Effect Of Cashless Policy On The Nigerian Economy

1.2 Statement of the Problem

Monetary policy as a technique of economic management to bring about sustainable economic growth and development through cashless policy and banking introduced by the Central bank of Nigeria (CBN) is not fully operational due to high rate of illiteracy, in-adequate sensitization/education of the benefits of the cashless policy, and in-adequate logistics (such as the provision of internet connections in commercial areas, computers and Point on Sale (POS)

machines).

Apart from the physical challenges, economic data and indicators are not fully available and reliable. There is a great challenge in attempting to analyze the true impact of the cashless policy on the economy of Nigeria as only few monetary and macroeconomic indicators can be traced with relation to the subject matter. Several scholars have attempted to analyze the cashless system or e-banking. However, it becomes clear that few studies present a comprehensive evaluation of cash-less banking implications in developing countries. Most ignore its economic benefits of the equation while some do incomplete examination of its negative implications. This is often due to unreliable panel data for monetary and macroeconomic indicators. Although, this study focuses on Nigeria, it is difficult to translate cashless studies from one country to another. Even payments instruments that look similar across countries on the surface may be different due to historical and legal variations (Daniel et al, 2004).

Based on the foregoing, the questions the paper tends to raise are:

1.3 Research Questions

Based on the problem and the purpose of the study stated above, the following research questions have been drawn to guide the study: 

1. What is this cashless policy all about?

2. Why was it introduced in the first instance?

3. What are the effects of cashless policy on Nigeria economy?

4. What are the cashless banking channels?

5. What are the challenges of cashless policy?

6. What should be done to make cashless policy a worthy policy in Nigeria? These and more constitutes the main thrust of this project.

1.5 Statement of Hypothesis

1. Ho: Cashless policy has no significant impact on the reduction of inflation in Nigeria

Hi: Cashless policy has significant impact on the reduction of inflation in Nigeria.

2. Ho: Cashless policy has no significant impact on economic growth of Nigeria

Hi: Cashless policy has significant impact on the economic growth of Nigeria.

1.4 Objectives Of The Study

The main objective of the study is to examine the cashless policy and its effects on Nigeria economy and how it affects economic growth. Specific objectives of the study include:

1. To examine the impact of the cashless policy on economic growth of Nigeria.

2. To examine the reasons for introducing the cashless policy to Nigeria

3. To examine the effects of cashless policy on Nigeria economy

4. To examine the various cashless banking channels.

5. To examine the various challenges associated with the implementation of the cashless policy/banking.

6. To proffer suggestions on how cashless policy and other monetary policies can be managed for better contribution to the economic growth and development of Nigeria.

1.5 Significance Of The Study

The study will give various insights into the various implications the introduction of the cashless policy will have on the economy of Nigeria. Through examining various economic indicators such as the gross domestic product (GDP) and inflation, the study will examine and compare growth trends and changes to determine whether the cashless policy introduced by the CBN has a negative or positive effect on the economy of Nigeria.

Various challenges and prospects identified in the study will also enable various stakeholders to tackle these challenges effectively by making policies that will address them and boost the economy of Nigeria.

1.6 Scope Of The Study

In pursuance of the objective of the study; attention shall be focused on electronic banking among other electronic commerce implementation. In order to conduct an empirical investigation into the adoption of Electronic banking in Nigeria and will also examine the nature of electronic banking operations from the CBN bulletin from2010-2012.

1.8 Limitation Of The Study

The fact that this study was required to be carried out simultaneously alongside the other academic activities limits the researcher from rigorously carrying out the research. The researcher was also constraints with time which was too limited to allow for detailed and much more detailed research work. Finance was also part of the research constraints.

1.9 Historical Background of First Bank Nigeria PLC

First Bank of Nigeria Limited (?First Bank?), established in 1894, is the premier Bank in West Africa, Nigeria?s number one bank brand and the leading financial services solutions provider in Nigeria. The Bank was founded by Sir Alfred Jones, a shipping magnate from Liverpool, England. With its head office originally in Liverpool, the Bank commenced business on a modest scale in Lagos, Nigeria under the name, Bank of British West Africa (BBWA).

In 1912, the Bank acquired its first competitor, the Bank of Nigeria (previously called Anglo-African Bank) which was established in 1899 by the Royal Niger Company. In 1957, the Bank changed its name from Bank of British West Africa (BBWA) to Bank of West Africa (BWA). In 1966, following its merger with Standard Bank, UK, the Bank adopted the name Standard Bank of West Africa Limited and in 1969 it was incorporated locally as the Standard Bank of Nigeria Limited in line with the Companies Decree of 1968.

The long drawn transformation in the Nigerian financial services sector has distinguished First Bank as Nigeria?s strongest financial services group. This is arguably as a result of the Bank?s proactive and far-reaching transformation programme initiated ahead of the turn of the present century. First Bank was the first quoted company in Nigeria to achieve the feat of hitting the trillion naira mark in market capitalisation, the clearest evidence of the market?s estimation of its worth. In 2012, the First Bank Group adopted a holding company structure ? FBN Holdings Plc ? in recognition of the need to retain the diversity of the Bank?s businesses, to enable the provision of a full range of financial services needs to customers beyond commercial banking, to investment banking, insurance and other financial services.

The Commercial Banking group is led by First Bank, which has operations in 12 countries, with nine (9) subsidiary companies which provide a comprehensive range of retail and corporate financial services, including commercial banking operations, pension fund management, and mortgages, offering banking services to a rich network of both individual customers and businesses.

