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Examining Issues In CBN’s Cashless Policy

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Mixed reactions have continued to trail the cashless policy introduced by the Central Bank of Nigeria (CBN) in January 2012.
The implementation of the policy commenced in Lagos in 2012 but it was extended to the Federal Capital Territory (FCT), Rivers, Kano, Ogun, Anambra and Abia states in July 2013.
While some die-hard cynics describe the policy as just another economic jargon that may not be feasible, others say it will boost the country’s economic growth in line with global best practices.
The policy aims at reducing the amount of physical cash in circulation; thereby encouraging more electronic-based transactions in payment for goods and services
The policy, as enunciated by the CBN, entails “cash-based transactions and stipulates a cash handling charge on daily cash withdrawals or cash deposits that exceed N500,000 for individuals and N3,000,000 for corporate bodies.’’
The CBN Governor, Mallam Sanusi Lamido Sanusi, explained that the cashless economic policy was designed to “promote financial intermediation and financial inclusion, while minimising revenue leakages and eliminating incidence of robbery.
“It will also reduce the amount of cash payment and encourage electronic payment,’’ he added.
Sanusi said that the policy became imperative because the cost of cash   movement and associated risk of cash-driven economy to Nigeria’s financial system  was ever increasing.
“The policy on withdrawal allows individual customers to make a free cumulative withdrawal of N500, 000 daily across the counter and ATM. Withdrawal above the free limit will attract processing fee of three per cent for every N1, 000 above the limit.
“Corporate customers are allowed to make free cumulative withdrawal of N3,000,000 daily. Withdrawal above the free limit will attract a processing fee of five per cent for every N1,000 above the limit.
“The policy on lodgment allows individual customers to make a free cumulative lodgment of N500, 000 daily. Lodgment above the free limit will attract processing fee of two per cent for every N1, 000 above the limit.
“Corporate customers are allowed to make free cumulative lodgment of N3, 000,000 daily. Lodgment above the free limit will attract a processing fee of three per cent for every N1,000 above the limit,’’ he said.
Sanusi said that the appropriate mechanism for e-payment had been deployed to facilitate the smooth running of the scheme.
The CBN governor listed the mechanism as Point of Sale (POS) Terminals, Automated Teller Machine (ATM), Web, Mobile Phones, Internet Banking, among others.
The CBN Deputy Governor (Operations), Mr Tunde Lemo, said that all constraints to the smooth operation of the scheme were being addressed.
“We know there will be constraints; the constraints are there for us to see.
“Of course, we will solve all those complaints; now we know the areas that are well served, we know the areas that we need to deploy technology and we know where we just need to overlay services because we know the facilities are just there.
“Of course, that was why we deferred the payment of charges for three months, exactly the same thing we did last year, just to allow some adjustments so that in the next three months, it will be very comfortable using those channels.
“So, within the next six months, it might be convenient for us also to roll out to the entire country because we are quite aware that it is possible for people to arbitrage by moving cash around states that are very close to areas where we are implementing the cashless policy,’’ Lemo said.
However, the House of Representatives has advised the CBN to implement the cashless policy in phases.
The House also urged the apex bank to remove the charges or limits on daily cumulative withdrawals and deposits to encourage small businesses.
This resolution was sequel to the adoption of a motion moved by Rep. Yakubu Dogara (PDP-Bauchi) and 38 others.
Leading the debate, Dogara conceded that even though the policy could save costs in the financial sector, it did not, however, imply real sector growth.
He noted that the majority of retail and commercial payments were usually made in cash by a large percentage of the population who did not operate bank accounts.
The lawmaker also noted that the CBN had not achieved the needed 40 per cent expansion of ATMs.
“The financial infrastructure in Nigeria is grossly inadequate to meet the demands of a cashless society,” he said.
Besides, Dogara said that the people’s low literacy level and the absence of constant power supply would discourage most citizens from embracing the policy.
Contributing to the debate, Rep. Aisha Ahmed (PDP-Adamawa) said that Nigerians had been variously defrauded of millions of naira through electronic transactions.
Rep. Albert Sam-Tsokwa (PDP-Taraba), who supported the motion, lauded the policy but said that it was premature to introduce it in Nigeria.
He noted that most communities in the country lacked banking facilities that were designed to implement the policy.
Nevertheless, the President of Certified Board of Administrators of Nigeria (CBAN), Prof Samuel Dairo, said that the policy would impact positively on the national economy if well implemented.
He said that it would help to regulate the volume of cash transactions in the economy, adding, however, that the citizens ought to be properly enlightened about the policy.
Dairo noted that the pilot scheme, which started in Lagos State in 2012, had not been very successful due to poor public enlightenment, inadequate Point of Sales (POS) machines and poor network services, among others.
“The introduction of the cashless policy in 2012 is yet to have its full effect on the economy due to persistent network failure, inadequate POS machines and poor electricity supply.
“Ignorance on the part of most of the end users is also another major challenge. A lot of people are sceptical about the policy due to the perceived risks it could expose them to,’’ he added.
Such comments notwithstanding, some experts have commended the CBN for postponing the payment of charges to October, saying that the shift would give the CBN more room to create the needed infrastructure for the smooth implementation of the policy in designated states.
The President, Finance Houses Association of Nigeria (FHAN), Mr Samuel Durojaiye, said that the current test-run of the policy in Lagos had provided the needed platform for the evaluation of the feasibility of the cashless policy.
Senior Lecturer, Department of Economics, University of Lagos, Dr Tunde Adeoye, described the postponement as a healthy development, stressing that it would aid efforts to rectify perceptible lapses in the policy.
He, nonetheless, stressed that the poor power supply situation in the country, which made network connectivity some how difficult, was a major challenge facing the cashless policy.
“Lack of adequate power supply is another impediment to the success of the policy and government must be proactive in tackling the problem,” he said.
All the same, Adeoye advised the CBN to step up a nationwide awareness campaign on the policy, so as to educate the citizenry on the workings of automated transactions.
He noted that lack of confidence in the financial system, coupled with the losses which many Nigerians incurred in the capital market, had impacted negatively on the acceptability of the policy.
“The ability of CBN to restore the people’s confidence in the banking sector and the commencement of a sustainable rural banking system will also enhance the policy,’’ Adeoye said.
All in all, policy analysts want the CBN to embark on aggressive public enlightenment campaigns to educate the people about the workings and gains of the cashless policy.
They note that the cashless policy  is already working in several countries across the world, adding that Nigeria should not be an exception.
The analysts, nonetheless, underscore the need to put in place the necessary infrastructure that would facilitate the smooth implementation of the policy.
Okoronkwo writes for NAN

