Perception Of Bank Customers On CBN’s Cashless Policy In Nigeria’

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Perception Of Bank Customers On CBN’s Cashless Policy In Nigeria’


The study was carried out on perception of bank customers on CBN’s cashless policy in Nigeria. The Central Bank of Nigeria (CBN) has been active in the inauguration of policies and schemes to foster the implementation of the cashless policy in Nigeria. However the current transition to cashless economy raises a lot of concerns with no substantial evidence yet to justify its implementation. This study was carried out in order to appraise the implementation of the cashless policy since its introduction into the Nigerian financial system in 2012 and also to examine the persistent challenges facing its implementation. In view of the above stated objective, primary data were collected with the aid of the questionnaire, which was randomly administered to 120 respondents selected from First Bank, Zenith Bank and United Bank for Africa. The banks were selected based on their total assets and the information collected covered the activities of the CBN and that of these banks towards implementation of the cashless policy from 2012 till date.The data collected were presented and analyzed with the aid of the Statistical Package for Social Sciences (SPSS) using descriptive statistics and one-sample t-test. The results led to the conclusion that despite the need to operate cashless transactions dominating the modern Nigerian economy, the cashless policy will have the desired impact only if a lot is done to ensure the implementation of an effective cashless system.

Chapter One


1.1 Background to the Study

The recent innovation of technology for financial transactions poses interesting questions for policy makers and financial institutions regarding the suitability of current institutional arrangements and availability of instruments to guarantee financial stability, efficiency, effectiveness of monetary policy and achievement of sustainable economic growth in Nigeria considering the perception of the populace (Ajayi and Ojo, 2006). Over the course of history, different forms of payment systems have been in existence. Initially, “trade by barter” was common. However, the problems of barter such as the double coincidence of wants necessitated the introduction of various forms of money. Nevertheless, pundits have been predicting the complete demise of study instruments and the emergence of potentially superior substitute for cash or monetary exchanges that is cashless society (Wikipedia 2011). Since Nigeria‘s Independence in 1960, there have been different governments, constitutional reforms, change in economic policies and banking reforms, mainly directed at enhancing social welfare and achieving developmental goals but there has been no substantial positive change in Nigeria‘s Human Development Indicators.

Banks are the linchpin of the economy of any country. They occupy central position in the country’s financial system and are essential agents in the development process (Adewoye, 2013). By intermediating between the surplus and deficit savings units within an economy, banks mobilize and facilitate efficient allocation of national savings, thereby increasing the quantum of investments and hence national output. In a developing economy such as Nigeria, financial sector development has been accompanied by structural and institutional changes and the sector generally has long been recognized to play a crucial role in the economic development of the nation.

Monetary Policy is the regulation of the money supply and interest rates by a Central Bank in order to control inflation and stabilize currency. The Central Bank of Nigeria (CBN) undertakes monetary policy in order to maintain Nigerian’s external reserve, safeguard the international value of the legal currency, promote and maintain monetary stability. Similarly, it acts as a sound and efficient financial system in Nigeria, as a banker and financial adviser to the Federal Government and as lender of last resort to the banks.

Consequently, in pursuance of its functions in compliance with the core mandate, the CBN as a result of change which is a constant factor, has engaged in series of reformations aimed at both making the financial system formidable and enhancing the overall economic performance of Nigeria so as to place it on the right path in tune with global trends. The payments system plays a very crucial role in any economy, being the channel through which financial resources flow from one segment of the economy to the other. Therefore, it represents the major foundation of the modern market economy. Essentially, there are three pivot al roles for the payments system namely; the Monetary Policy role, the financial stability role and the overall economic role (CBN, 2011).

1.2 Statement of the Problem

Most Less Developed Countries like Nigeria are on the transition from a pure cash economy to cashless one for developmental purposes. To reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach and to improve the effectiveness of monetary policy in managing inflation and driving Nigerian economic growth (CBN,2013). In addition, the cashless policy aims to curb some of the negative consequences associated with the high usage of physical cash in the economy, including: high cost of cash: high risk of using cash, high subsidy, informal economy and inefficiency & corruption (CBN, 2011).

