Business
Can CBN Achieve Its Cashless Policy?
It is no longer news that the Central Bank of Nigeria (CBN) is seriously gearing to commence the implementation of a nationwide cashless policy by June1, 2012.
Of major concern, however, are media reports that the ongoing pilot tests of the policy in Abuja and Lagos have continued to reveal fresh inadequacies almost on an every-other-day basis without a matching speed at remediation.
Much as Nigerians may appear to admire the ease with which modern technology is being used to facilitate non-cash payment for goods and services in the developed world, there is enormous doubt as to whether situations on the ground down here can accommodate a wholesale importation of such complex but seemingly simple payment culture.
If there are countries that need a cashless policy, it is surely the likes of Nigeria, Zimbabwe and the Francophone nations which would usually require a huge stack of their bank notes to exchange for a unit of American, British or Eurozone currency.
Whereas an American belle can conveniently walk through New York’s Wall Street with $3,000 (in $100 bills) tucked inside her handbag, her Nigerian counterpart can hardly carry an equivalent sum (N465,000 in N1,000 notes) on Broad Street in central Lagos without seeing the Area Boy in any man that smiles at her.
The CBN intends that its cashless policy would serve to encourage the use of such alternative payment channels as automated teller machines (ATMs), point of sales (PoS) terminals, mobile banking, Internet banking and electronic funds transfer alongside the long existing use of cheques and bank drafts.
Even before the kick-off of its trial runs, the apex bank had already placed ceilings on personal and institutional daily cash withdrawals at the banks.
Its initial approval of N150,000 and N1 million daily cash withdrawal limits for individuals and corporate bodies later got an upward review to N500,000 and N5 million, respectively.
This simply means that any over-the-counter (OTC) cash withdrawals exceeding these sums would attract a 10 per cent default charge and may also run the risk of raising undue security alert.
Among the benefits being touted as derivable from the CBN policy include: tracking of crimes such as armed robbery, kidnapping and money laundering; reduced risk of carrying bulk cash; saving man-hours spent queuing at the bank; easier accounts auditing; faster service at reduced cost; 24-hour service; immediate notification of transaction on user’s account; electronic buying and selling in line with modern global practice; ready access to data for economic planning and research; and elimination of problems associated with issuing change after payment.
For Nigeria, the planned introduction of a cashless policy may be ill-timed. This is partly because the country is yet to place a firm grip on its pitiable electricity supply situation. And considering that nearly all the payment channels are built on gadgets that depend on stable power sources, it becomes disturbing how the CBN hopes to achieve its new policy without first ensuring that the nation, particularly the urban centres, enjoys a modest electricity supply.
Furthermore, Nigeria suffers from high rates of illiteracy and rural underdevelopment. Even to this day, there are communities in this country where barter is still the chief means of exchange for goods and services. The absence of banks and inadequate money supply means that such communities have continued to suffer exclusion from the nation’s financial system.
This exclusion of the rural population was made even worse by the recent upsurge in armed robbery attacks, kidnapping, resource- control militancy and its associated brigandage which led to the closure of many rural bank branches, especially in southern parts of the country.
Apart from these, there is also this growing doubt in the ability of the CBN to successfully manage the cashless process.
It would be recalled that the financial systems regulator had on a number of occasions failed to push through some of its own regulatory measures. For example, in spite of its massive campaigns aimed at discouraging the abuse of naira notes (particularly at the eateries, parties and other ceremonial grounds), Nigerians have carried on as if the campaigners were a bunch of killjoys.
Even more poignant was the relentless rejection by Nigerians of the CBN’s recent attempts to reintroduce the use of coins alongside the nation’s currency notes. Instead, reports were rife that local jewellers preferred to melt such coins and have them molded into ornaments and other objects of greater face value.
Added to this is the discovery that deposit money banks (DMBs) have continued to flout the apex bank’s directive that they stop the practice of wholesale banking and concentrate on their traditional commercial banking services.
The CBN’s cashless policy is reportedly being pursued as part of measures aimed at accomplishing a stable financial system pursuant to its FSS 20:2020 vision which in itself dovetails into the wider national Vision 20:2020 project. If this is true, then the remaining eight years would still have been ample for a step-by-step approach to the introduction of the alternative payment channels than the simultaneous roll-out method being adopted.
