FAAN: Echoes of cashless policy
It is heart-refreshing President Bola Tinubu suspended the cashless payment system at airport toll gates barely three days it came into force due to inconveniences it brought to bear on
It is heart-refreshing President Bola Tinubu suspended the cashless payment system at airport toll gates barely three days it came into force due to inconveniences it brought to bear on the public.
But events leading to the president’s intervention brought back sad memories of the ill-fated naira redesign and cashless policy of the Central Bank of Nigeria (CBN). The redesign policy which was in part, to replace the old N200, N500 and N1000 with new ones had January 31, 2023 as deadline.
Its other component targeted reduction of the cash in circulation by pegging weekly cash withdrawals to N500,000 and N5million for individuals and corporate organisations respectively. The aim was to aid the CBN design and implement better monetary objectives, take control of the currency in circulation and address the hoarding of the naira outside the banking system. This was in addition to checking counterfeiting of the high denominations of the naira notes.
Ostensibly, the commencement date was primed to give the CBN sufficient time to circulate enough of the new currencies so that normal economic and commercial activities can progress seamlessly. But its implementation was faulted from day one as the CBN was unable to make the new naira notes available in sufficient quantities to commercial banks.
Acute scarcity ensued even as both the old and new currencies circulated concurrently. Excruciating hardship and all manner of sharp practices loomed large. Citizens could hardly access the new currency as the deadline approached. There was confusion everywhere with normal life endeavours seriously threatened.
Faced with the hopelessness which the situation presented, the CBN was compelled to extend the deadline to February 10, 2023. But that never brought any respite. Rather, it became a precursor for the chain of events that exposed all that is wrong with policy planning and implementation in this country.
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Allegations of connivance by commercial banks officials with unscrupulous Nigerians to corner the new naira notes and sabotage the process became the order of the day. Nigerians were forced by the existential threats the situation presented to buy the new naira notes at discounted rates.
Poor communications network did not make matters any easier at the Point of Sales (POS) centres. Inability of commercial banks to dispense cash through their Automatic Teller Machines (ATM) worsened the crisis situation. Some governors were compelled by the hopelessness of the situation to challenge the policy at the Supreme Court.
They got a reprieve when the apex court granted them interim injunction ordering the old and new notes to remain legal tender until the conclusion of the case. A number of events were to follow.
But what appeared a final relief came when the apex court nullified the government’s naira redesign and cashless policy for contravening the 1999 constitution. It has been three years since that ruling and the old and new naira notes have been circulating concurrently.
No further action on naira redesign and cashless policy appears to have been initiated since then. Neither has any explanations been given on how the government contends with those challenges on which the policy was rationalised. Every indication is that they still assail effective monetary policy management even as digital transactions have progressed with varying degrees of success.
That was the situation when the Federal Airports Authority of Nigeria (FAAN) announced its intention to implement the cashless payment system at airport toll gates. Given the country’s experience, the expectation was that the agency did its homework to ensure hitch-free operations. That was the minimum expectation when FAAN set March 1, for the commencement of digital payments at airport toll gates across the country.
Before then, it had mounted some campaigns to sensitise the public on various payment options available. Payments were to be made through the FAAN Go cashless card which the agency considers the fastest and most seamless option. The other called E-Tag is considered ideal for frequent users as it enables automatic deduction without stopping.
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There is also the VIP sticker for authorised vehicles with approved access as well as the ATM/debit card via POS. The latter, available on site, comes with varying processing time on account of anticipated banking network issues.
The digital payment options aim at eliminating cash transactions, check corruption by rogue officials and enhance efficiency by aligning with Nigeria’s wider push towards a cashless economy. Ironically, on the first day of its implementation, it was beset with serious hiccups just like the naira redesign and cashless policy of the CBN when it came into force in 2023.
Chaos ensured on the first day as long stretch of vehicles created gridlock in both Lagos and Abuja airport entry points. Motorists were reported to have resorted to the use of POS leading to serious delays. Travellers missed their flights even as others resorted to banned commercial bike riders in desperation to catch their flights.
The ensuing situation exposed the weakness in the payment options especially at the toll gates. That was the situation in which the president intervened to save the public from the hardship and national embarrassment the gridlock entailed.
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But the president’s intervention exposed the inadequacies of the measures put in place by FAAN before rolling out the plan. It was a grave error on the part of the agency for not anticipating that some of the payment options will definitely create delays at the gates. Though the agency floated four payment options, the fact remains there wasn’t adequate public sensitisation on both the commencement date and critical details of the payment options.
Take the case of ATM/debit card via POS. The agency rightly anticipated the process will take some time due to banking network issues. But it did not initiate any measure to check its effect on the travelling public especially on such busy airports as Lagos and Abuja. The gridlock at these airports is a consequence of that miscalculation.
Issues that should have been considered included possible expansion of the toll gates especially in Lagos and their possible designation in line with the payment options. Events have proven wrong, the assumption that all will go smoothly when the digital payment system commences.
FAAN was forced by the ensuing challenges into what it called a hybrid measure, in which both cash and digital payments will run concurrently until it comes up with something better. Ironically, that has been the fate of the mother policy, (naira redesign and cashless) three years thereon, with the old and new currencies still circulating concurrently.
Does that say something about policy making and implementation processes on this clime?
