Cashless Policy And Performance Of Small and Medium-Sized Enterprises (SMEs)

CHAPTER ONE

1.0 INTRODUCTION

1.1   Background to the Study

The rate of rapid development at global level has been so dynamic that it touches all aspects of human venture (Latifit & Alhan, 2020). Policymakers and development practitioners acknowledge the leading role of information and communication technologies (ICTs) for development (Dutta and Mia, 2019). Today, the world is becoming a global village, given the growing complexity of business portfolios and expansion of business groups, and the increase in decentralization in response to these changes (Tamin Albalor & Joi, 2021). Thus, cashless policy offers banking industry a new leading edge of opportunities and challenges in the global banking market. Hence, the success of cashless economy services depends on the rate at which the new technology is adopted by the small and medium scale enterprises. Consequently, the factors that affect the small and medium scale enterprises will certainly be of concern to both bankers and policy makers (Shauk & Zafarullah, 2020). The rapid changes in business operations in contemporary times in the form of Technological improvement require banks in Nigeria to serve the small and medium scale enterprises. Cashless policy products are increasingly gaining ground as many small and medium scale enterprises receive them as panacea to problems of poor service delivery that has been befalling many banks for a long time (Dogaraws, 2021).

However, experts posit that the rate at which Nigerians accept the products is far below expectation. This, according to some research findings, is due to lack of awareness about the transactions in a cashless economy are made feasible through the employment of ICT infrastructure. The growth of the internet and technology has led to the legalization of electronic money as a sort of currency, to obviate the necessity of real money, a cashless society depends on electronic technologies to perform all actions. This initiative’s goals include encouraging transparency and confidence in financial transactions. The demise of a currency-based economy is already being anticipated by policymaker, experts, and enterprises throughout the globe. E-widespread banking, which became widely available in the 1990, marked the beginning of a one when most people no longer make payments made through electronic means have increased dramatically since the year 2010.

Non-cash transactions of $358 billion grew by 76 percent in 2013 over 2012, according to the World Payments Repon (2015). The trend toward a cashless economy is becoming more prevalent in wealthy nations as well. Several publications have suggested cashless economy in which legal tender is replaced by electronic money. An increasing number of countries throughout the globe are adopting digital economic systems. A cashless monetary method will be examined in this research to see what effect it has on the small company market. Section 1. Section 2, and Section 3 are the three sections of this investigation. There is a brief discussion of cashless economics in the first section. The second part of the lecture takes a close look at how cable laws influence small and medium-red organizations. A robust regulatory framework is emphasized in the conclusion to protect small businesses firms from the quick shift to a cashless future. The description of SMEs as a business that utilize average trading capital and the largest number of participant operating as the lowest strata of the economy, could make the introduction of the cashless policy not only a plaque to the operators, but also a burden to the economy.

With the advent of Information Technology and the internet, the monetary system is taking a new swing into using electronic money as a legal tender for exchange. Several literatures have pointed out the emergence of a cashless economy where the present legal tender (which is paper money and coins) is replaced with electronic money. This initiative has become a global trend. Bonugli (2006) noted that bank notes and coins are gradually phasing out as mode of payment for transactions as more systems present themselves to be viable and better alternatives across the world.

Nigeria is not left out of this trend as the cashless policy is the latest innovation of the Central Bank of Nigeria, among its numerous efforts to reform the Nigerian financial system. There was the recapitalization agenda, then the redenomination of the Naira, the non-interest (Islamic) banking and most recently the cashless economy. While some of these policies made sense to the citizens, others were treated with discord. Though as always with any change attempt, resistance is inevitable. Amidst the skepticism of Nigerians, the recapitalization agenda which kicked off in 2005 has been successful. The redenomination of the Naira and the Islamic banking were flogged with critics. For instance, the redenomination of the Naira was judged to be counter-productive while the initiators of the non-interest banking concept are accused of masking under some hidden agenda (Akhalumeh and Ohiokha, 2012). The cashless policy has not escaped such critics, hence the need to address the concerns of the citizenry if the policy must survive. The anticipated benefits of the adoption of the cashless economy have been greatly stressed but people have not been convinced that the policy is for the good of all especially the SMEs which contributes majorly to the economy.

1.2   Statement of the Problem

All banks compete with each other to attract their customers in different ways by providing convenient, accessible and acceptable services or/and products to their customers. One of the most important of these services is cashless economy (electronic services) which have contributed significantly to reduction in the distance between costumers and the banks (Temables & Nary 2007). Tony banking Situation demands continuous innovation in order to meet the yearnings and aspirations of the ever-demanding customers. Hence, banks need to roll out new products and services quickly and effectively, using latest cutting edge technology (Augusto, 2002).

Cashless policy enable banks to improve their service delivery, decongest queues in the banking halls, enable customers withdraw cash 24/7, aid international payments and remittances, track personal banking transactions, request for online statements, or even transfer deposits to a third party account. Those services will undoubtedly impact significantly on the overall performance of small and medium scale enterprises. The small and medium scale enterprises on the other hand, stand to enjoy the benefit of quick service delivery, reduced frequency of going to banks physically and reduced cash handling, which will give rise to higher volume of turnover (Fagbuyi. 2003).