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Paper Industry’s Economic Contribution Hits N398bn

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The contribution of the paper industry rose to N398.8billion in 2023 from N356billion it recorded in 2022.
Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Musa Yusuf, disclosed this in a report released to mark the inauguration of World Envelopes Day in Lagos.
Marking the event, which also commemorated the 50th anniversary of envelope manufacturing firm, FAE Limited, Yusuf stated that the paper industry has a profound economic impact across all sectors of the economy.
He, however, noted that the growth in digital technology had greatly disrupted the sector, especially as a mode of communication.
“As of 2023, the value of the Nigerian paper industry was N398.8billion naira, according to the National Bureau of Statistics.
“The value was N365bn in 2022; N363 billion in 2021; and N255billion in 2020. This is a significant contribution to our GDP. However, when compared to the size of our economy, which is estimated at N230trillion as of 2023, it is still very small”,  the CPPE boss stated.
Yusuf said the paper industry had been largely in recession because of the digital technology disruptions and other macroeconomic headwinds, especially relating to exchange rate depreciation, forex liquidity crisis and high cost of fund and energy cost escalation.
He emphasised that the paper industry had a profound economic impact across all sectors of the economy, which underscored the need for government intervention in the sector.
In her opening remarks, the Managing Director of FAE Limited, Funlayo Bakare, described World Envelopes Day as the brainchild of the company, which sought to set aside April 16 as a day to celebrate the fundamental role envelopes play in daily communication.
“As we celebrate our golden jubilee, we are delighted to announce the inauguration of World Envelopes Day, to be celebrated annually on the 16th day of April.
“This is a pioneering initiative by FAE Ltd in accordance with our leadership position in the sector.
“The establishment of World Envelopes Day is to raise awareness about the importance of envelopes in various aspects of human endeavour, including personal correspondence, business transactions, and creative expressions”, she said.
The Publisher of The Guardian Newspaper, Maiden Ibru, who chaired the occasion, stressed the need to strike a balance between digitalisation and physical paper production, especially due to the indispensable role paper plays in cultural preservation.
Nigeria once had three paper mills: the Nigeria Paper Mill Limited, located in Jebba, Kwara State; the Nigerian Newsprint Manufacturing Company Limited, Oku-Iboku, Akwa Ibom State; and the Nigerian National Paper Manufacturing Company Limited in Ogun State.
The mills are no longer operational, and the country has had to depend on importation to make up for the shortfall.
The Asset Management Company of Nigeria has taken over the management of NNMC over unpaid debts.

