Cash-lite Lagos

(The end of money - or civilization as we know it...)
The Central Bank of Nigeria has got its hand in your pocket. What that hand is doing, is extracting as much of your cash as possible. The CBN doesn’t want us to have any cash. Or not so much cash. It has a new ‘cashless’ policy and people in Lagos, Nigeria’s commercial capital (whatever that means?) are the guinea-pigs on whom it has been being tried out since the beginning of January (you can find details at this link).

Basically, the idea is to reduce the amount of actual, raw, liquid cash that we use every day. So a private person can withdraw from, or pay into their account, any amount up to N150,000 cash per day. That includes money you get out of an ATM, or on a cash cheque. If you want more than N150,000, you’ll have to pay a penalty fee (or what the CBN coyly calls a ‘handling charge’) of N100 for every N1,000 over the limit. So, for example, if you need N300,000, you would be wise to plan ahead and withdraw N150,000 a day before you need the money and another N150,000 on the day you need it. But if you can’t plan ahead and leave it to the last day, it will cost you an extra N1,500 to get the N300,000 in cash all at once.
Businesses – or corporate bodies – can get or pay in up to N1,000,000 without paying a penalty fee. But for them, the penalty fee is N200 for every N1,000. Not cheap at all! We’ve been given a couple of months to get used to this, but those are the ‘handling’ fees that we’re going to have to pay in Lagos as from the 30th of March.
Naturally, the CBN has its own list of reasons why we should embrace this cashless policy – well, this blog isn’t here to do the CBN’s work – and you can find lots of them on its website at the link above.
But what does it really mean for ordinary people? We might think it doesn’t really affect us, because – I mean, how often do we spend N150,000 in a day? So it won’t actually affect our going to the market, or the supermarket, or the cinema … or will it? Think about it. If a business has to pay a penalty of 20% each time it tries to bank any amount over a million naira, then probably the less cash it has to bank, the better, abi? So even though you personally might not be planning to spend a whole lot of money on any given day – if a business has a lot of small-ish customers, the amount they pay might add up to more than that one million. A supermarket, for example, might need only about 60 or 70 customers to hit the million naira limit.
OK, we should all pray to have something going on that yields a million naira a day! But that’s why the CBN and other banks are trying to persuade as many businesses and organisations that usually take cash as possible, to get paid electronically. ‘Point of Sale’ (POS) machines, which allow shops and other organisations to take your money without actually handling cash, are popping up everywhere. If you have a card with some kind of gold mishmash on it – a card that you can use at an ATM – you can also use it at a POS machine to pay for your stuff.
But even if you don’t have a bank account, the fact that the CBN has also given some banks mobile money licences means that if you’ve got a mobile phone, you can get cash on it, and use it to pay for things you want to buy – even in the market! Though many people have got more than one mobile phone, last year we were said to have as many as 70 million mobile phones in the country. We’ve got a population of 167 million, so that still leaves a lot of people without phones, but remembering how many of them are under 15, it’s enough to get started sha.
We’ve come a long way from the days when ‘money’ had to be something – cowries, manillas, gold and so on. We came round to accepting that it could be just a piece of paper (and of course, here in Naija with our pathological hatred of coins, we are talking about paper) but boy, how we cling to that paper. Cool cash. Owo tutu. We love it. Even when it’s a smelly, filthy rag that you have to go and wash your hands immediately after handling, we love our cash.
And the subterfuge we had to resort to to move it from place to place. One trader, who needed millions of naira to buy stuff for his spare parts business, collected the cash from his bank, with one of his boys who was dressed as a tomato seller, complete with large basket. The cash was wrapped in plastic, surrounded and covered with a convincing layer of tomatoes, hoisted onto the boy’s head, and he then walked from bank to wherever it was, with the oga following – oh so casually – behind...
But now, we’re being told to give all that up or pay a ridiculous amount. How will we manage? This is not just a matter for small people. Big ogas will also be affected. It’s true that people who survive in the margins of “Keep the change” will suffer, but don’t our hearts also bleed for the traditional recipients of ‘Ghana Must Go’ – you know, the emergency suitcases stuffed with cash? How will they collect their own now? Oh, you think they are all in Abuja? Even if that was true, Lagos is only going to be a guinea pig until the end of May. After that, the same cash-lite rules are going to apply all across the country.
Is it going to work? Well, Nigerians are very religious. And being religious is all about believing in something that you can’t see. So it might just work. It might just work. Anyway, I expect that by then, the Abuja version of cash-lite will have made the dollar, or the pound de rigeur for... well, whatever it is that GMG used to do!
This piece was originally posted on February 7, 2012.