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.”
( Courtesy Punch & Agencies …….. Source ……. Our Freelance Contributor in Lagos & New Africa Business News)