Other entities under First Bank include FBN Bank (UK) Ltd ? a fully licensed bank in the UK with offices in London and Paris; FBN Bank DRC ? a leading tier 2 bank headquartered in the Democratic Republic of Congo (DRC), acquired in 2011, the FBN Bank in The Gambia, Ghana, Guinea, Sierra Leone acquired in 2013, and Senegal acquired in 2014.

These recent acquisitions are major landmarks in First Bank?s plan for growing its sub-Saharan African footprint. Other subsidiaries include First Pension Custodian Ltd (First Pension), providing pension fund custody services, and FBN Mortgages, a primary mortgage institution.

The Bank also has a network of representative office in Beijing set up to capture trade-related businesses. The Nigerian banking business operates nationally and internationally, with active customer account base of virtually 10 million served through a large distribution network consisting of over 750 business locations, and more than 7.5 million cards in issue.

These diverse operations in the financial services industry, with widespread service outlets, ensure the foothold of First Bank as a foremost financial services provider in Nigeria, contributing enormously to the growth and development of the national economy and delighting its stakeholders.

Changes in the name of the Bank also occurred in 1979 and 1991 to First Bank of Nigeria Limited and First Bank of Nigeria Plc, respectively. In 2012, the Bank changed its name again to First Bank of Nigeria Limited as part of a restructuring resulting in FBN Holdings Plc (?FBN Holdings?), having detached its commercial business from other businesses in the First Bank Group, in compliance with new regulation by the Central Bank of Nigeria (CBN). First Bank had 1.3 million shareholders globally, was quoted on The Nigerian Stock Exchange (NSE), where it was one of the most capitalised companies and also had an unlisted Global Depository Receipt (GDR) programme, all of which were transferred to its Holding Company, FBN Holdings, in December 2012.

Building on of its solid foundation, the Bank has consistently broken new ground in the domestic financial sector for over a century and two decades. First Bank is present in the United Kingdom and France through its subsidiary, FBN Bank (UK) Limited with branches in London and Paris; and in Beijing with its Representative Offices there. In October 2011, the Bank acquired a new subsidiary, Banque International de Credit (BIC), one of the leading banks in the Democratic Republic of Congo. In November 2013, First Bank acquired ICB in The Gambia, Sierra-Leone, Ghana and Guinea, and in 2014, the Bank acquired ICB in Senegal. These were major landmarks in its plan for growing its sub-Saharan African footprint and all the African subsidiaries now bear the FBN Bank brand.

As the global operating environment evolves, First Bank has kept pace, responding to the dynamic needs of its customers, investors, regulators, host communities, employees and other stakeholders. Through a balanced approach to plan execution, First Bank has consolidated its industry leadership by maintaining trans-generational appeal. Thus, the Bank has continuously boosted its customer-base, which cuts across all segments in terms of size, structure and sectors.

Leveraging experience spanning over a century of dependable services, First Bank has continued to build relationships and alliances with key sectors of the economy that have served as strategic building blocks for the wellbeing, growth and development of the country. With its huge asset base and expansive branch network, as well as continuous re-invention, First Bank is Nigeria?s strongest banking franchise, maintaining market leadership on all fronts in the nation?s financial services industry.

1.10 Definition Of Terms

Access Products ? Products that allow consumers to access traditional payment instrument electronically, generally from remote locations.

ATM Card ? An ATM card (also known as a bank card, client card, key card, or cash card) is a payment card provided by a financial institution to its customers which enables the customer to use an automated teller machine (ATM) for transactions such as: deposits, cash withdrawals, obtaining account information, and other types of banking transactions, often through interbank networks.

Chip Card ? Also known as an integrated circuit (IC) Card. A card containing one or more computers chips or integrated circuits for identification, data storage or special purpose processing used to validate personal identification numbers, authorize purchases, verify account balances and store personal records.

Electronic Data Interchange (EDI) ? The transfer of information between organizations in machine readable form.

Electronic Money ? Monetary value measured in currency units stored in electronic form on an electronic device in the consumer?s possession. This electronic value can be purchased and held on the device until reduced through purchase or transfer.

Internet Banking- This is a product that enables the Bank leverage on the Internet Banking System Module in-built on the new Banking Application (BANKS) implemented by the Bank to serve the Internet Banking needs of the Bank?s customers.

Mobile Banking - This is a product that offers Customers of a Bank to access services as you go. Customer can make their transactions anywhere such as account balance, transaction enquiries, stop checks, and other customer?s service instructions, Balance Inquiry, Account Verification, Bill Payment, Electronic fund transfer, Account Balances, updates and history, Customer service via mobile, Transfer between accounts etc.

Payment System ? A financial system that establishes that means for transferring money between suppliers and of fund, usually by exchanging debits or Credits between financial institutions.

Point Of Sale (POS) Machine - A Point-of-Sale machine is the payment device that allows credit/debit cardholders make payments at sales/purchase outlets. It allowed customers to perform the following services Retail Payments, Cashless Payments, Cash Back Balance Inquiry, Airtime Vending, Loyalty Redemption, Printing mini statement etc. 

Smart Card ? A Card with a computer chip embedded, on which financial health, educational, and security information can be stored and processed.

Transaction Alert - Our customers carry out debit/credit transactions on their accounts and the need to keep track of these transactions prompted the creation of the alert system by the Bank to notify customers of those transactions. The alert system also serves as notification system to reach out to customers when necessary information need to be communicated.

Western Union Money Transfer (WUMT) - Western union Money transfer is a product that allowed people with relatives in Diaspora who may be remitting money home for family upkeep, Project financing, School fees etc. Nigerian Communities known for having their siblings gainfully employed in other parts of the world are idle markets for Western Union Money Transfer.