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  Agency banking, which led to the proliferation of POS terminals, has not aided in Nigeria’s cashless policy operations. Although the system was introduced in 2013 as part of the CBN’s efforts towards the cashless policy, more cash has been in circulation. 
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On January 1, 2012, the Central Bank of Nigeria (CBN) implemented the cashless policy aimed at reducing the handling cost of cash, enabling payment transparency and improving access to digital payment channels. In a bid to reduce cash circulation, tax payments of 2-10% were implemented. There was also an establishment of withdrawal thresholds for individual and business accounts; ₦500,000 and ₦3,000,000, respectively.
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Due to the introduction of the POS system, e-payment platforms have constantly risen, with several optimizations being made. The value of Point-of-sale (POS) transactions has also grown rapidly, from about ₦167 billion in 2017 to ₦663 billion as of July 2022. POS agents have increased over the years, as the business is typically lucrative. Given the high rate of unemployment and underemployment in the country, many have taken to trade. It has become so good that between 2017 and 2022, the number of POS terminals grew from 155,000 to 1.1 million. Agency banking has also relieved banks of their numerous transaction responsibilities. There is less cash risk and exposure.
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However, despite the efforts to reduce cash handling, it has continually increased. CBN Governor, Emefiele, announced in October that there was ₦3.23 trillion in circulation, an increase of ₦26 billion from the same period last year.  With the rise in the establishment of fintech, not many people have come to terms with e-payment operations. Similarly, petty payments like market transactions and transportation fares greatly rely on cash to survive. This entails that financial inclusion, though being achieved, is irrelevant to the realization of Nigeria’s cashless vision. There is a need for CBN to critically analyze the situation and proffer solutions.  Featured Image Source: Waynbo
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This article was first published on 9th November 2022


Chidiogo Shalom Akaelu holds a degree in English and Literary Studies, from the University of Nigeria. She is a freelance writer, editor and founder of Loana Press, a budding online publishing outlet.

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