Already, the ATMs which, at the time of their deployment a few years ago, held some promises of a success story are now confronted by long queues and a plethora of complaints. Out of the three machines that may be found at any urban bank branch, only one can be said to be functional at any given time. As for the other two, they would almost certainly be ‘temporarily out of service!’
Having apparently failed to maximize the benefits accruable from using the already existing ATMs, there is nothing to suggest that the nation stands to pull off much from the planned introduction of new multifunctional machines and the licensing of Independent ATM Deployers (IADs) into a system that would soon get saturated with diverse electronic payment channels and their vendors.
Another make-or-break factor in the implementation process is the readiness of the telecommunication network providers to improve the quality of their services. Already, Nigerians are being heavily fleeced for making mostly voice calls and using short message services (SMS). One can, therefore, imagine what awaits the nation when m-banking and the other network-dependent services are forced on the citizens.
A number of these telecoms firms are already partnering with the banks in attempts to outsmart their competitions at e-payment solutions development. What’s more, their banker partners are now in the market with very tantalizing newspaper advertisements some of which even tend to suggest that such solutions possess fail-safe characteristics. But try as they possibly can, it will only be a matter of time before mischievous bank staff, retail agents, poor network and Internet hackers rip the entire system to shreds.
Going further, the Economic and Financial Crimes Commission (EFCC) and indeed all the law enforcement apparatus should brace up against the impending upsurge in cases of identity theft, issuance of dud cheques and other related misconducts.
Cashless policy may be the vogue, but certainly not for a clime with so much illiteracy, poor infrastructure and a terrible maintenance culture. Talking of Nigeria, that is.
Ibelema Jumbo
As part of efforts to curb mishaps in the aviation industry, the Nigerian Safety Investigation Bureau (NSIB) has signed a Memorandum of Understanding (MoU) with the African Aviation and Aerospace University (AAAU) to deepen training on preventing and reducing accidents in Nigeria’s air transport.
Director, Public Affairs and Consumer Protection of NBIS, Mrs Bimbo Olawumi Oladeji, in a statement, said NSIB granted AAAU access to its facilities to facilitate an efficient exchange of resources and expertise.
According to the statement, the Director-General/Chief Executive Officer of NSIB, Captain Alex Badeh, who spoke at the ceremony held at the NSIB Training School, noted that the MoU sets the stage for facility sharing, capacity building, and collaboration between the Bureau and AAAU.
“I am confident that this MoU will enhance the effectiveness of our collaboration and commitment to promoting safer skies and operational excellence in the aviation industry in Nigeria and beyond”, Badeh said.
Registrar of AAAU, represented by the Director of Physical Planning and Works, Engineer Masud Aliyu Yerima, was also quoted in the statement, saying, “The journey of AAAU’s establishment and progress would have faced considerable challenges without NSIB’s generous support”.
He commended Badeh for his exemplary leadership and steadfast dedication in propelling NSIB to greater heights, and affirmed AAAU’s readiness to engage in mutually beneficial endeavours with NSIB.
“This partnership marks a significant milestone in fostering a culture of safety and excellence within Nigeria’s aviation sector, and both NSIB and AAAU are poised to leverage this synergy for the benefit of the industry and the nation at large.
“The African Aviation and Aerospace University, AAAU, is the first Pan-African university dedicated to aviation, aerospace, and environmental science.
“Addressing two critical needs within the continent’s industry, AAAU tackles the research and development gap in Africa’s aviation and aerospace sector while simultaneously cultivating a skilled workforce to propel it forward”, the statement added.
By: Corlins Walter
he commencement of flights operations on the London route by an indegenous Carrier, Air Peace Airline, and the recovery of the local currency have sparked fresh competition on international routes.
Air Peace, Nigeria’s outstanding indigenous airline, may face a prolonged market battle with many foreign airlines with decades of experience in the industry following its entrance on the Nigeria-London route.
Some of the industry’s experts say the airline required support from the government and a strategic approach to stay competitive.
Analysts have also stated that the strategic move has garnered high praise from stakeholders in the aviation sector, considering that Nigerians were paying exorbitant prices to travel from Nigeria to London, but that sustaining this momentum will require more than just offering low prices.
On March 31, 2024, the 11-year-old airline made a bold statement with its inaugural flight, using a Boeing 777 aircraft, offering a capacity of 274 seats and carrying 260 passengers from Lagos to London.
It sold its tickets for N1.2m, a price way lower than the rates offered by most foreign airline operators plying the same route.
