The Impact of Cashless Policy on Mobile Money and Agency Banking in Nigeria
Chapter One
Objective of the study
The objective of the study on the impact of cashless policy on mobile money and agency banking in Nigeria is to:
- Assess the extent to which cashless policies, particularly initiatives like the Central Bank of Nigeria’s Cashless Policy, have influenced the adoption, usage patterns, and growth trajectories of mobile money services and agency banking in Nigeria.
- Investigate the readiness of infrastructure and technology to support cashless transactions, identifying challenges and opportunities related to network connectivity, availability of point-of-sale terminals, digital literacy, and other technological factors, especially in rural and underserved areas.
- Understand the regulatory environment governing mobile money and agency banking.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
CONCEPTUAL REVIEW
A cashless economy is a society, community, and state where no one utilizes cash, all payments being made are by cheques, credit cards, charge cards, or movement of money from one bank account to another through mobile banking. The cashless policy was intended at restricting various adverse consequences associated with the utilization of physical currency in the economy, including the immense expense of cash, increase risk of using cash, theft, as well as extortion of money. A cashless economy is a financial system where business can be carried out without necessarily using physical cash as a means of exchange of transactions but instead with the use of credit or debit card for payment of goods and services. The cashless economy policy program of the Central Bank of Nigeria (CBN) is a move to foster the financial terrain but in the long-term sustainability of the policy will be a function of adoption and compliance by end-users. The cashless economy anticipated here points to the comprehensive use of computer technology in the financial system. The cashless policy introduced by The CBN in 2012 kicked off with the commencement of the mobile payment, Nigeria is only keying into a swift-developing global payment framework. The mobile money structure is a technology-driven payment system that will open up several other business opportunities in the economy. The mobile money payment system allows clients to make payments with their GSM phones, and other gadgets etc. It is a transfer and savings system that changes GSM phones into a savings account platform, permitting the owner to accumulate money in it and from which withdrawals or transfers could be done. Under the payment system, users could do their normal basic financial transactions daily by making payments for goods and services or by engaging in person-to-person transfers directly on their GSM phones. There are various components of cashless policy in Nigeria. Woleola observed that the most involved cashless payment in the banking system is automated teller machine (ATM), point of sale (POS), internet banking, mobile banking, etc.
THE POLICY
It is estimated that approximately 65 percent of the cash in circulation in Nigeria is outside the banking system, severely limiting the price and economic stability effect of the CBN’s efforts. (CBN, 2011). As a result of saving, the amount of money available to banks for the creation of new money is reduced. As a result, the large scale of this informal sector has an impact on the viability of banks, which is heavily reliant on the volume of capital available for lending (Alagh & Ene, 2014). Among other things, this situation prompted the Nigerian Central Bank, in collaboration with the Bankers Committee, to implement the cashless policy, which was designed to provide mobile payment services aimed at breaking down traditional barriers to commerce to the financial inclusion of millions of Nigerians, as well as the protection and provision of convenient financial services throughout the country’s metropolitan, semi-urban, and rural areas. The CBN cash policy, effective March 30, 2012, established a regular combined cap of N150,000 and N1,000,000 for automatic cash withdrawing and lodging by persons and business customers in Lagos State, respectively. Persons and private organizations that make cash purchases in excess of the cap would be charged a processing fee. Furthermore, as of January 1, 2012, third-party cheques in excess of N150,000 will not be redeemable over the counter. All Nigerian banks were expected to discontinue cash-in-transit merchant-customer lodging services on January 1, 2012. According to the Central Bank of Nigeria (CBN, 2011), Lagos state was chosen as the first port of call for implementation because it accounted for 85% of POS and 66% of cheque transactions in Nigeria (Muotolu & Nwadialor, 2019). Cashless banking channels Below are some electronic payment channels in Nigeria: · ATM · POS Terminals · NIP · NIBSS (Nigerian Interbank Settlement Scheme) · NEFT (Nigeria Electronic Fund Transfer · Internet (WEB) · Mobile Money.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the impact of cashless policy on mobile money and agency banking in Nigeria. UBA, Ibadan form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of cashless policy on mobile money and agency banking in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the impact of cashless policy on mobile money and agency banking in Nigeria
Summary
This study was on the impact of cashless policy on mobile money and agency banking in Nigeria. Three objectives were raised which included: Assess the extent to which cashless policies, particularly initiatives like the Central Bank of Nigeria’s Cashless Policy, have influenced the adoption, usage patterns, and growth trajectories of mobile money services and agency banking in Nigeria, investigate the readiness of infrastructure and technology to support cashless transactions, identifying challenges and opportunities related to network connectivity, availability of point-of-sale terminals, digital literacy, and other technological factors, especially in rural and underserved areas and Understand the regulatory environment governing mobile money and agency banking. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from UBA, Ibadan. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
In conclusion, the impact of cashless policy on mobile money and agency banking in Nigeria has been substantial, with positive trends observed in adoption, infrastructure development, regulatory environment, financial inclusion, and socioeconomic impact. By addressing remaining challenges and implementing targeted interventions, Nigeria can further leverage digital financial services to drive inclusive economic growth and development.
Recommendation
Based on the findings of this study, the following recommendations are proposed to further enhance the impact of cashless policies on mobile money and agency banking in Nigeria:
- Government and private sector stakeholders should prioritize investment in infrastructure, including telecommunications networks, internet connectivity, and point-of-sale terminals, especially in rural and underserved areas. This will expand access to digital financial services and support the growth of mobile money and agency banking networks.
- Regulators should review and update existing regulatory frameworks to accommodate the evolving landscape of digital financial services. This includes promoting interoperability, ensuring data security and privacy, and fostering an enabling environment for innovation and competition among service providers.
- Efforts should be made to enhance digital literacy and financial education among consumers, agents, and other stakeholders. Capacity-building programs and awareness campaigns can help improve understanding of mobile money and agency banking services, promote trust and confidence in digital transactions, and address barriers to adoption.
References
- Alalade, T. & Yomi, O. (2018). The Impact of Cashless Policy on the Nigerian Economic Development. International Journal of Advanced Research in Management and Social Sciences, 7(12), 170-184.
- Central Bank of Nigeria. (2019). Financial Inclusion Strategy: 2018 – 2020. Retrieved from https://www.cbn.gov.ng/Out/2019/FCMB%20Financial%20Inclusion%20Strategy%20Document%202018%20-%202020.pdf
- Olaifa, A. (2014). Effects of Cashless Policy on the Operations of Mobile Money Operators in Nigeria. International Journal of Scientific & Engineering Research, 5(12), 586-595.
- Adediran, I. (2017). The Role of Cashless Policy in the Development of the Nigerian Economy. IOSR Journal of Economics and Finance, 8(3), 20-27.
- Abaenewe, Z.C., Ogbulu, O.M. and Ndugba, M.O. (2013), Electronic Banking and Bank Performance in Nigeria. West African Journal of Industrial and academic research, 6(1), 171-187. Retrieved from: https://www.ajol.info/index.php/wajiar/article/view/87447 [2]
- Achugamonu, B.U, Taiwo, J.N, Ikpefan, O.A., Olurinola, I.O., Emena, O.U. (2016). Agent banking and Financial Inclusion: The Nigerian experience, Proceedings of the 28thInternational Information Management Association Conference-Vision 2020: Innovation Management, Development Sustainability, and Competitive Economic Growth pp. 4418-4430. Retrieved from: http://eprints.covenantuniversity.edu.ng/8356/1/IBIMA%20Conference%20Papaer%20Ag ent%20Banking%20CU%20Repository%201.pdf [3]
