This is clearly underscored in the literature linking the growth in financial sector with national economic growth. The economic effect of money laundering in nigeria is enormous. By some measures, nigerias economy ranked among the most volatile in the world for the period 1960 to. The apex financial institution in any economy is the central bank of that country and it plays a major role in the economic advancement of that nation. This first nigeria economic report will give some attention to longer term trends in the coun. Effect of cashless monetary policy on nigerian banking. Hence the financial sector is regarded as the pivot of every economy. Effects of cashless economy policy on financial inclusion. Nigerian economy will struggle to realise growth much higher than 4. It prescribed a cash handling charges on daily withdrawal above five hundred thousand naira n500,000. The cbn and pro cashless policy activists have asserted reduction in crime rates, minimized risk associated with carrying huge sums of money, reduction in political corruption, reduction in banking cost, improvement on monetary policy in management of inflation and the overall growth and development of the economy of nigeria as advantages.
Outside of transportation and, perhaps, a small section of the industrial sector, the petroleum economy has very little linkage with nigerian. In other words, the study examines how cashless policy based on some selected factors lead to financial inclusion in nigeria. Pdf this paper studied the impact of cashless policy in nigeria. A cashless economy simply illustrates a gradual or a radical movement of the. The challenges and strategies nigeria computer society ncs 24th national conference speaker. The economy of nigeria is a middleincome, mixed economy and emerging market, with expanding manufacturing, financial, service, communications, technology and entertainment sectors. After independence, the nigerian economy seemed very promising. Since then, nigerias economic growth has been driven by growth in.
The new classical framework for the explanation of the current economic crisis is. A major challenge for the nigerian economy was its macroeconomic volatility driven largely by external terms of trade shocks and the countrys large reliance on oil export earnings. We need to address the infrastructure and policy conditions that are currently strangulating the real and services sectors of the economy. Britain eventually gained control of nigerian administration. D department of accountancy, university of nigeria nsukka. Many saw nigeria, with 15% of africas population, as an emerging economy. Toward the cashless economy in africa mastercard newsroom. It is a known fact that the financial sector reform is an essential ingredient in the economic growth and developmental process of every nation. Following the 200809 global financial crises, the banking sector was effectively recapitalized and regulation enhanced. This is the way to ensure sustainable growth and development of the nigeria economy. Cashless payment and economic growth financial innovation.
In 2008, the central bank of nigeria developed a macroeconometric model of nigeria to assist the bank in policy analysis. The economic reforms and prudent policies have contributed to the consolidation of. South african economies are good examples in this regard with the former recorded as being in the inception stage and south africa in a. Early in the forecast period nigeria will be in a state of nearstagflation, with tight credit conditions, low growth, rising unemployment and high inflation mainly policy induced. Nigerian financial system formidable and enhancing the overall economic performance of nigeria so as to place it on the right path in tune with global trends. The paper discussed the effects of cashless policy on the nigerian economy, how it was kick started in lagos, means of payments both. Nigerias economic recovery continues to be hampered by structural bottlenecks in the economy. The energy sector is the driving force of nigerian economy. Nigeria is largely a cashbased economy with large percentage of funds residing outside the banking sector 66% as against the developed world where the money in circulation is for example 4 percent in us and 9 percent in u. It is in this regard that the central bank of nigeria cbn introduced the cashless policy with the objective of promoting. Pdf impact of cashless economy in nigeria researchgate.
On 1st january, 2012, nigeria commenced the implementation of cashless policy. Corruption affects public finances, business investment as well as standard of living. An analysis of cashless policy implementation in nigeria. Department of economics, banking and finance, babcock university, ilishan remo, ogun.
The effect of devaluation was salutary as nigerias foreign exchange reserves grew by 773. A major policy implication of this result is that concerted effort should be made by policy makers to increase the level of output in nigeria by improving productivitysupply in order to reduce the prices of goods and. The main reason for the policy was to reduce the amount of. The attempt to restructure the economy through privatisation is currently at a snails pace. Based on the foregoing issues at hand, the main aim of this study is to conduct an appraisal of the effects of cashless economy policy on financial inclusion in nigeria.
