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Cashless Policy: Strict Implementation Starts April – CBN

Barring any last minute change, the cashless policy of the Central Bank of Nigeria (CBN) is expected to go nationwide next April, with the implementation staggered for four month.

In a circular on the nationwide implementation of the policy sent to all the commercial banks on Thursday by the Director of Banking and Payments System Department of the CBN, Mr. Dipo Fatokun, the apex bank explained that the move was part of decisions reached at the last Bankers’ Committee meeting.

Fatokun said that the implementation of the policy would start in April with some selected states.It would continue in May, August and October with other states.

The circular read in part: “Please be informed that the Bankers’ Committee at the 493rdrd meeting held on February 8, 2017, reviewed the cashless policy charges on withdrawal and deposit and decided that the policy be extended to the remaining30 states of the federation.

“For the avoidance of doubt, the following decisions were taken at the meeting: Charges on deposits be reintroduced. Charges on deposits and withdrawals were reviewed and the new rates are indicated as follows:

As for individual, no charges on deposit and withdrawals that is less than N500,000.But N500,000 to N1million will attracts 1.5 per cent charge on deposit and 2 per cent on withdrawals. Above N1million to N5million attracts 2 per cent on deposit and and 3 per cent on withdrawals, while those who deposit or withdraw amount that is above N5 million would be charged 3 per cent on deposit and 7.5 per cent on withdrawal.

As for corporate bodies, there would be no charges on either the deposit or withdrawal of any amount less than N3million.But from that amount up to N10million carry 2 per cent charge on deposit and 5 per cent on  withdrawals.Any amount above N10 million to N40million, such corporate customer will be charged 3 per cent on deposit and 7.5 per cent on withdrawals.But above N40 million, 5 per cent will be charged on deposit and 10 per cent on withdrawals.”

The new charges would take effect from April 1, 2017 in the existing cashless states of Lagos, Ogun, Kano, Abia, Anambra, Rivers and FCT

The policy shall be implemented with the charges taking effect on May 1, 2017 in the following states:Bauch, Bayelsa, Delta,. Enugu, Gombe,Imo, Kaduna, Ondo, Osun and Plateau.

The policy shall be implemented with the charges taking effect on August 1, 2017 in Edo, Katsina, Jigawa,Niger, Oyo, Adamawa, Akwa Ibom, Ebonyi,m Taraba and Nasarawa.

“The policy shall be implemented with the charges on October1, 2017 in Borno, Benue, Ekiti, Cross River, Kebbi, Kogi, Kwara, Yobe, Sokoto and Zamfara.

The income generated from the processing fees charged above the allowable cash transaction limits shall be shared between the CBN and the banks in the ratio of 40 to 60. “Existing exemptions remain sustained

One thought on “Cashless Policy: Strict Implementation Starts April – CBN

  1. The Organisation of Petroleum Exporting Countries, OPEC a fortnight ago
    got producers to cut production from January 1, 2017 to shore up the price of crude in the international market.

    OPEC and non-OPEC producers again last Saturday reached a deal to jointly have an oil freeze
    to ease the global glutted market since July 2014. Nigeria was exempted from production cuts to make up for lost grounds occasioned by militancy in the Niger Delta since February 2016.

    The decision ordinarily would herald glad tidings for Nigeria but the continual catch of the hurry
    sickness is in the offing. Nigerians have seen the intended OPEC
    production freeze for hooray. The same crude perceived to be a boon to state coffers to
    aid budget implementation is again on cue for imported
    petroleum products price increases at the pump.
    We know that prices of imported products are determined by the
    vagaries of crude oil in the international market

    Another mulish approach to what was christened deregulation for imported products on May 11, 2016
    would follow soon. In August 2015, then Group Managing Director of the NNPC and now Minister of State
    for Petroleum Resources, Dr. Ibe Kachikwu told Nigerians that
    fuel subsidy was an unsustainable drain on the economy, calling for the deregulation of the oil and gas sector.

    According to Kachikwu, deregulation will provide a fair deal for Nigerians from abundant petroleum resources,
    through fair product prices for consumers, full cost recovery, and
    reasonable margins for operators. To him, implementation of the policy will entrench efficiency
    in product usage, product availability and effective
    competition among investors, hence ending product shortage.

