By Gift Olivia Samuel, The Sight News
ABUJA:The Central Bank of Nigeria, (CBN) on Friday gave clarifications on its Cashless Policy and the 7.5% increment in the Value Added Tax (VAT).
The CBN Governor, Godwin Emefiele who briefed newsmen after the Monetary Policy Committee (MPC) for September, 2019, said that the government increased the VAT, to generate revenue to fund critical infrastructure, to improve the lives of Nigerians.
This is as he also stated, that the 7.5% VAT rate in Nigeria compared to those in other parts of the world, stands as one of, if not the lowest in the world.
According to him, “The government has a responsibility to fend for every body and that means that it has to spend money to provide infrastructure that will improve the lives of our people, and there are two ways through which the government can fund these expenditures, it is either it raises revenue or it goes for debt.
“It is a right decision to say that government must increase VAT from 5 to 7.5 percent. It is important you understand that government also has obligations it must meet and so, it must raise revenue. Compare the 7.5% VAT rate in Nigeria to that in other parts of the world, Nigeria’s VAT rate even at 7.5% stands as one of, if not the lowest in the world”.
He appealed to Nigerians to show understanding, adding that it may seem painful but it is important for the government to raise revenue to meet its obligations.
“With this revenue, government will improve roads, provide money for electricity and it will have positive implications on the GDP growth of the country. I will rather choose an increase in VAT, rather, MPC decided that VAT will be a better option to raise revenue”.
Speaking on the Cashless Policy, he said that the policy has been on since 2012 but charges on deposits was stopped in 2014 and reintroduced now to reduce the cash flow outside the banking industry.
“I truly sympathize with the banking public and regret the inconvenience this may cause to bank customers. The cashless policy in Nigeria is not new, it was launched in 2012 and several engagements had been held across multiple stakeholders before we started this policy.
“At inception, charging has always been on deposits and withdrawals since 2012. Withdrawal charges have been in place, only deposit charges are new. By 2014, we agreed that it was too early to begin to charge people who want to deposit money because we agreed that there was a lot of cash outside the banking industry and so, we agreed to relax on charging for deposit but retain those who want to withdraw cash from the bank.
“We are saying, that we would like to return back to the earlier schedule, we are returning back to the six states where currently, withdrawal charges are holding. There are six states, it is not all over the country, but the entire cashless process will have to permeate the entire Nigeria by March 2020,” he remarked.
He further added that the policy is in no way designed to disenfranchise hardworking Nigerian businesses, many of whom, he said, have embraced electronic payment channels and online digital marketplaces.
“Permit me to say that Small and Medium Enterprises and other businesses have various options and channels available to them for collecting legitimate payment for goods and services, like Bank transfers, POS, mobile POS, Mobile money and USSD codes”, Emefiele added.
He emphasized that it is in the public interest to promote an efficient payment system via the cashless policy which helps to reduce the punitive cost of cash processing, often passed on to bank customers by the Deposit Money Banks(DMBs).