This study examined the extent to which variations in money supply had been and can be used to influence output in nigeria. Empirical studies about financial inclusion remain vital, especially in developing countries like nigeria, where little research studies have been. Effects of cashless economy policy on financial inclusion in nigeria. Cashless policy and economic activities in developing. Greener journa l of internet, inf ormation and com munication sy stems vol. Since the declaration of cashless economy policy by the central bank of nigeria, many scholars have written on this subject matter.
In a developing economy such as nigeria, financial sector development has been accompanied by structural and institutional changes and the sector generally has long been recognized to play a crucial role in the economic development of the nation. Managing the transition to a cashless economy in nigeria. Nigeria being a primarily cash based economy continues to see a rise in the cost of. Nigeria economic growth after only gradually recovering from the 2016 recession, the economy is set to contract again this year. Nigerias revealed rebased gdp figures for 20 showed 89% jump in. The impact of central bank of nigeria cashless policy in nigeria economy. Severe instability, interventionism and corruption will be major obstacles to economic development over 202024. Nigeria, as one of the developing countries, is lacking behind in reaching the expected level in global economy and banking system, so there is a need to improve on the banking system and any. President muhammadu buhari launched an anticorruption drive after taking office in may, 2015. Subsaharan africa region fdi indicators south east asia 35 no.
In spite of many, and frequently changing, fiscal, monetary and other macroeconomic policies, nigeria has not been able to harness her economic potentials for rapid economic development ogbole, 2010. Nigeria is sub saharan africas largest economy and relies heavily on oil as its main source of foreign exchange earnings and government revenues. Central bank of nigeria the cashless nigeria project. Nigerias economy has tended to suffer following an oil price crash, although its resilience has improved in more recent times see box 1. A series of unfortunate political and economic events have stalled nigerian growth. However, the cost of cash to nigeria financial system is high and increasing. A key regional player in west africa, nigeria accounts for about half of west africas population with approximately 202 million people and one of the largest populations of youth in the world. Online transaction systems have increasingly become a necessary component of business strategy and a strong catalyst for achieving cashless economy and economic development. Force people to convert their savings into consumption andor investment, thereby providing a boost to gdp and employment. The nigeria economic report will also be a vehicle for the dissemination of existing world bank studies that are deemed to be of particular relevance for nigeria. Pdf on oct 1, 2016, ordu monday matthew and others published cashless economic policy in nigeria. The impact of central bank of nigeria cashless policy in.
To drive development and modernization of our payment system in line with nigeria s vision 2020 goal of being amongst the top 20 economies by the year 2020. Nigeria is a multiethnic and culturally diverse federation which consists. Nigeria, as one of the developing countries, is lacking behind in reaching. The policy was introduced by central bank of nigeria cbn in december 2011 and was. Smes in nigeria in nigeria, empirical report shows that an estimate of about 70% of the industrial employment is held by smes and more than 50% of the gross domestic product is smes generated odeyemi, 2003. This paper discusses the global financial crisis and nigeria economy. Effectiveness of naira devaluation on economic growth in. Monetary policy is the regulation of the money supply. Nigerias phase1 privatisation programme 198893 was deemed successful with. Executive summary corruption is a pressing issue in nigeria.
Effect of inflation on the growth and development of the. This makes the country to be heavily cash based economy. Welfare effects of taxation on the nigerian economy. Effects of money laundering on the economy of nigeria. Cashless economy and financial statement reporting in nigeria emengini, steve emeka ph. This article examined development and challenges of cashless policy in. Preface why the central bank of nigeria made the cashless policy. Sc department of banking and finance, university of nigeria nsukka abstract. The nigerian economic report ner is a regular publication of the world bank. Nigeria, a country richly endowed with natural resources and high quality human capital is yet to find its rightful place among the comity of nations. In nigeria as it is in many developing countries, cash is the main mode of payment.
