PROBLEMS AND PROSPECTS OF CASHLESS POLICY IN NIGERIAN ECONOMIC (A CASE STUDY OF DUTSE LOCAL GOVERNMENT AREA JIGAWA STATE)

This study is built on cashless policy in Nigeria, and the primary aim of the study is to find out the problems and prospects of cashless policy in Nigeria where the study is done by using Dutse central bank (CBN) as a case study. The information gathered in this research work is gathered using the questionnaire administered designed for the respondents. It discovered that Cashless policy is seen to have improved the performance of bankers in carrying out their duties. And it discovered that it tends to maximize business profitability by extending customers “base, boosting cash flow and improving competitive advantage”. It recommends that a major problem in the working of the cashless economy is internet related fraud and this can only be expected to increase as we march into the cashless economy it is recommended that a country as large as Nigeria should have a signed law preventing. In conclusion the study conclude that being cashless is an emerging trend prevailing in most modern economies in the world although that does not necessarily mean that one would be without cash at all but it is the extensive use of computer technology in carrying out transactions in the financial system. Despite the challenges of Nigerian vision 2020 regarding the above the cashless economy is a veritable tool in subverting money laundering tax evasion, inflation, poor balance of payments and also increased efficiency and effectiveness in financial statement. 

Title page ................ ...... . ...................................................................................i

 Approval page .............. ..................................................... . ........ …………….ii

Dedication... ............. . .........................................................................................iii

 Acknowledgement............ . .............................................................  …………..iv

Table of content ................ ...... …………………………………………………v

Abstract …………………………………………………………………………vi

GENERAL INTRODUCTION 

1.0 Introduction ............ . ............ ………………………………………………1

1.1 Background to the study..... .. ....……………………………………............1

1.2 Statement of the problem ........………………………………………………4

1.3 Objectives of the study ………………………………………………………5

1.4 Research hypothesis................ . .. ……………………………………………5

1.5 Significance of the study ........ . ...... ………………….... ..... .. …. …………6

1.6 Scope and limitation of the study .. …………………………………………..6

1.7 Definition of terms ...... . .....…………………………………………………..7

2.0 introduction ……………………………………………………………...9

2.1 theoretical frame work   …………………………………………………11

2.2. Concept of cashless economic  ………………….………………………12

2.3 Overview of the payment systems in Nigeria .. ………………………….15 

2.4 Institutional and organizational frame work..……………………………..15

2.5 Cashless system of payment and Nigeria economy ...... ……….. ………..15

2.6 Cashless economy and the Nigerian banking sector ...................................16

2.8 Prospect of cashless economy .....................................................................18

2.9 Factors contribute to the successes of cashless policy in Nigerian banking industry ...............................................................  ……………………………..21

3.0 Introduction ........................................................................ ……………….22

3.1 Research design  .........................................................................................22

3.2 Population of the Study ................................... ………………………….22

3.3 Sample and Sampling Techniques ..............................................................23

3.4 Method of  Data Collection  ................................. ………………………23

3.5  Method of data analysis ………………………………… ………………23

3.6 administration of the instrument ……………………….. ……………..24

3.7 method of data analysis and presentation……………………………….24

4.0 DATA PRESENTATION  AND ANALYSIS

4.1 Introduction ................... ........... , .................. ………………………..…25

4.2 Bio data of respondents …………………………………………………..25

4.3 Test of hypothesis …………………………………………………………32

5.1 Summary ………………………………………………………………..…35

5.2 Conclusion ……………………………………………………………..….37

5.3 Recommendation …………………………………………………………37

Reference  ............................................... ........., ............. ……………………..38

