Let alternative payments channels work

Globally, the number of what people know as alternative payments options has grown exponentially in the last few years due to the ever growing need for payments solutions. In the wake of the 2008/09 global financial crisis and the reforms carried out by the CBN and the Federal Government of Nigeria to enhance the national payments system, alternative payments opportunities were introduced to reinforce electronic payments options, particularly in line with the vision of being among the 20 best economies in the world by 2020.

As it is in advanced economies, the policy is aimed to revolutionize and modernise Nigeria’s payments system, reduce the cost of banking services, promote financial inclusion, reduce high security and safety risks, foster transparency and curb corruption and other leakages. More importantly, it was also to improve the effectiveness of monetary policy by reducing the amount of physical cash circulating in the economy by encouraging more electronic-based transactions.

Laudable as the policy is, some Nigerians, however, loathe it and their aversion and distaste towards these alternative payment systems were one of the major reasons the Naira, sometimes back, exchanged at N525/$1 as a result of speculation and round-tripping. As the 2019 general elections approach, attempts are on in some quarters to tinker with the CBN Act 2007, which if allowed to succeed, may erode the economic gains so far made and diminish Nigeria in the comity of nations.

Several payments solutions, including online payments, have been devised to support and access distant markets. Alternative payments options are used in Europe, the Americas, Asia and quite a number of Africa countries, and if Nigeria prides itself as the hope of the continent’s economic hub, all and sundry should support the efforts of the nation’s monetary authority in seeing the policy through to fruition.

There are quite a number of these options worldwide, but the most common are: debit cards, charge cards, prepaid cards, direct debit, bank transfer, phone and mobile payments, cheques, money orders and cash payments. The CBN, while initiating the payments channels, sensitized both the banked and the unbanked segments of the economy to embrace it as part of its financial inclusion strategy programme. The alternative payments system would have grown astronomically but for the infrastructure challenge, particularly power, which has hindered and excluded people in the rural and remote areas in the country from the benefits of electronic means of transaction.

Policies introduced by the Federal Government such as the TSA and the BVN have helped to check corruption and leakages in the economy, however, what has remained current since the enactment of the Act in 2007 is that every successive National Assembly regime has always laboured to tinker with the Act. The independence accorded CBN made it possible for the bank to save the financial sector from collapse during the 2008/9 global financial crisis. The banks’ consolidation exercise gave Nigeria strong and viable banks. The same CBN, if allowed to carry out to a logical and safe end its cash-less policy program for the growth of the economy and a stronger Naira, has the capacity to make Nigeria great.

The independence enjoyed by CBN enabled it to embark on development and intervention projects which have not only helped in the provision of infrastructure and economic development of the country but also played a critical role in Nigeria’s exit from recession. It is also of importance to note that when the economy entered recession coupled with the forex crisis, the CBN was able to dish out some ingenious homegrown forex management policy – flexible exchange rate as well as creating a window for the importers and exporters, the I & E Window.

Since the introduction of the policy (but for its temporary suspension due to opposition from certain quarters) and now, issues of bank robbery or customers getting robbed as soon as they leave bank premises have disappeared because people no longer carry huge sums of money about. People no longer keep huge sums of money at home. Queues at banking halls have long disappeared.

Understandably, the initial resistance to the cash-less policy was due to lack of understanding amongst the banked and the unbanked segment of the economy, the prevalent cash culture, technology phobia, illiteracy (including the lettered), distrust of the banking system and some other factors. Today with the help of mobile phones one can do transactions worth billions of Naira in a jiffy from the comfort of one’s office or bedroom. It is safe and secure, seamless and convenient.

Cash, as we all know, is an integral element that fuels quite a number of vices in Nigeria, but with the introduction of alternative payments channels that have brought positive impact to the economy, some of these vices have given way.

In today’s Nigeria financial space, there is the Point-Of-Sale (POS), Mobile Payments, Multi-functional ATMs and Internet Banking. There is also Electronic Funds Transfer and Direct Debits, among others, available for easy and seamless transactions.

And to hone its determination and vision of making Nigeria counted among the 20 best economies in the world by 2020 and make Nigeria Africa’s financial hub, the CBN needs the support of every stakeholder in the Nigeria project. Anything otherwise will amount to reversing the gains so far recorded. Its independence has enabled it to intervene in the economy at critical periods not only as the nation’s banker but as an economic development advisor to the country.

Dr Michael, an Economist, writes from Ekinrinade, Kogi State.