Yesterday, the CBN released a circular on the “Implementation of the Cash-less Policy”. Much of the social media dialogue diverted from Andela’s restructuring to the policy’s potential impact on the economy – especially for micro, small and medium enterprises (MSMEs). A lot of comments highlighted the perceived “ineptness” of this policy and conceived it as an attempt to further complicate things, frustrate small businesses and increase the number of businesses within the informal economy.
Do the facts agree with this position? No.
In this article, I argue that yesterday was calculated and is a step in the right direction.
A Short History Lesson
On 1 January 2012, there was an attempt by the government to curb excess cash in circulation by introducing the Cash-less Nigeria Policy. It was first introduced in Lagos and prescribed handling charges on cash in excess of N500,000 (individuals) and N3,000,000 (corporate bodies).
The policy was not put in place to remove cash from the equation but to reduce its volume. It also aimed to encourage more electronic based transaction systems e.g. POS terminals, short codes and the like. The policy was first rested in Lagos state with service charges taking effect from 30 March 2012.
Under the policy, effective from June 1, 2012 daily cumulative withdrawals and lodgment in banks by individual would be limited to a maximum of N150,000, while daily cumulative withdrawals and lodgments by corporate customers is pegged at N1million. However, individuals and corporate organizations wishing to withdraw above the fixed amount would have to pay special charges.
Essentially – this has happened before, it was always in the offing.
Why is Everyone Worked Up on Social Media?
To clarify the position in yesterday’s release, if you withdraw or deposit N500,100, the charge will be levied on the N100 and not the entire sum. After all, it’s little drops of water that makes an ocean. Dissenting opinions on the issue argue from two major standpoints and I have set them out in the following bullets.
The first and most popular argument against the CBN’s cash-less move borders around financial inclusion. Proponents say Nigerians will be less interested in the banks and frequently conjure an illiterate Nigerian man who lives under a rock in some remote Nigerian village to prove their point. However, Nigeria’s current vector does not support the conclusions many commentators have reached.
Strong economies have equally strong banks; Nigeria’s banks are only beginning to get back on their feet. The informal economy valued at $240bn (IMF) presents an opportunity for the government to stabilize monetary policy and redefine banking in Nigeria. The pertinent question is, how does the government intend to do it?
Enter the CBN’s National Financial Inclusion Strategy (NFIS)
The long term move for the NFIS is to ensure that 80% of bankable adults in Nigeria have access to financial services. This is the reason why you have telecommunications companies offering Mobile Money nationwide, why there are more vending machines on the Island and why POS Terminals are available at barbershops in Modakeke (for a commission, you can withdraw and send money).
It has taken time but, it is working out – execution is key.
Ease of Doing Business
Another argument borders around ease of doing business, especially for MSMEs. Ask anyone who makes this argument a simple question: what is easier, physically depositing/withdrawing N3,000,000 or transferring N300,000,000 via internet banking?
This particular argument sees the entire situation as high risk because, if handled improperly, there is the possibility that businesses in the informal sector are crushed in the wake of yesterday’s announcement. Businesses and individuals alike have to pay N52 bank charges (plus VAT) on inter-bank transactions. Arguments from this quarters note that transferring money or using POS Terminals to make payments can reduce the incentive to have money in the bank in the first place.
I will use an illustration to explain how difficult it is to agree with the above position. A woman walks into Tejuosho market with N500,000 – she intends to buy 4 items from 4 different vendors. Which of the following options makes her life easier?
- Making those payments with *737# mobile transfer and paying N208 extra or
- Withdrawing N500,000 from her bank, taking it into Tejuosho market and making payments at 4 different shops.
Would you rather risk your personal safety because you intend to save N208? If we consider ripple effects in the illustration above, there seems to be an upside for companies involved in online payments, procurement and logistics. An upside any responsible government should leverage. If you do not want to use electronic payment channels, you would have to shoulder time costs, transport and think carefully about security.
Understanding the N500,000 Threshold
The statistics show that if 100 Nigerians read this article, only 2 will have over N500,000 in their bank accounts. Thus, there is at least a 20:1000 chance that this policy may never apply to you. On the off chance that it does, you most likely are in the 2% of Nigerians that own 90% of all bank deposits.
The aforestated shows that the Central Bank of Nigeria has by default safeguarded most Nigerians and inadvertently created an exception to the policy – the 98%. It is simple, the bulk of Nigeria’s individual and business demographic will never have to shell these fees. It shows that this policy was carefully thought out, all that’s left is effective implementation.
Corruption has been touted as an existential threat to Nigeria. As a country, we hold multiple records on several corruption indexes. Through this policy it has become easier to monitor the movement of money and track illicit financial flows. Whether we grasp this or not, it is a big win for Nigeria.
