The Central Bank of Nigeria (CBN) has clarified that the implementation of charges on cash deposits and withdrawals in the six states where the cashless policy is in place will only affect five per cent of bank customers as about 95 per cent do transactions within the threshold.
The governor, Central Bank of Nigeria (CBN), Godwin Emefiele, stated this at the end of the 269th meeting of the Monetary Policy Committee (MPC) in Abuja.
During the week, the CBN said transactions would attract three per cent processing fees for withdrawals and two per cent processing fees for lodgments above N500, 000 for individual accounts while corporate accounts would attract five per cent processing fees for withdrawals and three per cent processing fee for lodgments above N3 million.
The charges would, however, only apply in Lagos, Ogun, Kano, Abia, Anambra, Rivers States and the Federal Capital Territory (FCT).
Emefiele said: “Close to 95 per cent cash deposited or withdrawn from banks fall within the threshold.”
The implication of this, according to Emefiele, was that a large number of bank customers would not be affected by the decision of the bank to promote cashless policy.
He said this would be 85 per cent in Lagos, 74 per cent in Abia and 68 per cent in the Federal Capital Territory (FCT), Abuja.
“This has shown that, contrary to claims by financial experts, the policy will not have negative impact on SMEs and other small businesses and also people in the rural areas when eventually the policy starts nationwide by March 2020,” Emefiele said.
The CBN governor said the committee expressed its support for the Federal Executive Council’s decision to increase Value Added Tax (VAT), saying it would reduce the budget deficit and government borrowing when implemented.
His words: “Committee noted that this was too little to close the gap in government financing and called on the government as a matter of urgency to adopt a big bank approach towards building fiscal buffers by freeing up redundant public assets through an efficient and effective privatisation process.
“This would raise significant revenue for the government and resuscitate the redundant assets to generate employment and contribute effectively to national economic growth.”
The committee also advised the National Assembly to “exercise restraint” from increasing budget oil benchmark since crude oil prices are projected to remain tight.
The Federal Government was also advised “to adopt other ways of funding its operations outside the banking sector” so that credit could be directed towards the private sector.
Emefiele added that the CBN would no longer provide foreign exchange for the importation of cassava and its by-products.
Some of the by-products that would be affected include starch and ethanol.
“Nigeria is the largest producer of cassava. If Nigeria is the world’s largest producer of cassava then we should not allow people to say they want to import starch or they want to import ethanol or they want to import sorbitol into Nigeria.
“We will prevent them from doing so with all our might,” Emefiele said.
At the last MPC meeting held in July, the CBN governor had announced the bank’s intention to restrict forex for the importation of milk.
“We believe that milk is one of those products that can be produced in Nigeria. Milk importation has been going on in Nigeria for over 60 years. If you Google West African Milk or Friesland Campina today, they say that they have been importing milk and that they have been in Nigeria for over 60 years,” he said at the time.
“Today, the import of milk annually stands at $1.2-$1.5 billion. That is a very high import product into the country. Given that it is a product that we are convinced can be produced in Nigeria.
“The reason some say that our cows are not producing much milk is that our cows roam around, they don’t have water to drink.”
Since 2016, the CBN had been restricting forex for the importation of items it said could be produced in the country.
After an initial list of 41 items was released, the CBN had updated the list with fertiliser, milk, textile and now cassava.
Meanwhile, the MPC at the end of the meeting voted that monetary policy rate, which measures interest rate, should remain at 13.5%.
This was the third consecutive time that the committee would retain the rates since March 2019 when the rates were reduced by 50 basis points.
The cash reserve ratio (CRR) was retained at 22.5%, liquidity ratio at 30% and asymmetric corridor at +200 -500 basis point.