CASH-LESS LAGOS: IS THE MARKET READY?

By BABAJIDE KOMOLAFE
IT was Niyi Ajao, Acting Managing Director/Chief Executive, Nigeria Interbank Settlement System that posed the above question to participants at a one day seminar on the Cash-less Lagos initiative scheduled to take off 72 hours from today.

The seminar was organised by the Committee of E-banking Industry Heads (CeBIH) to examine the level of preparedness for the initiative introduced by the Central Bank of Nigeria (CBN) to encourage Nigerians to embrace electronic payment channels instead of cash as means of payment.

Among other things, the seminar featured a keynote address by Mr. Tunde Lemo, Deputy Governor, CBN and presentations by  Musa Jimoh - Deputy Director, Banking and Payment Systems, CBN, Mr Niyi Ajao, Acting Managing Director/Chief Executive, Nigeria Interbank Settlement System (NIBSS), Ms. Eyitope St. Mathew-Daniel, Head, Shared Services, CBN.

Sanusi Lamido Sanusi
At the end of his presentation, Ajao asserted that the infrastructure needed to drive the initiative is ready, the readiness of the banking public to embrace these alternative channels and began to use them is however not certain. He however tied this to the level of publicity and awareness done by the apex bank and the banks.

He asked, 'Have we done enough awareness about the various alternative channels and the benefits of using them.' He then rounded up saying, 'Stakeholders need to promote the scheme, do a lot of enlightment on the benefits of using electronic banking channels as against cash.'

His submission aptly summarises the revelation of the seminar. Infrastructure and policy wise, the industry is largely ready but in terms of awareness the readiness is below average. In fact, the question and answer session show that besides publicising the scheme, there is need for massive education of bankers and customers on various aspects and issues of electronic payment transactions.

This is reflected in the personal experience shared by Musa Jimoh during his presentations. He had paid online for a fight ticket. But the flight was cancelled and so he bought another ticket from another airline to make the trip. Thereafter he went to the bank for a return or as he puts its 'charge back' into his account the money he paid online for the ticket of the flight that was cancelled.

'The bank staff initially told me she does not know anything about charge back, later she told me to go to the airline and collect the money. But I insisted that since it was the bank that move the money from my account to that of the airline, it was its responsibility to collect the money from the airline for service not rendered and charge it back to my account', he said. It took two weeks before the bank 'charged back' the money into his account.

What this shows is that there is significant need to educate banks' staff particularly at the branch level about electronic payment vis-a-vis the role and responsibilities of banks when incidences such as non rendition of services is rendered.

The CeBIH seminar revealed that there are several aspects that need clarification and more communication between the CBN and electronic payment providers. Some of these issues came up during the questions and answer session.

For example a participant asked that if cash lodgment above the limit was made from outside Lagos state into an account domiciled in Lagos, would such lodgment attract the stipulated service charges i.e N100 per N1000 for cash transactions above N150,000 for individuals and N200 per N1000 for cash trasactions above N1,000,000 for corporate customers.

In response, Mr. Tunde Lemo, CBN Deputy Governor, Operations said that for the pilot scheme the charges would be applied only to transactions initiated in Lagos.

Another aspect that generated interest among participants was the issue of who would bear the service charge when a third party pays cash above the limit into another person's account. Is it the depositor or the account holder that should bear the service charge?

Although Lemo's response that the account holder would bear the charges did not seem acceptable to the audience, he however explained that the idea is that the beneficiary of the transaction should bear the service charge.

He said since the account holder is the beneficiary hence he/she would pay for the charges for cash lodgment into his/her account that is above the limit. He said this would make the account holder to embrace electronic payment channels as means of receiving payment.

The above exchanges implied that without a platform for regular clarification of issues, the implementation of the cash-less initiative would be dogged with commotion and confusion.

Another apparent reveleation of the seminar is the sincerity of the regulators and operators about the challenges imminent to the implementation of the cash-less initiative, and the willingness to listen. This was reflected in the high powered delegation of the CBN at the seminar led by the Deputy Governor, Lemo. Ordinarily, one would have expected him to send a representative or at best leave immediately after delivering the keynote address.

He however waited till the end of the programme purposely to entertain questions and hear from the operators. Lemo was also honest in his keynote address. Though he assued that on the readiness of the apex bank and industry to deliver on necessary support for the success of the scheme, he also aknowledged that there were concerns and challenges.

For example he said, 'Notwithstanding the progress made thus far, the Nigerian payments system and settlements is still faced with some constraints which include infrastructural challenge such as epileptic power supply, slower adaptation to new initiatives, human capacity challenge as well as high level of illiteracy especially in the rural areas'.

Mathew-Daniel also frankly acknowledge that the industry expects there would be hitches during implementation of the scheme. 'Significant effort has been put in by various stakeholders to ensure a smooth take-off for Cash-Less Lagos

Infrastructure is also being put in place to ensure that issues/challenges that arise post implementation are quickly and effectively dealt with. This same infrastructure will also ensure that progress and achievements are also adequately communicated to all stakeholders.'

The proceedings of the seminar however have turned a major shortcoming of the preparations for the take-off of the scheme into blessing. Two weeks to the January 1st commencement date, the apex bank is yet to commence mass publicity campaign of the scheme.

This should have started since October and be ongoing into 2012 to sensitize the public but its delay means that all issues raised and lessons learnt from the CeBIH seminar and other engagement with stakeholders by the CBN can be incorporated into the campaign.

However, very obvious from the proceedings of the seminar is the fact that no amount of publicity campaign can guarantee readiness of the banking public or an immediate change in the habit of paying with cash. Such change would take time to happen.

Also the infrastructure and policy would not be perfect ready, and all the issues and challenges cannot be known or resolved upfront. The infrastructure would improve overtime with use and the issues would emerge in the course of implementation.