Monetary inflation is becoming an increasing threat to efforts to stabilize the economy. Monetary inflation happens when there is a consistent rise in the amount of money available within a currency area/country. When this happens especially with the admixture of several other factors including the transmission mechanism, there is a tendency for prices of goods and services to cost substantially more. Essentially, with less cash in circulation – chances that the price of garri will go up become minimal (too much money makes garri expensive).
Also, it is impracticable for this government to pay interests on loans, fund the new minimum wage, protect the foreign reserves, subsidize petrol, cover federal salaries and continue projects under the current revenue streams. The government realizes this and is taking steps to create long term sustainability. More money from the 2% means that more projects are possible going forward.
There are obvious risks with the policy especially as there seemed to be no warning or a phasing stage. The Buhari led administration has brought this policy at a time when there is the ban on CBN forex for importation of certain goods, proposed increased in VAT to 7.5% and tons of other policies that we cannot seem to agree are in Nigeria’s best interests. However, we can all agree that the government is driving change with monetary policy.
For the Cash-less policy to work, proper execution is more important than a viral A4 printout/PDF with the CBN letterhead. The government must clarify exemptions to the rule, increase the ease of access to mobile money and better network coverage.
The Cash-less Policy, if properly executed, might put an end to tally numbers and long queues in banks, increase the amount of diversified small businesses (small businesses providing peripheral financial services) and increase the formal economy.
Irrespective of Nigeria’s lingering challenge with implementation, I am taking the road less travelled by saying, Nigeria is actually playing to her strengths – we will be fine.
Samuel Korie is a graduate of Law from Obafemi Awolowo University (formerly University of Ife). He is passionate about policy, volunteering and the unchartered frontiers of the legal profession.
Egypt’s BONBELL seeks $10 million seed funding after closing $350,000 initial round
Egypt’s startup BONBELL, the first mobile App in the Food-tech industry specialized in food ordering, digital solutions for table and meal reservations, has closed an initial funding round for $350,000. This is through a Canadian Angel investor, to help further develop the App services and achieve a level of growth in regard to user count and daily orders.
BONBELL launched its own App in early 2022, to offer a wide range of food ordering services in Egypt. The App offers many food ordering solutions, from food delivery to restaurant’s reservations and Dine-in ordering through a QR Code on the tables, as well as take away services. The App offers various payment solutions through cash or credit cards.
BONBELL has partnered with many restaurants and cafes, as well as clubs like Heliopolis Club and Smash Club. It also offers its services in Malls and Cinemas, to offer a smoother food ordering experience, reserving tables and food delivery, for mall and cinema goers. It has also strategically partnered with many leading major companies and institutions. Most notably the German University in Cairo (GUC), and Raya Telecom, in order to offer its services in their respective headquarters for employees and visitors alike.
The Food-Tech startup targets raising its partnered restaurants to 750 by the end of 2022. The company is also negotiating with two venture capital funds from Europe and the Gulf, to close a $10 million fund in its seed round by the end of the year.
Doaa Abdel-Hameed, the Chief Business Officer of the company said: “we aim to help restaurants in offering an easier food ordering experience to their customers. Either through food delivery or reserving a table in the restaurant, as well as taking away orders and also the special orders made by customers in their restaurants.”
“We pursue a better experience for the Egyptian user in food ordering. We see a lot of potential and opportunities to do that through developing the App constantly based on the user reviews. And adding more restaurants in all of the Egyptian governorates.” She added.
BONBELL has earned the trust of more than 12,000 customers, who used the app in food ordering in all the ways offered through the App, in just 6 month.
Doaa Abdel-Hameed emphasized that the success of BONBELL App, in offering the best experience to its users can only be done through strategic partnerships with many more restaurants. In addition to the constant development of the technology used in the App, as well as relying on offering inventive solutions to the Egyptian user such as (Robotic Stations) service.
This service will offer customers the experience of food ordering and serving through a Robot, without any human intervention. It is expected to launch in Egypt at the end of 2023.
GrubTech partners Geidea to provide cutting-edge e-payment solutions for restaurants and cloud kitchens in Egypt
GrubTech, UAE’s leading cloud kitchens and restaurants tech solutions provider, signed an agreement with Geidea, a leading e-payments and fintech platform, to provide its services for the BOSs of GrubTech’s clients. This cooperation will avail an added value and new merits for GrubTech’s clients in the Egyptian market. GrunTech’s Egypt Country Manager Osama Harfoush, and Head of Commercials at Geidea Ahmed Magdy signed the agreement in the presence of GrubTech’s Founder and CEO Mohamed Al Fayed and the General Manager of Geidea in Egypt Ahmed Nader.
Founded in 2019, GrubTech is a platform that provides tech solutions to manage cloud kitchens and restaurants in a way that enables them automating their businesses and managing food delivery process online. The leading cloud kitchens and restaurants tech solutions provider also provides sales and marketing solutions as well as in-depth analyses of restaurants data that contributes to accelerating their work and reducing their costs as well.
