The Central Bank of Nigeria (CBN) has introduced a new policy on cash-based transactions which stipulates a cash handling charge on daily cash withdrawals that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies. The new policy on cash-based transactions (withdrawals) in banks, aims at reducing the amount of physical cash (coins and notes) circulating in the economy and encouraging more electronic-based transactions (payments for goods, services, transfers, etc.)
While we can’t deny the importance of a cashless policy to Nigeria’s economy but Nigeria as an agrarian economy with highly significant proportions of its farmers in the rural areas and for us to key into this paradigm shift efficiently infrastructures need to be put in place.
First, we need to look at the availability of banks in rural areas. Most farmers travel 2 to 4 hours from their village to the bank.
Secondly, there is a high rate of illiteracy among farmers in Nigeria, 90% of them can’t read numbers, and they can’t differentiate between 200 from 2000. Before this new policy farmers depended on Mobile Money agents when receiving their payments from off-takers/traders, but now the mobile money agents have limited access to cash and as a result, most of them close their shops.
Thirdly, there is low electricity power in the rural areas which makes it very difficult for farmers to charge their mobile phones and there is low network connectivity, in many villages farmers have to climb on top of hills to be able to make calls.
Mile 12 International Market (Africa’s largest fresh produce market) located in Lagos, Nigeria reported having low patronage as a result of the new policy. Just like the farmers, most of the traders in the market are illiterate too, they can’t read numbers even when transfer of cash has been made to their accounts.
How can we help smallholder farmers overcome the above financial challenges in Nigeria?