In Nigeria as it is in many developing countries cash is the main mode of payment. This makes the country to be heavily cash-based economy. However the cost of cash to Nigeria financial system is high and increasing. Cashless economy is an economy where transaction can be done without necessarily carrying physical cash as a means of exchange of transaction but rather with the use of credit or debit card payment for goods and services. The cashless economy policy initiative of the central bank of Nigeria (CBN) is a move to improve the financial terrain but in the long run sustainability of the policy will be a function of endorsement and compliance by end-users (Ejiro. 20012). The CNB cash policy stipulates a daily cumulative limit of'N150,00 and N1,000,000 on free withdrawals and lodgments by individual and corporate customers respectively in the Lagos state with effect from march 30, 2012 furthermore, 3rd party Cheques above N150,000 shall not be eligible for encashment over the counter with effect from January 1, 2012 the introduction of the implementation of cashless (policy is program of actions adopted by government) began in logos Nigeria why Lagos? 

According to central bank of Nigeria (CBN, 2011) Lagos state accounted for 85% of pos and 66% of Cheque transaction in Nigeria. Cashless economic aims at reducing the amount of physical cash circulating in the Nigerian economy and of Nigerian (CBN,) 2011) the policy is expected to reduce cost incurred in maintaining cash based economy by 90% upon its full implementation in Nigeria. 

The central bank of Nigerian was established by the CBN ordinance of 1958 and commenced operation on July 1958. 

The major regulatory objectives of the bank as stated in the CBN Act of 1958 is to maintain the external reserves of the country promote monetary stability and a sound financial environment and to act as a banker of last resort and financial adviser to the federal government. The central banks role as lender of last resort and adviser to the federal government has sometimes pushed it into murky regulatory waters. 

After the end of imperiperial rule the desire of the government to become pro-active in the development of the economy became visible especially after the end of the Nigerian civil war the bank followed the government’s desire and took a determined effort to supplement any short falls in credit allocation involved in lending directly to consumers, contravening its original intention to work 

through commercial banks in activities involving consumer lending. In 1948 an inquiry under the leadership of G.D Paton (2011) was established by the colonial administration to investigate banking practices in Nigerian. Prior to the inquir the banking industry was largely uncontrolled/ The G.D Paton (2011) report off shoot of the legislation in the country. The banking ordinance of 1952. The ordinance was designed to prevent non-viable banks form mushrooming and to ensure orderly commercial banking. 

The banking ordinance triggered rapid growth in the industry with growth also came disappointment by 1958, a few number of bank had failed to curtail further failures and to prepare for indigenous control in 1958 a bill for the establishment of central bank of Nigeria was presented to the house of representatives of Nigeria the Act was fully implemented on July 1, 1959 when the central bank of Nigeria came into fully operation. In April 1960 the bank issued its first treasury bills. In May 1961 the bank launched the Lagos bankers clearing house which provided licensed banks a frame work in which to exchange and clear checks rapidly. By July 1, 1960 the bank had completed issuing all determination of new Nigerian notes and coins_and redeemed all of the West African currency boards’ previous money. 

The CBN early functions were mainly to act as the governments’ agency for the control and supervision of the banking sector to monitor the balance of payments according to the demands of the federal government and to tailor monetary policy along the demands 

along the demands of the federal budget. The control banks initial lack of financial competence over the finance ministry led to instrument of major economic decision to the finance ministry. A key instrument of the bank was to initiate credit limit legislation for bank lending. The initiative was geared to make credit available to neglected natural areas such as agriculture and manufacturing. 

By the end of 1979 most of the bank did not adhere to their credit limits and favored a loose interpretation of CBNs guidelines. The central bank did not effectively curtail out by commercial banks were usually set within a year. The major policy to balance this distortion in the credit market was to create a new bank of commerce and industry a universal bank in connect with the intentions of the government was direct involvement in the affairs of the three major expatriate commercial banks 1n order to forestall any bias against indigenous borrowers and consumers by 1976 to federal government had acquired 40% of equity in the three Li gest Commercial banks currently under recent success is partially due to the rise in crude oil prices. The banks use of capitalization has g ve more strength to the banking sector against an earlier failure by the central bank to control the fall of many merchant banks in (1 commercial bank in the early, l990s. by 1990, the liberal cing agenda of an adopted structural adjustment programme led to unprecedented growth in the banking sector the central bank  as instrumental in the growth and financial credibility of Nigeria commercial bank by making sure that all the financial bank operating in the country has a capital base (required reserves) this help to make sure that bank customers just don’t bare the loss alone in the event of bank failures. However, this policy led to S into Nigerian commercial banks to fail some bank could not meet up with the capital base which was 25, 000, 000, 000, 00 naira at the time. 