Customers demand efficient, fast and convenient services. Customers want a Bank that will offer them services that will meet their particular needs (personalized Banking) and support their

Business goals for instance; businessmen want to travel without carryout cash for security reasons. They want to be able to check their balance online, find out if a cheque is cleared, transfer funds among accounts and even pay their bills online. However, this study is examining the perception of Bank customers on the CBN’s cashless policy in Nigeria.

1.3 Objectives of the Study

The following are the objectives of this study:

  1. To examine the perception of Bank customers on the CBN’s cashless policy in Nigeria.
  2. To examine the perception of bank customer on the reliability and effectiveness of the CBN’s cashless policy in Nigeria.
  3. To determine the advantages and disadvantages of the CBN’s cashless policy in Nigeria.

1.4 Research Questions

  1. What is the perception of Bank customers on the CBN’s cashless policy in Nigeria?
  2. What is the perception of bank customer on the reliability and effectiveness of the CBN’s cashless policy in Nigeria?
  3. What are the advantages and disadvantages of the CBN’s cashless policy in Nigeria?

1.6 Significance of the Study

The following are the significance of this study:

  1. Results of this study will educate the general public on the perception of bank customer on the CBN’s cashless policy in Nigeria.
  2. This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic

1.7 Scope / Limitations of the Study

This study will cover the attitude, views and opinion of bank customers on the effectiveness and general implementation of the CBN’s cashless policy in Nigeria.

Limitation Of Study
Financial constraint

Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint

The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary

5.1.1 Theoretical Findings
  1. The implementation of cashless policy is technically feasible in Nigeria provided that infrastructural challenges which might hamper the efficiency of the policy, such as epileptic power supply, non-availability of cash in the ATM and lack of information technology are dealt with.
  2. The cashless policy has numerous benefits in Nigeria since the result indicates that the policy will help fight corruption/money laundering, reduce the rate of carrying cash, and increase the convenience of business transactions.
  3. However, there are challenges associated with the implementation of a cashless policy in Nigeria, resulting from complexity and high prohibitive cost of implementation of policy, inadequate POS system, awareness level, inadequate security amongst many others.
5.1.2 Empirical Findings
  1. The study confirmed that the introduction of cashless policy has eased banking transactions in Nigeria.
  2. It was also established that the advent of cashless policy has made customers to hold less cash in hand.
  3. Banks activities and their income structure are continuously being influenced positively by the introduction of cashless policy.
  4. It was also noted that cashless policy enhances banks’ operational efficiency through swift and timely responses to customer’s demand.

5.2 Conclusion

One most significant contribution of the cashless policy in any economy is that it aidsthe reduction of the risk associated with carrying cash. The critical value of 1.9835. The null hypothesis (H0) is therefore rejected. Hence, cashless policy affects the liquidity position of customers development of an innovative cashless policy has the potential to transform economic activity into achieving developmental goals. From the analysis carried out, it appears much has already been done in creating awareness on the introduction of the cashless economy. The e-payment system is gaining prominence in Nigeria, to the extent that the era of cash payment is gradually fading away as the need to operate cashless transactions dominates the modern Nigerian economy.

It can also be concluded from the study that the cashless system will be helpful in the fight against corruption and money laundering. Therefore if an effective cashless banking system can be developed and the recommendation below carried out, cashless policy will have a desired impact on the Nigerian economy.

5.3 Recommendation

Based on the findings, the following measures on how to efficiently and effectively improve the cashless policy are recommended:

  1. Public enlightenment programs on the cashless system should be put in place by the CBN to foster conversance with the system before the introduction of the policy, since it affects every citizen.
  2. There should be strategic plans by the government to educate the illiterates to help them understand the necessities of the new move and how to function in a cashless economy.
  3. The government ought to ensure a conscious security to prevent online fraud, and to protect the fraud.

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