a challenging year for the citizens.To help Nigerians who are going to be affected by the policy, I have compiled 10 simple ways of minimising the effect of this new tax imposed by the CBN. The steps are by no means perfect but will go a long way towards enabling us to navigate the stormy waters of 2012 and beyond.The first step is to realise that between January and June 2012, the majority of states in Nigeria will not be applying the policy, so you can carry on your withdrawal and lodging of cash above the approved limits in the branches of your bank in cities, towns and villages outside the pilot project areas.Second, you can convert your naira to USD, pound, yen, euro, CFA, cedis and price your goods and services in these foreign currencies, as the burden on handling cash transactions above the approved limits only applies to the naira and not foreign currency, and you can even follow it up by opening a domiciliary account with a deposit money bank.Third, since the limit for individual and corporate cash lodging/withdrawal is N150,000 and N1,000,000 respectively, you can open more corporate accounts with deposit money banks either through registering a business name or incorporating a limited liability company which increases your cash handling limits without penalty by N850,000.Four, you can also decide to open more individual or corporate bank accounts with different deposit money banks, and other than the trouble of going to these different banks to cash or lodge money, it can be business as usual for cash lovers who can withdraw N150,000 from two or more accounts in different banks.Five, you can decide to boycott the deposit money banks entirely and join up with millions of Nigerians who operate in the informal sector of the economy and have nothing to do with bank transactions, and there is a strong possibility that informal institutions will spring up in the informal economy to fill the gap of handling cash on behalf of desperate Nigerians.Six, you can sue your bank in a court of law for penalising you for withdrawing or lodging cash above the approved limit as the policy is what it claims to be, a simple policy that has no legal backing, and since the legal duty of the CBN is to issue and print the naira as a legal tender, penalising Nigerians for using the naira is certainly illegal.Seven, you can decide to cut down on your spending by restricting yourself daily to goods and services that cost N150,000 if an individual, and N1,000,000 if a corporate organisation, meaning you will have more disposable cash in your savings, and this will be wise in the face of global economic uncertainties.Eight, you can go and open bank accounts in the names of other members of your family or if a corporate entity, incorporate additional subsidiaries with their own bank accounts even if these accounts have different signatories, the goal being to be able to pool up as much cash as is needed to lubricate the wheels of business in Nigeria.Nine, if you are already a lawyer or training to be one, you can concentrate on electronic payment transactions, a policy that has no legal backing, even lacking laws to deal with frauds, defaults, and dispute resolutions that are sure to spring up in their millions when electronic money is expected to replace cash where goods and services are to be exchanged.Ten, if all else fails, you can buy bank shares to profit from the huge dividend pay-out they will make from raking in billions of naira from penalising individuals and corporate organisations withdrawing or lodging cash above the approved limits, a step which is guaranteed to revive the fortunes of the Nigeria Stock Exchange. With 65 per cent of commercial transactions taking place in Lagos State, according to Governor Babatunde Fashola, I fear that the volume of commercial dealings in the state will nosedive with the full implementation of the policy in January 2012, meaning that we have the responsibility of taking reasonable steps to minimise our losses and keep business moving.Omose, a Lagos-based attorney and economic analyst, wrote in from 25, Warehouse Road, Apapa, Lagos via kingsleyomose@gmail.com.
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