For Geidea, it is currently the favorable choice for merchants in the Egyptian market who seek to count on the fastest and easiest e-payment solutions. Geidea provides a unique and integrated services that qualified it to acquire a large market share of the e-payments in Egypt.
Commenting on the signing, CEO and Founder of GrubTech Mohamed Al Fayed said that this agreement is a part of the company’s strategy that aims at expanding in establishing grand commercial partnerships with the major key players in food and beverages (F&B) market in MENA region.
“This cooperation will come into effect in Egypt, originally, and then it is planned to cover other countries that GrubTech operates in, including in MENA; Asia and Africa”, Al Fayed added.
Egypt’s Country Manager of GrubTech expressed his excitement of inking the agreement, asserting that it represents a significant step in terms of GrubTech’s plan to build a system that integrates with its objectives to create a platform that contains all solutions the restaurants and cafes in the local market need.
“Tech solutions GrubTech provides benefit its clients in easing selling and purchasing transactions, tapping digital transformation policy all institutions across the world adopted recently towards sustainable development goals achievement by 2030”, said Harfoush.
On his side, General Manager of Geidea in Egypt Ahmed Nader said that he is pleased about this cooperation with GrubTech as one of the leading tech solutions providers as well as a cloud kitchens and restaurants management system designer.
“This agreement is an imperative action for Geidea in order to expand in F&B market that is growing rabidly in Egypt. It will enable cafes and restaurants owners to work more efficiently, while providing a better experience in terms of online food delivery. It will also help the business owners increasing sales through utilizing multifarious trademarks via a single window in an easy way”, Nader stated.
Head of Commercials at Geidea, Ahmed Magdy said that the company’s vision is providing all merchants and business owners with innovative payment solutions that help growing their businesses and facilitating their management.
“Through collaborating with GrubTech, we target expanding our operations in F&B sector by introducing cutting-edge e-payment solutions. Cloud kitchens and restaurants sector is notably growing in Egypt with accelerating digital transformation, which gives us a significant opportunity to provide an all-in-one operating system that eases the process for our clients”, according to Magdy.
Mouka Parent Company, Dolidol International Group, Appoints Dr Adesegun Akin-Olugbade as New Vice Chairman
Mouka, the market leader in Nigeria’s sleep industry and a new member of the Dolidol International group, has appointed Dr Adesegun Akin-Olugbade as its new Vice Chairman. The Board of Mouka’s parent company, Dolidol, has given their vote of confidence to the new Vice Chairman, who has an impressive resume of sterling accomplishments.
According to the Managing Director of Mouka, Mr Femi Fapohunda, the new Vice Chairman’s expertise is in finance, corporate governance and law. As a Non-Executive Board Member, his input and guidance to decision-making by Mouka’s Executive Directors would help propel Mouka to even greater heights. Dr Adesegun is the Founder and Managing Partner of Luwaji Nominees, a legal and corporate advisory services firm and currently serves as Of Counsel at Clifford Chance (CC Worldwide Limited) and International Counsel at ÆLEX.
A graduate of King’s College London (LL. B (Hons) 1983, LL.M 1985) and Harvard Law School (LL.M ’88 and SJD ’91), in addition to being the Overall Best Student at the Nigerian Law School in 1984. He has served for over 30 years in the legal profession and financial services sector; having worked at both the technical and executive management level, in the public and private sector, for leading commercial law firms, multilateral development banks and international financial institutions.
He was previously General Counsel and Senior Director at the African Development Bank (AfDB) (2000 -2007) and the first Chief Legal Officer and Head of the Legal Services Department of the African Export-Import Bank (Afreximbank) (1993 – 1997). In December 2018, he retired as Executive Director (Chief Operating Officer), General Counsel and Corporate Secretary of Africa Finance Corporation (AFC).
Adesegun A. Akin-Olugbade has significant Board level experience. He was a non-Executive Director and former Chairman of the Governance Committee of Ecobank Transnational Inc. (ETI). He was also a Founding Director and Managing Partner of AFC’s wholly owned subsidiary, AFC Equity Investments Limited, Mauritius. He was a founding shareholder and former non-Executive Director of Asset & Resources Management (ARM) Company, a leading financial services company in Nigeria. He is a life member of the Nigerian Conservation Foundation and Trustee of the African Refugee Foundation (AREF) and of the Nigerian Law School Class of 1984.
In 2003, he was invited to be a member of the Committee on International Monetary Law of the International Law Association (MOCOMILA) and joined the World Trade Board as the first African member in 2019.
Adesegun A. Akin-Olugbade is an alumnus of several Executive Management Programs including the Wharton CEO Academy, the IMD Executive Management Program and the HEC (Montreal) Management Development Program (MDP). He is an Officer of the Order of the Niger (OON), a national honour conferred on him by the Nigerian Government in September 2012.