Dolapo is a management consultant cutting his teeth in the research division. He sleeps, eats and drinks about financial inclusion in Africa.

Selected articles by Dolapo

Dissecting Nigeria’s Cashless Policy

By Dolapo. Posted in Financial Markets & Economics on 3 Feb 2013.

In July 2012, First Bank of Nigeria, the country’s third largest bank, inaugurated cardless ATM services. This latest innovative move by one of Nigeria’s big banks followed widespread banking reforms in 2009 and several attempts at achieving financial inclusion for the country’s unbanked population. One of the most significant attempts came on the 28th of April 2011 when the Central Bank of Nigeria (CBN) announced its intention to implement a cashless policy for the whole Nigerian economy, starting with a pilot in Lagos. The primary element of this policy is the limit of withdrawals and deposits of physical cash for individuals and corporations, with daily free withdrawal limits of N500 000 ($3 180) and N3 000 000 ($19 080) respectively. These limits apply regardless of which channels (e.g. over the counter, ATM, 3rd party checks, etc.) are used (Central Bank of Nigeria n.d.).

However, despite the international fanfare with which this policy was announced, several issues have surfaced in its pilot that requires thoughtful resolutions before rolling out nationally.

Undoubtedly, the adoption of this policy is expected to drive the development and modernization of Nigeria’s payment system in line with the country’s 2020 vision of being among the top 20 economies in the world by the 2020. The policy aims to reduce the high usage of cash, moderate the cost of cash management and encourage the use of electronic payment channels. It seeks to improve the effectiveness of monetary policy in managing inflation and driving economic growth, which will prove to be a key enabler for economic growth and development (Central Bank of Nigeria n.d.).

The enormous negative effects of a high usage of physical cash have been widely researched and documented. Some of these negative consequences include: cash related crimes and robberies; increasingly high costs of cash exchanging hands; and enabling corruption and money laundering. On the other hand, economies that have adopted cashless policies as part of their payment system strategy have also reaped significant benefits from its adoption. These benefits include: increased convenience and cheaper access to credit for consumers; reduced revenue leakage and reduced cash handling costs for corporations; and increased tax collections and greater financial inclusion for governments (Central Bank of Nigeria n.d.).

The primarily informal nature of Nigeria’s economy, however, requires a heavy reliance on cash transactions in both the retail and commercial sectors. At the end of 2011, cash transactions represented an estimated 85% of all transactions made via banks, ATM or over the counter (Ovat 2012). While this provides a strong impetus for a cashless policy, it also highlights some of the major implications and potential challenges to effecting change on a massive scale. For Nigeria’s cashless policy to be implemented and adopted successfully, this author believes three key implications must be addressed. These include infrastructure developments, investments in technology and the availability and reliability of data. Without these critical elements the policy is likely to fall short of its stated objectives:

  • The current state of infrastructure in the country will make it difficult for the country to implement this policy on the desired scale. The Automated Teller Machine (ATM) was introduced to the country less than a decade ago and consumers frequently complain of regular malfunctioning. The irregularity of power supply also gives way to the sense of doubt in the optimal operation of this required technology.
  • The government in its catalytic role will need to invest in various forms of technology (e.g. anti-hacking technology) that are not yet used in the country, thereby requiring significant investments into infrastructure and IT development.
  • There is a need for reliable data for all users; adequate and reliable identification of users is necessary for security reasons. The CBN will need to collaborate with the relevant stakeholders to collect such data.


Nigeria has clearly made significant improvements in its monetary and fiscal landscape over the last few years. However, critics and proponents alike recognize that these improvements have not adequately transformed the economy into an inclusive one (Lecture by Sanusi on Banking Reform and its Impact on the Nigerian Economy on 17 February 2012). The newly implemented cashless policy seeks to do just that. Nonetheless, to make these improvements successful and sustainable, the CBN will need to address infrastructure, IT, security and power issues simultaneously. Perhaps the announcement in January 2013 of the delay in rolling out this policy across the nation is proof that these challenges have yet to be resolved.


Central Bank of Nigeria, n.d., Further Clarifications on Cash-less Lagos Project, viewed 3 February 2013, from

Ehidiamen, J., 2011, ‘Nigerians Debate Pros and Cons of New Cashless Policy’, in African Outlook Online, viewed 5 February 2012, from

Ovat, O., 2012, ‘The Central Bank of Nigeria’s Cashless Policy in Nigeria: Benefits and Challenges’, Journal of Economics and Sustainable Development, 3(14), 128-134.

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