Since the introduction of automated teller machines (ATMs) in 1989, the Central Bank of Nigeria (CBN) has tried to dissuade Nigerians from doing business with cash. Emir of Kano, Sanusi Lamido Sanusi, a former banker who was appointed Central Bank governor on June 3, 2009, really pushed for a cashless policy, and moved the campaign notches higher, before he was suspended on February 20, 2014. He never returned to office, as he became emir, barely four months after the suspension. Sanusi gave life to the cashless policy, and his successors have tried to push the boundaries.
People no longer carry huge cash, just as they no longer take their mats to the banking halls because they would take more than a nap there. People simply go to ATMs to make withdrawals, and even deposits. Although the nation has not levelled up in inclusivity in the sector, given that some people still do not have bank accounts, even with the incentive by some banks for prospective customers to do so with no deposit. The progress made in that area is visible, and remarkable.
Nigerians have responded to cashless banking, such that people use point of sale (POS) to pay for purchases in petrol stations, supermarkets, and sundry places. Customers simply whip out their ATM cards, insert them in the machine, and punch in their four-digit secret numbers to effect deductions from their accounts. The move further minimized the movement of cash.
However, just as people had begun to adjust to usage of POS, government, in its bid to shore up internally generated revenue, remembered that there was something called stamp duty, a brainchild of colonial masters, in our laws. It sought to strengthen and implement it and stated, in accordance with the law, that any purchase beyond N1,000 attracts a stamp duty of N50. This only applies if the customer intends to pay through a current account. Government projected that the move would boost revenue with N2.5tn per annum.
For a government that was neck-deep in borrowing, using all manner of meaningless statistics to justify a growing appetite for loans, such revenue was a pleasant relief. But two major agencies of government were locked in a battle over collection of the duty. The Nigerian Postal Service (NIPOST) insisted that, since 1939, when the colonial masters introduced stamp duty via Ordinance 15 of that year, the post office had been the custodian of the fund. But the Federal Inland Revenue Service (FIRS) held that it had the duty of collecting taxes accruing to the Federal Government, which put it in good stead to do the job. Perhaps it is vital to state that any agency given the nod to do the job would keep 4 per cent of the proceeds as administrative charges. That would be a lot of money for an agency like NIPOST, tottering on the brink, on account to the advent of social media, which seems to have sent the traditional letter-writing into oblivion, badly denting the revenue of the organisation.
Both agencies locked horns on the matter, until a Federal High Court ruled that there was a fundamental flaw in the National Assembly bill of 2004, given that there was no clear-cut agency vested with the duty to collect stamp duty. Government quickly put together an amendment to the bill, and sent it to the National Assembly, in which electronic transfers were added to the list of transactions eligible for stamp duty. The new bill gave collection duties to FIRS, but NITEL is not relenting in the fight, something akin to a struggle for survival. While the fight lasted, banks seemed to have watched in amusement, as they allegedly kept most of what had been collected in their coffers, apparently waiting for the agencies to sheathe their swords.
Meanwhile the CBN swung into action, and intsructed banks to commence collection of stamp duty of N50 on all transactions beyond N1,000 where the customer would pay with a current account. The apex bank said it was the merchant that would pay, not the customer. But that instruction is obeyed largely in the breach, from petrol stations to supermarkets and sundry places, the norm is to be charged N50 or N100 atop your bill, if you present an ATM card with a current account. But the CBN insists, rather helplessly, that the merchants are flouting instructions, yet does nothing about it. The merchants argue greedily that their profit would be eroded, to the point of non-profitability, if they pay the stamp duty. The result is that the customer, whom the CBN encourages to go cashless by using POS, is being made to look again at the exploitation now ensuing in the process. The charge may seem a trifle but when you engage in multiple purchases, exemplified in moving from a petrol station to a supermarket in three or four successive days, you may be forced to consider stopping at the ATM to make withdrawal to do cash transactions. Such a move is bound to defeat the cashless environment touted by the same central bank that now stands helplessly, to the chagrin of customers under the brunt of stamp duty.
Merchants may have their points but we know that profitability cannot be genuinely listed. Recently, a friend told me how he was charged a higher rate for opting to pay for a hotel room through POS than cash. He would have saved no less than N1,000 had he paid cash. The current buck-passing in the stamp duty execution detracts from the cashless policy, and the current execution seems to make money for the merchants to the detriment of flustered customers.