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Aviation Union Threatens Strike Over Revenue Deduction

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The Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) has said it would embark on industrial action if the Federal Government refuses to exempt aviation agencies from a directive that seeks to deduct 50 per cent from their Internally Generated Revenue (IGR).
ATSSSAN disclosed this in a communique issued by its National Executive Council (NEC) after its National Economic Council meeting in Ibadan, Oyo State.
The NEC, which had in attendance all 17 affiliates of ATSSSAN comprising all branch Chairmen, Secretaries, and national officers, reiterated calls for the exemption of the aviation agencies from the deduction of 50 per cent  of their IGR under the Fiscal Responsibility Act.
The association said the agencies were not established for profit, hence stifling them of the required funds would jeopardise the effective performance of their safety and security mandates.
ATSSSAN warned that if the Federal Government insist on the deduction, it would compound the current financial state of the agencies, and “we may be forced to direct all aviation workers to down tools until the government reverses itself”.
Last year, the Federal Government directed the Office of the Accountant General of the Federation to immediately commence the presidential directives on a 50 per cent automatic deduction from the IGR of Federal Government-owned enterprises.
The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, had issued a circular titled, “Re: Implementation of the Presidential Directives on 50 per cent Automatic Deduction from Internally Generated Revenue of Federal Government Owned Enterprises (FGOEs)”.
According to the circular, all partially-funded Federal Government agencies and parastatals (receiving capital or overhead allocation from the Federal Government’s budget) should remit 50 per cent of their gross IGR, while all statutory revenues, like tender fees, contractor’s registration, and sales of government assets, among others, should be remitted 100 per cent to the sub-recurrent account.
ATSSSAN stated its apprehension over what it perceives as deliberate efforts by certain private airlines to stop their employees from forming labour unions.
Citing Section 40 of the Nigerian Constitution and international labor norms, the association contends that such actions constitute a violation of workers rights.
The statement, however, did not specify the airline operators suppressing workers from joining unions.
Part of the statement read, “The NEC-in-session calls on all employers in the private sector in the aviation industry to respect collective bargaining agreements in order to avert industrial crises at the workplace.
“NEC-in-session was seriously disturbed by the continuous willful acts by some private airlines towards frustrating the unionization of their employees, contrary to the letters and spirit of Section 40 of the Constitution of the Federal Republic of Nigeria and relevant international conventions and laws”.
The association, therefore, called upon the Federal Ministry of Labour and Employment to uphold and enforce employees’ rights to unionise within the aviation industry.
It urged the Minister of Aviation and Aerospace Development, Festus Keyamo, to orchestrate a dialogue involving all relevant stakeholders, including the non-compliant airlines and labour unions, under the auspices of the Labor Ministry.
At the meeting, other issues affecting workers, especially members’ welfare and working conditions, and the aviation industry at large were discussed, and positions and resolutions were taken.
The aviation group decried what it perceive as a dearth of avenues for career progression within government-owned aviation entities.

