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Dirty money: Could COVID-19 mean the end of cash?

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Nigerian naira banknotes . REUTERS/Afolabi Sotunde

Nigeria is Africa’s largest economy – but we are pretty old-fashioned when it comes to money.

Although many Nigerians are used to receiving money electronically from relatives overseas, at home the vast majority of people prefer physical money to digital payments and would rather queue up at a kiosk for cash than pay for something using their phone.

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It’s not smart. And in the time of Covid-19, it’s not safe.

By 2025, almost two-thirds of Nigerians will own a smartphone – but right now only 6% of us use digital technology to make financial transactions.

In Kenya meanwhile, the number is 73%.

Digital payments save businesses and consumers time and money – think of the time and effort it would save Nigerians in remote rural communities from not having to travel to go to the bank!

More importantly for digital democracy campaigners like me, electronic money is much easier to keep track of, increasing accountability and transparency and reducing corruption and theft.

So why don’t we work towards becoming the first nation on Earth to abolish cash?

This might sound like a ludicrous dream but in the time of the coronavirus, it might not be as far-fetched as you think.

Reducing the handling of cash to a simple way of slowing the spread of this and other viruses – and social distancing is almost impossible in a kiosk or bank queue.

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And Nigerians are getting used to the idea of digital payments. During the Covid-19 lockdown, many Nigerians had no choice but to switch to digital banking when bank branches were closed. And they liked it. There were even reports of shops refusing to accept cash.

Making the change to a cashless Nigeria would require intensive effort – but the chances are such a move could pay for itself. When Mexico made state worker salary payments, social welfare and pensions electronic it saved the equivalent of ₦491 billion.

Then there is also the informal economy. According to the IMF, the Nigerian informal sector accounted for 65% of Nigeria’s 2017 GDP. A move away from a cash-in-hand culture could lead to a very helpful increase in the government’s tax revenue.

Nigeria is already making more progress towards becoming a cashless society than you might think.

The Covid-19 crisis also saw the government utilise digital-payment platforms to distribute financial support for those affected by the lockdown.

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This followed on from earlier efforts to establish payment service banks, which see telecoms companies permitted to provide financial services.

Other government targets could be achieved too. The payment service banks were one of the initiatives aimed at meeting targets set in 2012, for 80% of Nigerian adults to have a bank account by 2020. These ambitious targets have been missed (the figure is currently around 60%) but a 2015 report prepared for the G20, the world’s largest 20 economies, highlighted the potential of digitised payments to rapidly increase access to financial services.

The journey towards a cashless Nigeria would require significant government commitment and investment. But the government could start tomorrow by aiming to make all government payments – such as Conditional Cash Transfer – digital by default. And doing so would be hugely beneficial for our democracy.

Physical cash is dirty money in more ways than one indeed.

Transparency and accountability are almost impossible to with cash payments which are anonymous and untraceable. And this has huge implications when it comes to making sure public money is spent where it is supposed to be spent.

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When the Indian government started making pension payments digitally, instead of using cash, bribe demands almost halved. I’m sure almost every Nigerian would dearly love to see that here.

At the digital democracy campaign, we are determined to improve accountability and transparency in Nigerian politics.

We have created a free app called Rate Your Leader, which allows voters to contact directly with their local elected representatives. The Rate Your Leader app helps politicians engage directly with people who elected them, helping them understand what matters most to the people who elect them, get important information directly to them and build relationships of trust with the electorate.

We did this because, in 2020, democracy is digital. Communication is digital. Commerce is digital.

Our money should be digital too – not least in the interests of public health.

Far from being a fantasy, perhaps a cashless Nigeria is an idea whose time has arrived.

Joel Popoola is a Nigerian technology entrepreneur, digital democracy campaigner and is the creator of the Rate Your Leader app. He can be reached at @JOPopoola

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