CASHLESS POLICY AND ECONOMIC GROWTH EVIDENCE FROM NIGERIA.
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
CASHLESS POLICY AND ECONOMIC GROWTH EVIDENCE FROM NIGERIA.
Chapter one
INTRODUCTION
1.1 Background for the Study
Nigeria currently holds the awful position of being Africa’s most populous country with no access to financial services. According to data compiled by Micro Finance Information Exchange (MIX) last year, Nigeria and the Democratic Republic of the Congo have the greatest disparities between populations living in poverty and those without access to financial services–80 million in Nigeria and 48 million in the Congo.
Furthermore, controlling the few who have access to banks is claimed to cost banks a lot of money, with cash management accounting for a significant portion of the costs. Furthermore, the cost of printing fresh bank notes as a result of frequent handling is believed to cost the Central Bank of Nigeria (CBN) a horrifying amount each year.
To address this and other difficulties confronting banks and the nation’s economy, the CBN implemented the cashless economic strategy. The programme aims to broaden the scope of banking and make financial services accessible to “Banking adults” at an affordable cost.
According to the Central Bank of Nigeria (2011), a high proportion of Nigerian adults do not have access to bank services, which has serious economic and developmental ramifications.
The overarching goal of the cashless policy is to lower the adult exclusion rate from 46.3% in 2012 to 20% by 2020. According to CBN (2012), financial inclusion occurs when people have easy access to a wide range of formal financial services that satisfy their needs and are reasonably priced.
According to Omotunde et al. (2013), a cashless economy is one in which transactions can be completed without the use of raw cash as a means of payment, instead using credit or debit cards to pay for products and services.
According to Ejiro (2012) in Omotunde et al (2013), the Central Bank of Nigeria’s (CBN) cashless economy policy proposal is a step to improve the financial landscape, but the programme’s long-term viability would be determined by end-user endorsement and compliance.
According to Tunde Lemon, Deputy Governor of the CBN, the CBN cash policy imposes a daily cumulative limit of N150, 000 and N1, 000, 000 on free cash withdrawals and deposits by individual and corporate customers in Lagos state, respectively, beginning March 30, 2012.
Individuals and organisations that exceed the cumulative limitations on cash transactions will be assessed a service fee. Omotunde et al. (2013) highlighted that the policy, through the improved use of information technology, promotes financial transfers, hence reducing time spent in bank(s). The adoption of cashless policy and, as a result, the rise of the cashless economy in Nigeria.
According to these researchers, the adoption of the cashless policy began in Lagos State, Nigeria. Why Lagos? According to the Central Bank of Nigeria (2011), Lagos State accounts for 85% of POS and 66% of cheque transactions in Nigeria.
The cashless economy helps to reduce the quantity of raw currency circulating in the Nigerian economy while simultaneously encouraging more electronic transactions.
The programme is intended to lower the costs of running a cash-based economy in Nigeria by 90% once fully implemented (CBN, 2012). The purpose of this study is to look into the evidence for cashless policies and economic growth in Nigeria.
1.2 Statement of Problem
The Central Bank of Nigeria’s implementation of the cashless policy was intended to aid monetary policy as a strategy of economic management to bring about sustainable economic growth and development.
This introduction is not fully operational because to a high degree of illiteracy, inadequate sensitization/education of individuals on the benefits of the cashless policy, and insufficient logistics (such as the availability of internet connections in business areas, computers, and Point of Sale (POS) equipment).
Aside from physical constraints, economic data and indicators are not widely available or dependable. Identifying the impact of the cashless policy on Nigerians is more difficult because there are limited monetary and macroeconomic statistics available.
Countless scholars have attempted to assess the impact of cashless policies or e-banking. However, it is clear that few studies have provided a complete review of cashless policies and their effects on the economies of developing nations such as Nigeria. Most people don’t realise how important this is economically, and some disregard the bad consequences.
This is frequently caused by a lack of or unreliability in panel data for monetary and macroeconomic indicators. This study focuses on the Nigerian economy, although it is difficult to translate cashless studies from one nation to another.
1.3 Research Objectives
The overall or primary goal of this research is to look into the impact of cashless policies on economic growth in Nigeria. The precise aims include:
i) To investigate the economic impact of the cashless policy in Nigeria.
ii) To investigate the reasons for the Central Bank of Nigeria’s implementation of a cashless policy.
iii) To identify the various banking channels that promote cashless policies in Nigeria.
iv) Identifying the challenges of cashless policy in Nigeria.
1.4 Research Questions.
The following are some of the questions that this study aims to answer:
i) What are the economic consequences of the cashless policy in Nigeria?
ii) What are the reasons for the Central Bank of Nigeria’s cashless policy?
iii) What are the various financial channels that promote cashless transactions in Nigeria?
iv) What are the hurdles to Nigeria’s cashless policy?
1.5 Significance of the Study
This study will help to better understand the problems associated with cashless policies and their acceptance by Nigerians. The study also contributes to theory by offering information on numerous theories of economic development in the banking industry and the business sector as a whole, adding value.
The material in this paper will also be useful in giving empirical data about the influence of cashless policies on economic growth. It will be useful in other banking-related studies.
1.6 Scope of Study
This study focuses on the impact of cashless policies on economic growth. This study will thus be conducted among bankers, company owners, and individuals who use electronic banking in Nigeria.
1.7 Limitations of the Study
This study entailed investigating a number of concerns in order to produce a full examination of the difficulties; nevertheless, numerous constraints were met in the form of data collecting and a lack of adequate information from respondents.
The biggest constraint of this study was the difficulty in gathering reliable information from bank workers, since the majority of them were preoccupied with their work schedules and unable to provide enough information about their jobs.
1.8 Definition of Terms
The following terms were utilised throughout this study:
A cashless economy is one in which financial transactions are made using digital information rather than physical banknotes or coins.
Electronic banking provides 24-hour access to cash via automated teller machines (ATMs) or direct deposit of paychecks into checking or savings accounts. However, electronic banking encompasses a wide range of transactions, rights, and duties, as well as, on occasion, costs.
Need help with a related project topic or New topic? Send Us Your Topic