Just two weeks after entering the market, Air Peace’s Chief Executive Officer, Allen Onyema, complained on Arise TV that foreign airlines were undercutting prices in an attempt to push Air Peace out of the market.
Onyema said, “We are aware that there are devilish conspiracies. All of a sudden, airlines are pricing below the cost. One airline is advertising $100 and the other $350. If you peel up your entire aircraft and carry people on the wings, it is not even enough to buy fuel.
“Why are they doing that? Their government is supporting them because Nigeria has been a cash cow for everybody. The idea is to take Air Peace out, and the moment they succeed in taking Air Peace out, Nigerians will pay 20 times over. It would happen, God forbid, if they were able to take Air Peace out”.
It was gathered that an economy ticket for a flight scheduled for April 29, 2024, from Lagos to London costs about N679,375 on Ethiopian Airlines, an operator with 75 years of experience.
Air Peace priced the same ticket at N1,090,750. The difference is that on Air Peace, it will be a 6-hour non-stop flight, while on Ethiopian Airlines, it will take 16 hours with one stopover.
Last Friday, Ethiopian Airlines reduced the price of its London ticket by 0.77 per cent to N1,628,660 from N1,641,249 two weeks ago.
In the same period, Air France’s price dropped to N1,687,824, nearly halving from last month’s N2,482,138.
On March 4, 2024, Lufthansa offered the Lagos-London route for N1,966,165. Qatar Airways provided the same ticket for N2,016,824, and KLM priced it at N2,448,740.
This continuous decline in air ticket prices was also driven by the strengthening of the naira against the US dollar and the payments of airlines’ trapped funds by the Central Bank of Nigeria.
Minister of Aviation and Aerospace Development, Festus Keyamo, had confirmed that the Federal Government, through the CBN, had cleared all the trapped funds (foreign exchange backlogs) to the tune of about $160m.
Beyond the ongoing price war, the Air Peace Chairman had also lamented the challenges with ground handling and space allocation at the London Gatwick Airport, adding that no airline has faced such obstacles before.
He noted, “On the inaugural flight out of London, 24 hours before departure, the management of Gatwick Airport moved us to another checking area instead of the designated one.
“The area they provided had a malfunctioning carousel, forcing us to manually transport luggage 50 meters away, causing delays”.
Users and business operators at the Port Harcourt International Airport, Omagwa, have decried the downward trend in flight operations at the airport.
Some of the users and operators told The Tide that flight operations at the airport, rather than go upward, have steadily been irregular, and diminishing steadily.
A regular air passenger of the airport, Simeon Echeonwu, in a chat with The Tide, said many airlines, both domestic and international operators, that usually operate at the Port Harcourt airport, have stopped operations, whereas others that are still operating are no longer very stable as before.
Echeonwu noted that airlines such as Aero Contractors, United Nigeria, and Green Africa airlines, now operate about one flight, twice a week, unlike before that they flew every day on Lagos and Abuja to Port Harcourt.
Also speaking, former Chairman of the FAAN Accredited Car Hires Association, Clifford Wahunoro, lamented that the down turn in Operations has affected the business of car hires.
“If you have noticed, I have not been regular at the airport for some time now, because business is no longer flowing at the airport as before. I will not fold my hands and be sitting down doing nothing, so I have to look for other things, so I come when I think there will be something.
“You can see that between 12noon and 1pm, after that segment of flights, when you have few flights arrival, many people will close for the day, and when you wait till evening, flight like Dana may come very late at night, and sometimes, it will not arrive, and by that time, many people will not like to book for commercial vehicle”, he said.
Meanwhile, a travel agent, who wished to be anoyimous, decried the rate at which the airport is going down in terms of flights operations, noting that Port Harcourt airport ought to be competing with the other major airports like Lagos and Abuja.
He queried if such was a calculated attempt to bring the airport to its kneel in terms of flight operations, while other major airports have steady flow of flight operations both for domestic and international.
TheTide observed a continuous distortions in flight movement at the airport. Some of the airlines, like Max air, which many passengers patronize, have completely stopped operations, and no new airline has been added.
Apart from the Air Peace Airline that has maintained some level of stability in operations, other few operators have been involved in either steady rescheduling of flights, cancellation and regular delay, resulting in poor and unpredictable flight movement, which affects or determine other businesses in the airport.
By: Corlins Walter
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