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Cooling-off period; bank loan


The Central Bank of Nigeria (CBN) penalizes DMBs and other financial institutions that attempt to circumvent its tacit approach to regulate Nigerian’s ingenuity in the face of its cash rationing and cash withdrawal limit (revised cash withdrawal limit).

As Nigerians struggle to adapt to extreme inflation and unemployment or unemployability, the CBN adopts a stiffer regulation instead of a free market approach.

Stiffer regulation appears consistent with the Federal Government’s implicitly socialist approach.

Capitalism is compatible with the Nigerian spirit – predominate attitude of its majority. The Federal Government or the incoming administration must favour a free market approach to make Nigeria livable.

The implications of Cash rationing on financial mobile money services

TheGuardian reports that Kelvin Emmanuel, the CEO of Diary Hills Limited, noted that the CBN’s “decision to restrict cash withdrawals, following the naira redesign policy, as a means to slow down inflation is proof that the monetary policy division of the Central Bank has run out of sound ideas”.

Kelvin Emmanuel claimed that Nigeria “has a 55.5 per cent unbanked population, 38.7 per cent Internet penetration rate, enabling 17 ATMs, 147 POS machines and four bank branches per 100,000 Nigerians ….”

The one hundred and forty-seven POS (point of sale) devices for every one hundred thousand Nigerians are largely for cash-out transactions.

Most POS terminals are not enabled for fund transfers. With the CBN’s revised cash withdrawal limits, Fintech in the mobile money system must quickly enable fund transfer.

The ordinary Nigerian cannot spend twenty-one thousand in cash daily unless she operates multiple bank accounts or wallets.

A Nigerian who operates five bank accounts, including wallets, may withdraw up to one hundred thousand cash.

Opening a bank account or Wallet is now easy. DMBs (deposit money banks), PSBs (payment service banks) and MMOs (mobile money operators) will experience a spike in opening bank accounts or wallets in the coming days.

Consequently, consumers’ requests for credit cards known as ATM (automated teller machine) cards will increase – despite consumers’ lack of confidence and friendly frauds in Nigeria’s payment system.

 The Death of POS Business?

CBN’s revised cash withdrawal limit is not a death sentence for the emerging POS business in Nigeria.

It is a clear opportunity with all the hardships and high transaction costs that digital financial consumers will experience.

The CBN should deregulate transaction charges on POS and allow market forces to determine transaction charges.

A free market approach, like the price of Garri and (transportation) fares across Nigeria’s cities and villages.

We admit that the present CBN and the Federal Government are unlikely to adopt a free market approach, given its stiffer approach to regulations.

The revised cash withdrawal limit is a fruit of the Federal Government’s stiffer regulation approach.

Yet Nigerian ingenuity can hardly be regulated. In the coming days, ATM card issuers, supporting payment systems infrastructure, and service providers will blossom.

Finally, the CBN’s revised cash withdrawal limit may not be the end – including inflation and unemployment or unemployability.

As Nigerians prepare for the 2023 elections, candidates who truly stand for the free market should emerge; otherwise, the end may be more remote than we imagine.

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