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NCDMB Rakes In $1m Return On NEDOGAS Investment

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Management of the Nigerian Content Development and Monitoring Board (NCDMB) says it has received a cheque of $1 million from Nedogas Development Company Limited (NDCL).
A statement made available to newsmen by the Directorate of Corporate Communications and Zonal Coordination of the Board said the sum received was part of the return on investment (ROI) on one of its strategic investments.
The statement added that: “The cheque was presented by the Chairman of the company, Engr. Emeka Ene, when he visited the Nigerian Content Tower in Yenagoa, Bayelsa State, where he was received by the NCDMB’s Executive Secretary, Engr. Felix Omatsola Ogbe, and other members of the Board’s management.
“Nedogas Development Company Limited (NDCL) is a joint venture company between Xenergi Limited and NCDMB Capacity Development Intervention Company.
“As part of the project, Nedogas NDCL constructed and commissioned a 300 MMscfd Capacity Kwale Gas Gathering (KGG) and injection facility located in the Umusam Community, near Kwale in Delta State, Niger Delta, Nigeria.
“The KGG Facility was designed to handle stranded gas resources in Nigeria’s OML56 oil province by providing the opportunity for independent operators in the area to monetize natural gas from their fields through the gas gathering, compression, injection and metering infrastructure of the KGG for quick market access.
“Nedogas is one of the several strategic and successful investments of the NCDMB funded from the Nigerian Content Development Fund (NCDF), in line with the Board’s mandate to build capacity and catalyze local projects in the Nigerian oil and gas industry as enshrined under the Nigeran Oil and Gas Industry Content Development (NOGICD) Act”.
In his remarks, according to the statement, the NCDMB Executive Secretary stated that the success story of NEDOGAS at Kwale, Delta State, could be replicated in other oil and gas producing communities to minimise gas flaring, saying that Ogbe also declared the Board’s readiness to continue collaborating with the company.
“Their model should be extended to other parts of the country where gas flaring is continuing.They have shown that with the modular system, we can quickly remove flaring from our operations in Nigeria.
“The NCDMB had continued to receive briefings from its investment partners. We’re still waiting for them to come back with success stories. Some of them are near completion and have not started operations yet”, the NCDMB’s Executive Secretary said.
In his remarks, Chairman of NEDOGAS, Mr. Emeka Ene, conveyed the company’s excitement in returning part of the credit and profit, adding that it was a proof that the NCDMB’s investment was a success and they are getting back that investment, adding that the firm looks forward to further collaboration with the NCDMB to expand its scope.
Responding, the NCDMB boss said the Board was now doing effectively and practically and tangibly what it was set up for, saying its mandate was to impact the economy by direct interventions.
“That’s the way the economy can grow, improve the gas infrastructure in such a way that’s sustainable despite the tight economic conditions”, he said.
He added that, “the  value propositions of the Nedogas project include total eradication of flared gas and conversation of environmental pollutants into products of value and creation of a strategic gas gathering hub and injection node for quick access to market for gas owners to monetize gas”.
Other benefits, according to Ogbe, include the provision of alternative gas supply to western flank of the OB3 line to add to the volumes of economic sustainability and increase in Nigeria’s Gross Domestic Product (GDP).
“The partnership with NEDOGAS is one of NCDMB’s 15 strategic investments geared towards actualizing the Federal Government’s aspirations in key areas of the oil and gas industry.
“Most of the projects were targeted at actualizing the Federal Government’s Decade of Gas programme.
“Some of NCDMB’s notable third-party investments include Waltermith’s 5000 barrels per day (bpd) modular refinery in Imo State, Azikel Group12,000 bpd hydro-skimming modular refinery in Gbarain, Bayelsa State, and Duport Midstream’s 2,500bpd modular refinery in Edo State.
“Other investments of the Board include Better Gas Energy for LPG terminal and gas distribution, partnership with Rungas Prime Industries Limited to establish a cooking gas cylinders manufacturing plant in Polaku, Bayelsa State, and Alaro City in Lagos and the partnership with Butane Energy to deepen LPG utilization in the North”, he stated.
The Executive Secretary also noted that there was the partnership with BUNORR Integrated Energy Limited in Port Harcourt, Rivers State, to produce 48,000 litres of base oil per day and partnership with the Nigerian National Petroleum Corporation (NNPC) Limited, Brass Fertilizer and Petrochemical Company Limited, and DSV Engineering to establish a 10,000 Ton Methanol Production Plant, Odioama, in the Brass Local Government Area of Bayelsa State.

By: Ariwera Ibibo-Howells, Yenagoa

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