EFFECT OF CASHLESS POLICY ON SMALL AND MEDIUM BUSINESS IN NIGERIA

Background of the study: There have been a consistent agreement in the body of extant literatures (Daasi, 2012; Nelson & nelson, 2010; Gboski, Joshua & Stephen, 2007) that small and medium scale enterprises have the tendency to improve the economy of any nation through job creation and increased flow of finance to the economy calls for policy formulation and implementation that will enhance its growth and performance. However, the recent introduction of cashless policy by the central bank of Nigeria (CBN) has relegated SMEs to a characterization of what is described as the declining glory of the sector. This is evident in SMEs performance, growth and operation, especially in rural areas. The situation is more disturbing when compared with what other sectors (with lesser economic implication) of the economy has been able to achieve. Studies have also described the situation by showing a high correlation between access to finance and operations, performance and growth of SMEs. Hence, if the goals of SMEs which is widely acclaimed by researchers (Daasi, 2012; Nelson & nelson, 2010) as a boast to the economy will be achieved, then the development and enhancement of the performance, operations and growth of SMEs should be vigorously pursued. The growth of SMEs in Nigeria is a product of availability of finances and effective utilization of mechanism which enhances their performance, operation and growth in terms of execution of transaction. Thus, inability to accomplish the foregoing could hinder the growth of SMEs especially with the recent introduction of cashless policy which calls for internet and online banking, the use of Automated Transfer Machine (ATMs), etc., makes the situation even more disturbing for SMEs especially those operating in the rural areas due to the proximity, lack of awareness and knowledge, access to Information and Communication Technology (ICT) (Ebepanipre & Oyuoyo, 2013; James, 2012; Olajide, 2012). 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.