The Edo State Government has called on the Federal Government of Nigeria and the Central Bank of Nigeria (CBN) to make new notes available with a view to addressing the challenges that have plunged businesses in Nigeria into low productivity while calling on business owners to adopt the CBN’s cashless policy for its numerous advantages.
The Managing Director Edo State Investment Promotion Office (ESIPO)-Ease of Doing Business Secretariat, Mr. Kelvin Uwaibi made this call during an interaction with journalists on the effects of the cashless policy on businesses and the Nigerian economy at large.
Speaking in his office in Benin City the State capital, Uwaibi noted that the cashless policy is good to drive online banking. But the unavailability of new notes is a big challenge which is currently affecting small businesses, putting them (businesses) into a difficult situation and creating a black market for the Naira. “And this is not good for our economy”. He said.
The Secretary to the Edo State Ease of Doing Business Council enumerated some of the challenges businesses are facing at the moment which include: money scarcity; fuel scarcity; high cost of goods and services; low patronage to businesses; the temptation of trading in black market for the Naira, among others.
Encouraging businesses to go cashless and migrate to digital platforms, Uwaibi noted: “The cashless policy is good. It will help to drive online banking, which will help to address security challenges in terms of payment of ransom to kidnappers, terrorism financing, counterfeiting and more. But people are complaining about the short time to phase out the old notes and the unavailability of the new notes.
“And the businesses say to me, if the new notes are available, there won’t be issues. So, critical things to address include the availability of new notes and infrastructures to enable implementation of the cashless policy. We also need more awareness and sensitization. The fact is that such a change is not easy but it comes with gains. India did it in 2016. Their economy became better in terms of online banking.” Uwaibi said.
“We are aware of the challenges businesses are facing. They (businesses) have become unproductive. You can imagine a situation where a businessman now considers the option of investing in black market for money instead of buying goods in the shop with low or no patronage. This is not good for our businesses and it is not good for our economy.
“When businesses are unproductive, they will lose profit. When there is loss of profit, people may lose their jobs. Unemployment is already an issue in this country.” he added.
Highlighting some of the challenges that were already constraining businesses before the Naira redesign policy was enforced, the ESIPO MD noted that: “At present, households and small businesses are already facing serious financial pressures from prolonged, high inflation, recently compounded by external food and fuel price shocks. The situation may be worse in the coming days if the new notes are not made available.
“We are in support to redesign the naira. We are in support of the cashless policy. But we must take quick action to make our people adapt to it. We must ensure the few notes in circulation are monitored to serve the desired purpose. It is important to note that there are businesses and poor households whose day-to-day transactions depend largely on cash, which is the obvious reason the new notes are made available. The feedback we are getting from businesses is that there is generally low patronage because of the unavailability of cash.”
On the way forward, Uwaibi called upon the apex bank to work with deposit money banks and fintech companies to strengthen digital payment platforms and develop other infrastructures required for a cashless economy to thrive.
“It is important to have all hands on deck to resolve these issues because the situation may be worse than this in the coming days. Let the Central Bank of Nigeria and the commercial banks work closely with the fintech companies to increase the availability of new notes and improve digital payment platforms. As a country, we also need to put the necessary infrastructures in place to prepare ourselves for a digital economy. Let’s see how we can work to ensure that POS agents do not extort businesses. And I know that the CBN has the capacity to resolve these issues.” he concluded
The CBN had released new N,1000, N500 and N200 notes as part of measures to mop up excess cash in circulation, ransom payment for kidnapping, and terrorism financing among others.
Consequently, it appears that the motives for the naira redesign and cashless policy are good for the Nigerian economy, but the challenge is the unavailability of new notes which has now compounded the difficulties businesses and individuals are faced with.
Last modified: February 12, 2023