A study by United States-based technology
company, MasterCard, has shown that countries spend an average of one
per cent of their Gross Domestic Product on handling cash annually.
Cost of cash refers to the cost of
printing cash, moving it from one location to another, and the cost of
making cash transactions, among others.
What this means is that Nigeria may be
spending about $5.1bn, which is one per cent of its rebased GDP of
$510bn, as cash handling costs.
The Vice President, West Africa,
MasterCard, Mrs. Omokehinde Ojomuyide, who made the disclosure in Lagos
on Thursday, lauded the Central Bank of Nigeria for driving the
cash-less policy in the country.
“MasterCard advisers have done studies in
many countries and found out that the cost of cash to an economy is
about one per cent of the country’s GDP. The studies show that countries
spend from 0.5 to 1.5 per cent of their GDP,” she said.
Ojomuyide expressed confidence that
Nigeria would reduce its cash costs because the CBN, banks and customers
were already pushing for cashless transactions.
She said, “And for us at MasterCard, it
is important that we are in the middle of it right now. There are very
few countries like Nigeria that the electronic movement has the full
weight of the government and the central bank. A lot of countries are
ahead of us when it comes to electronic payment, but very few countries
have the government and the central bank pushing the electronic payment.
“And the reason is simple. It is because
the government has done the numbers and realised that there is a cost to
cash, and it is only when you realise that there is a cost to cash that
this conversation that we call cashless can start.”
The MasterCard vice president added,
“That is when you realise that as a central bank, I need to start
getting involved not for the sake of it, nor because you want to do
technology, but because it is important to us as country, it saves us
money.
“I believe that is the discussion the CBN
had some years ago and started pushing the cashless policy. There is a
reason to the cashless initiative. It is not because they want to adopt
“We are excited to be in the Nigerian
market and the economy at a time like this. The CBN is pushing and the
banks are also pushing for electronic payment. Consumers are also doing
so. They are pushing for different reasons.”
Ojomuyide, who noted that cash costs also
involved the cost of moving and printing cash, said transferring cash
from one location to another could happen without physical movement.
She explained, “Everybody thinks when I
take N1,000 from my pocket and spend it, I am just spending the N1,000.
That N1,000 has cost more than the N1,000 you are holding. It is that
discussion they are holding now.
“That is what is
motivating their policies. You see them bringing out policies to reduce
cash, make PoS work, and if you deposit above X amount, you will get
charged. It is all going the direction of moving away from cash. I am
happy we have listening to the CBN. When I say this, I am not
patronising them, it is because we have experience in other markets.”