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The Impact Of The Cashless Economy Policy On Nigerian Citizens And The Economy

Download the complete materials on The Impact Of The Cashless Economy Policy On Nigerian Citizens And The Economy from chapter one to five with references




The apex financial institution in any economy is the central bank of that country and it plays a major role in the economic advancement of that nation .De’cock(1998) defines a central bank as a bank which constitute the apex of the monetary and banking structure of a country and which performs as best as it can be in the national economic interest the following functions of regulations of currency in accordance with the requirements of business and the general public, custodian of cash reserves of commercial banks, custodian and management of foreign exchange reserves, lender of last resort, controller of credit, clearing house for transfer and settlement and also act as the banker, fiscal agent and adviser to the government.

In Nigeria, the mission statement of CBN is to be proactive in providing a stable framework for economic development through the effective, efficient and transparent implementation of monetary and exchange rate policy and management of financial system CBN 2011.It is in line with this mandate that it has introduced various monetary policies that would strengthen the financial system and cashless policy which ensures efficient and modern payment system is one of such which is geared to achieve the goal of being amongst the top 20 economies by year 2020.

However an efficient and modern payment system is positively correlated with economic development and is a key enabler for economic growth. (Baddley 2004), Cashless policy was introduced to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach and to improve the effectiveness of monetary policy in managing inflation and driving economic growth. The cashless economy policy initiated by the CBN led by its governor; Sanusi Lamido Sanusi was introduced first in Lagos state, the country’s economic hub with the aim of achieving an environment where a higher and increasing proportion of transactions are carried out through cheques and electronics payment in line with global trends.

Upon this background, this study is poised to investigate and appraise to the best of the researchers ability the impact of the cashless economy policy on Nigerian citizens and the economy at large. Some other policy agenda did not enjoy as much acceptance as did the recapitalization agenda. For instance, the redenomination proposal was snubbed and judged to be counter-productive. In the same vein, the non-interest, Islamic banking concept has been greeted with a lot of scepticism, and the initiators are accused of masking under some hidden agenda.

The same may be said of the proposal on the introduction of “cashless economy”. The reaction of one Gibson sums up the scepticism in certain quarters about the “cashless economy”, he remarks that “I am foreseeing the ANTI-CHRIST stepping in and the fulfilment of Biblical prophecy that a time for cashless society will come and nobody will buy or sell except you have a number, be wise” (Magill, 2010).

This may mean that not enough has been done to address the genuine concerns of the citizenry about the cashless economy. So much may have been said about the anticipated gains attendant to the adoption of e-payment and cashless economy (or cashless banking), but in concrete terms, people have not been convinced that the agenda is for the good of all. While we may point to such economies as the Japanese or U.S, we must be very ready to accept the fact that these are economies with functional institutional basis which cannot also be said about Nigeria with much conviction.

Apart from the institutions, one fear that has been expressed is the state of Nigerian infrastructural decay. Have we witnessed the impact of infrastructure on the implementation of ‘cashless economy’ or is it an assumption that the infrastructural platform needed for the cashless economy to perform will simply come with the cashless economy?

All things being equal, there are still a few downsides to a cashless economy. Money by its nature is abstract. The less cash that flows through our hands, the more intangible it becomes and the more we lose our sense of its real value. Our banked assets are now on an electronic apparition, and the fear of not having cash at hand is a downturn.

Furthermore, the drive towards a cashless economy; a recent key policy of the CBN which has imposed on the financial sector calls for a leaner staff roll in many of the banks which has led to the mass retrenchment of workers, leaving many Nigerians without a source of income. Considering also that the sustainability of the policy will be a function of endorsement and compliance by the end users, the researcher deemed it fit to effectively gauge the level of the policy’s endorsement by means of this research with respect to the end users.

Finally, anxiety still persists amongst Nigerians from every sector about how the introduction of the cashless economy policy in Nigeria will affect businesses, prices and economic stabilization. These among other reasons led the researcher to carry out this study not only to examine and appraise the impact and effects of the cashless economy policy on the Nigerian economy, but to determine whether it will serve as a viable alternative cash transaction method in our society. With respect to the above, one way of proffering solution to the problem would be to find out as well as determine among other things the extent to which the adoption of the cashless economy policy will enhance the growth of financial stability in the country. The effect of this is that there exist short run changes in the volume of money which causes the CBN to have little or no control over the money volume.

This has made it increasingly clear and important to maintain monetary stability because it is central to the economic policy since the major task of CBN is to sustain a non inflationary environment. Furthermore, the high dependence on cash for settlement has resulted in the inefficient allocation of resources and a low depth of financial intermediation with downside effects on monetary operators and monetary policy management. To address this and many other issues facing the banks and the nation’s economy, the CBN introduced cashless economy policy on cash based transactions which stipulates a “Cash handling charge” on daily cash transaction withdrawals or cash deposits which aims at reducing (not eliminating) the amount of physical cash (coins and note) circulating in the economy, and encouraging more electronic based transactions.


There is often delay in payment of cheques which led to the adoption of electronic banking system. Adoption of electronic banking which is supposed to ease banking transactions rather resulted to woes to customers. Most customers complain of time wasted in banks, mostly when there is network failure due to linkage problem between central server and branches.

This aside, banks have since 2000 been introducing payment cards in form of ATM cards, but the usage have been very low due to lack of interconnectivity. To resolve some of this problems, most especially to reduce the volume of cash transactions, government decided to encourage the use of e-commerce instruments to transact business in place of cash thereby reducing the traffic in the banking hall and other hardships faced by customers. The trust of this study is to investigate the above problems encountered by customers as a result of cashless policy.


This study is poised to investigate and appraise to the best of the researcher’s ability the impact of the cashless economy policy on Nigerian citizens and the economy at large. This study when completed will add to the body of knowledge in the area of banking and finance as literature on cashless policy in Nigeria is scarce. Besides, future researchers will find this work as a valuable of materials for writing literature review and they could expand the scope of this study. The general public could find this study useful as they can learn about cashless policy from reading this work. Students of banking and finance will find this study useful as course material.


The under mentioned research questions will be closely examined in this study

  • Does cashless policy have an effect on the banking industry?
  • Has cashless policy brought efficiency in electronic payment process?
  • Has cashless policy reduced cost of operation in banks?


Based on the objective of the study, the following null hypothesis shall be tested.

H0: cashless policy has not brought about efficiency through electronic payment process

H1 : cashless policy has brought about efficiency through electronic payment process

H0: cashless policy has not reduced cost of operation in banks

H1 : cashless policy reduced cost of operation in banks

H0: cashless policy does not have an effect on the banking industry

H1 : cashless policy has an effect on the banking industry


The report of this study has been divided into five chapters. Chapter one is the introduction to the study chapter two is the review of relevant literatures. Chapters three is the research methodology. The data presentation and analysis has been shown in chapter four. Lastly summary, conclusion and recommendation is in chapter five.


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