    He sounded like Thomas More’s 1516 philosophical treatise of utopia.
    Some of us were not persuaded by the December 2015 full deregulation of the downstream sector by introducing the price modulation would solve the problem because we knew that with no refining capacity it was a riddling possibility.
    We knew that a substantial part of whatever we derive from low
    crude price would be ploughed to the importation of refined
    products and petroleum-base raw materials.

    Deregulation proponents erroneously implied allowing market forces to determine the price even when Nigeria was importing petroleum products.
    The implication was that with gutted crude market we paid more
    and now with high cost of crude if OPEC and non-OPEC,
    NOPEC agreements stand we are likely to pay more for
    imported products. The principle of giving Nigerians petroleum products which they need at the least possible costs with local
    refining would evade us.

    In the deregulation package, Kachikwu-led NNPC took out
    import subsidy on May 11, 2016, with an increase of premium motor
    spirit, PMS by 68.60 percent from N87 to N145. This posed a serious challenge to the Nigerian monetary authorities because of the inflationary tendencies it generated.
    The monetary authorities also compounded the people’s woes in June 2016 by devaluing the Naira in a
    floated, flexible exchange rate by about 70 percent.
    Again the incongruous interaction between the monetary and fiscal authorities gave
    the economy out to recession by the third quarter, Q3 2016 and teetering along
    the path of depression.

    IMF study is that global trade is dominated by the export of goods that sold better after a cut in exchange rate.
    IMF proposition is that a 10 percent cut in the value of a nation’s currency can boost exports by an average 1.5 percent of GDP;
    a benefit in exchange rate for foreign trade. And here we are exporting only one primary commodity (crude oil) and devaluing our currency by about
    70 percent in one fell swoop.

    The sermon from preacher men Federal Ministers was diversification which
    indeed became a sing along for them. With
    no refining capacity, reliance on crude exports that went
    haywire and petroleum products imports Nigeria was
    in for it. What we called downstream deregulation would have made better sense if
    only there are adequate structures including local refining
    capacity. The vulnerable Nigerian continued
    to groan under high pump price of imported petroleum products
    in a free falling and devalued Naira.

    Downstream deregulation with intention for the private sector to come in has hit a brick wall with the
    NNPC being the sole importer of petroleum products. Deregulation argument that the Federal
    Government would free itself from foreign exchange problem when marketers source
    their foreign exchange to import products is worn out as the
    Minister has reregulated the downstream by importing products.
    That we are part of OPEC and NOPEC that came together
    to cut production to shore up price reaffirms that deregulation is not cast in stone.

    Deregulation proponents cite the United States; the U.S.
    allows private citizens to own mineral rights. It is
    only on federal land does the federal government directly own the oil under the ground.
    If the government doesn’t own the oil, and doesn’t grant itself a
    monopoly, a national oil company has no inherent market advantage – it must buy drilling
    rights from landowners like anyone else. Even at that petroleum in the
    United States is still a regulated commodity with petroleum super majors enjoying production subsidies with tax rate way below the standard 35 percent.

    Section 43(3) of the Federal Government of Nigeria Constitution states that: ‘’the
    entire property in and control of all minerals, mineral oils and natural gas in, under or
    upon any land in Nigeria or in under or the
    territorial waters and exclusive economic zone of Nigeria
    shall vest in the Government of the Federation and shall be managed in such a manner as may be
    prescribed by the National Assembly.” The constitution is clear about state ownership.

    Another flier is privatisation, often with deregulation forming a pair. Experts say they do not necessarily translate to improved efficiency let alone investments in infrastructure. In Europe the wholesale privatisation in the 80s and 90s of state owned enterprises are now being bought back by governments and metropolitan districts. Nigeria’s power projects that have been privatised or deregulated are still under government intensive care units, ICUs with government technically funding them and also getting blackmails that unless consumers pay more tariffs, the sector will collapse.

    Is our deregulation for foreigners to explore, produce, export crude for the state to share proceeds monthly? Nigeria at the best of times has 90 percent of its operations in the hands of international oil companies, IOCs as joint venture partners. Our little contribution to production from the Nigerian Petroleum Development Company, NPDC the NNPC subsidiary has been tangled in the web of controversy and miry corruption allegations.

    Who is our saviour from the headaches of the petroleum problem child? The beat goes on ad infinitum with deregulation blitz with encores from the United States, North West Europe, Middle East, China, India and an anchor in Dangote refinery started this year to come on stream in 2018.

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