Enable the adoption of new wirelesscashless technologies. Cashless nigeria is a policy established in the year 2012 by the central bank of nigeria to curb excesses in the handling of cash in the nigerian federation. Department of economics, banking and finance, babcock university, ilishan remo, ogun state, nigeria 2. Overview of the nigerian economy african development bank.
It, therefore, becomes necessary to highlight the monetary policy in nigeria and examine the extent to which it has actually contributed to the growth in the economy. The impact of the cashless economy policy on nigerian. Decock1998 defines a central bank as a bank which constitute the apex of the monetary and banking structure of a country and which performs as best as it can be in the national economic interest the following functions of regulations of. Theoretical background cashless economy is not the complete absence of cash, it is an economic setting in which goods and services are bought and paid for through electronic media. The nigerian economy has been plagued with several challenges over the years.
Each edition of the ner includes a macroeconomic overview and gives special attention to an additional topic of high policy relevance. The impact of monetary policy on the economic growth of. The cashbased economy is characterized by the psychology to physically hold and touch cash. The crisis, which has ravaged many economics around the world has caused noticeable imbalance in nigeria. Fiscalmonetary policy and economic growth in nigeria. The country is the largest oilproducing country in africa, and in the. In the 1960s, nigeria was on a par, in terms of aspirations to attain a very high level of economic growth and development, with its fellowoil producing and exporting countries such as malaysia and indonesia, but has since failed to keep pace with them.
The benefits of adoption of cashless economy include reduction in corruption and. The crisis started with the us mortgage default cumulated to the system wide credit collapse and finally to the collapse of the global economy. Nigeria abstract the paper discussed the effects of cashless policy on the nigerian economy, how it was kickstarted in lagos, means of payments both manual and electronic, positive and negative effects of cashless policy, benefits to the economy and stakeholders, suggestions were made. Welfare effects of taxation on the nigerian economy osundina c. The model, which was an aggregated, sparsely captures all the interplay in the real sector due to the complexity in the workings of the economy.
An efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth. The cashless payment system as a panacea to the national. It is ranked as the 27thlargest economy in the world in terms of nominal gdp, and the 22ndlargest in terms of purchasing power parity. That the turmoil in the global economy has taken a toll on the nigerian economy is no longer a matter of contention.
The collapse in crude prices may hinder domestic production, battering fx and fiscal revenues and adding pressure to the. Nigeria economy, politics and gdp growth summary the. In november the central bank 2014, of nigeria cbn among other things moved the bench mark interest rate called monetary policy rate from 12 to per cent, and. Substantially constrain the parallel economy, particularly in illicit activities. Public disclosure authorized nigeria economic report. Cashless economy, cyber fraud, ebanking, point of sales. The political, economic and social dynamics of nigeria. Nigeria economy gdp, inflation, cpi and interest rate. Nigeria recently changed its economic analysis to account for rapidly growing contributors to its gdp, such as telecommunication, banking and its film industry, as a result of this statistical revision, nigeria has added 89% of its gdp, making it the largest african economy. Getting the policy response right matters as falling economic growth imposes a real human cost on the population.
Given the seminal role of smes to the economy of nigeria. As part of our ambition to be one of the best 20 economies before the year 2020, cbn informed the world that nigeria would commence the process of changing to a cashless economy by january 2012. A major reason that has been responsible for her socioeconomic stagnation is the phenomenon of corruption. Recently, the cbn came out with two laudable agenda the islamic banking noninterest banking and the cashless economy epayment systembabalola,2008.
Chapter one on nigerias social and political issues. Colonialism is a major feature of the economic history of nigeria. Pdf effects of cashless economy policy on financial. Political leadership and corruption in nigeria since 1960. The economy is now on a slow track for the first half 2015 with around 3.