These studies seek to point the prospects and problems of such policy in a developing economy like Nigerian. The study presented useful recommendations for policy makers. In conclusion the study posits that the moves towards a cashless Nigeria bring with it numerous benefits but there is still the need to create more awareness to entice the numerous unbanked Nigeria into the banking system.

 It is discovered in the recent researches that, cash policy aims to curb many 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, inefficiency and corruption in the cash management. The policy has since been affected by many factors namely ineffective sensitization comparing exercise, inadequate protection  of the interest of merchants and people in the informal sector non availability of point of sale (POS) terminals as well as ( inc: technological challenges.

 therefore, this research work is intended to find out the problem  and prospect of cashless policy in the Nigeria economy. 

 The general objective of this research project is to find out at problems and prospect to cashless policy in Nigeria. economy. However, the specific objectives are: 

i. To identify the cost of banking services.

 ii. To determine how to reduce the cost of banking services

 iii. To proffer a solution to the problems of cashless policy in Nigeria. 

The researches questions of this study relate to the factors influence the adoption and implementation of e-commerce. in developing countries with the particular reference to the Nigerian banking industry. 

The specific questions to be examined are:

Hypothesis I 

Ho: there is no significant barrier faced by banks for adopting cashless policy in Nigerian banking industry. 

Hypothesis ll 

Ho: the introduction of cashless economy policy cannot enhance the growth of financial stability in the country.

This research project would have been an important documentation to large number of people which include government, private organization and even individuals.

Specifically the  research will be of benefit to the individual and  group depositors as bank(s) customers. It will also benefit to  the government (s} at all levels because of their regulatory role in the banking sector. Most  importantly it will, serves as a future reference for professional and academic purposes! For consumer increased convenience more services an option reduces risk of cash related  crime cheaper access to (out of branch) banking services and access to credit. 

For corporations faster access to capital reduced revenue leakage cash handling costs. To drive the development and modernization of the payment system in line with Nigeria’s vision 2020 goal of being  amongst the top 20 economic by year 2020. 

To reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction option and greater reach. 

This study will examine the adoption of cashless policy in Nigerian banking industry with respect to their; 

Benefit

Challenges 

Implications

 Prospects 

Due mainly to time and denial of some vital information which would have enhanced to focus attention to only banks: Dutse CBN the research is also subjected to every limitative encountered it a research of this nature. Such as giving miss leading information, time constraints and financial problem. 

1. Bank account: is a record of financial transactions between a bank and the customer which is maintained by the bank in addition to financial transaction. A bank account also show the result financial position of the customer with the bank 

2. Cheques: there is an expected surge in the use of cheques. 

However, encashment of third-party Cheaque across the counter is prohibited and all Cheaque drawn in favor of any benefit the CBN clearing house sequence to that the value on cheques must not exceed N10 million. 

3. Bank drafts and other instruments: bank drafts will become the toast of many merchants for big ticket 

4. ATM: automated teller machines be used much frequently for making variety of online payments such as utility bill T.V subscriptions GSM recharges etc customer are advised to keep their ATM cards (debit and credit) 'safe and never to divulge their pins 

5. Mobile money: t

6. his is a product make payment or receive balance enquiries on their mobile phones 

7. E-transfers: refer electronic transfers which (ran be effected via the internet on PCS laptops and other devices. Bank custom: who have subscribed to internet banking can do basic bankig transaction via the web. 

8. Poss. terminal: point of sale {POS} terminals are deployed to merchant location where use swipe their electronic cards through them in order to make payment for purchase or services instead of using raw cash.