Fresh indications emerged at the weekend that the proposed legislation by the Central Bank of Nigeria (CBN) to discourage local transactions in dollars in Nigeria was informed by the need to ensure the sanctity of the cashless policy in the nation's financial system.
CBN sources told THISDAY at the weekend that in spite of the rising opposition to the proposed policy, the apex bank is resolved to push ahead in view of the challenges confronting the implementation of the cashless policy especially in Lagos.
According to the policy, which formed part of the discussions at the last Bankers' Committee meeting in Abuja, recipients of international money transfer schemes, such as Western Union, Travelex and Money Gram, will receive the naira equivalent of the currencies wired to them from abroad.
Money transfer providers assist in transferring small to medium size amounts because they have a larger network of receiving agents in Nigeria and transfers take less than 24 hours.
However, the proposed policy aimed at enforcing payment of such transactions in naira may also affect firms and hotels that sell their goods and services in dollars.
A source explained that by allowing beneficiaries of remittances from abroad to continue to collect the money in dollars, the peg on the amount of money which could be withdrawn by individuals and corporate organisations in the cashless policy regime will not be achievable.
N500, 000 and N3 million per day were the thresholds set for individuals and corporate organisations respectively under the cashless policy.
According to sources present at the bankers committee, which is made up of chief executives of banks and CBN officials, concerns were raised that by allowing beneficiaries of wired money to be paid in dollars, it will be difficult to restrict amount of cash in the system especially given the volatility in naira-dollar exchange rates at both the official and parallel markets.
Their worries were said to have been informed by the activities of politicians and some businessmen who rely on wired money for their operations.
Dollar is the world's widely accepted means of payment in the international market. Virtually, all countries including Nigeria have majority of their reserves in dollar.
The demand for dollars has continued to exert pressure on Nigeria's foreign reserves, which were $37.65 billion as at June but fell to $36. 4 billion last Thursday.
Banks, according to persons familiar with the discussions, are willing to embrace payments for international money transfer in naira to reduce the costs associated with importation the foreign currencies used for such payments.
"Everyone wants dollars, which is imported by banks and the CBN. And it is too expensive. If recipients accept the naira equivalent for payment of their international money transfer, it would reduce pressure on our foreign reserves. Banks will also be saving a lot of money as they have to import foreign currencies, particularly dollars," said a top official of one of the big banks.
It was gathered that Travelex - the importing logistics provider for the CBN- imports over $200million on behalf of the apex bank monthly.
But there is always the propensity for recipients of international money transfer to receive their money in foreign currencies because of the differentials between the official foreign exchange market (the Wholesale Dutch auction System where the CBN sells forex bi-weekly) and the black market. At the official market, a dollar exchanges at N159, while its N162 per dollar at the black market.
The apex bank had introduced the new policy on cash-based transactions which stipulates a 'cash handling charge' on daily cash withdrawals or cash deposits that exceed N500,000 for individuals and N3,000,000 for corporate bodies.
The new policy on cash-based transactions (withdrawals & deposits) in banks, according to the CBN aims at reducing (not eliminating) the amount of physical cash (coins and notes) circulating in the economy, and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)
The policy, among others is expected to drive development and modernisation of the payment system in line with Nigeria's vision 2020 goal of being amongst the top 20 economies by the year 2020. It is also to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach as well as to improve the effectiveness of monetary policy in managing inflation and driving economic growth.