Economics Project Topics

Impact of Introduction of Cashless System on the Nigerian Economy (A Case of First Bank Plc Afikpo)

Impact of Introduction of Cashless System on the Nigerian Economy (A Case of First Bank Plc Afikpo)

Impact of Introduction of Cashless System on the Nigerian Economy (A Case of First Bank Plc Afikpo)


  1. To determine the effect of cashless system on Nigerian economy.
  2. To study the adoption of cashless system in the rural areas.
  3. To study the precondition of the introduction of cashless system in the Nigeria economy.
  4. To study the workability of the cashless system in the Nigerian economy.
  5. To determine the possible solution to anticipated problems.




Literature on the cashless policies is rather scarce, but recently the topic has gained more attention both by central banks and academic researchers. In this section, this study reviews some existing studies as follows; Electronic Payments as argued by (Cobb, 2005) have a significant number of economic benefits apart from their conveniences and safety. These benefits when maximized can go a long way in contributing immensely to economic development of a nation Automated electronic payments help deepen bank deposits thereby increasing funds available for commercial loans – a driver of all of overall economic activity. According to (Cobb, 2005), efficient safe and convenient electronic payment carry with them a significant range of macro – economic benefits. While the high level of cash transactions creates an opportunity for the electronic payment industry, it also imposes a cost on local economies. Cash has to be minted, securely transported, counted and reconciled, kept secure and maintained for re-use time and time again. The per-payment cost is high, and will always remain high whereas the costs of electronic system are fixed. Once the infrastructure has been built, the costs pertransaction is very low (Cobb, 2005). When cardholders use their cards at the point of sale they are helping to keep money in the banking system. More than two thirds of all non-cash transaction payments in the United States are made electronically, with the biggest increase in electronic payments occurring between 2003 and 2006 according to US central bank. The central bank’s non-cash payments study found that about 19 billion more electronic payments were made in 2006 than 2003. In assessing the role of central bank in a cashless society, Claudia and De Grauwe (2001) stressed that central banks gradually lose their monopoly position in the provision of liquidity combined with its subsequent small size which makes it hard to control the short – term interest rates. On the contrary, Marco and Bandiera (2004) argue that increased usage of cashless banking instruments strengthens monetary policy effectiveness and that the current level of e-money usage does not pose a threat to the stability of the financial system. However, it does conclude that central banks can lose control over monetary policy if the government does not run a responsible fiscal policy. Cashless economy is not the complete absence of cash, it is an economic setting in which goods and services are bought and paid for through electronic media. According to Woodford (2003), cashless economy is defined as one in which there are assumed to be no transaction frictions that can be reduced through the use of money balances and that accordingly provide a reason for holding such balances even when they earn rate of income. In a cashless economy, how much cash in your wallet is practically irrelevant. It has been observed that developed countries of the world, to a large extent, are moving away from paper payment toward electronic instrument especially payment cards. Some aspects of the functioning of the cashless economy are enhanced by e-finance, e-money, e-brokering and e-exchanges. These are all transactions and payments effected in a cashless economy. (Moses Ashike 2011). Echekoba and Ezu (2012) in a research carried out in Nigeria, observed that 68.2% of the respondent complained about long queues in the bank, 28% complained of bad attitude of teller officers (cashiers) while 2.89% complained of long distance to bank locations to their home or workplace. Likewise, in her 24th NCS conference in December 2011, CBN data shows that 51% withdrawal done in Nigeria was through automated teller machine (ATM), while 33.6% was through over the counter (OTC), cash withdrawals and cheque 13.6%. Payment was also done through point of sale machine (POS) which accounted for 0.5% and web 1.3%. The cashless economy policy of the CBN is designed to provide mobile payment services, breakdown the traditional barriers hindering financial inclusion of millions of Nigerians and bring low cost, secure and convenient financial services to urban, semi – urban and rural areas across the country. Valentine Obi, Managing Director/CEO e-Tranzact International Plc, a leader provider of mobile transaction services defines cashless society as one where no one uses cash, all purchases being made by credit cards, charge card, cheque and direct transfer from one account to another. In other words, it refers to the widespread application of computer technology in the financial system. In Nigeria, under the cashless economy concept, the goal is to discourage cash transaction as much as possible. The CBN had set daily cumulative withdrawal and deposit limits of N150, 000 and N1, 000, 000 for corporate entities (now reviewed to N500, 000 and N3million respectively). Penalty fees of N100 and N200 respectively (now reduced to 3% and 5% respectively) are to be charged per extra N1, 000 (Ezumba 2011)


Money is often described as having three function, (i) a unit of account function (ii) a medium-of-exchange function, and (iii) a store-of-value function. In a cashless economy, the third is not operative and, probably, neither is the second. Cashless economy does not refer to an outright absence of cash transactions in the economic setting but one in which the amount of cash-based transactions are kept minimum. It is an economic system in which transactions are not done predominately in exchange for actual cash (Daniel, D. G., R. W. Swartz, and A. L. Fermar, (2004). In a cashless society the unit of account (e.g. Dollar, euro) remains a national affair and is provided by the state. The followings among others enhance the functioning of cashless economy; the use of non-cash payment methods such as cards (credit and debit) dominates the use of cash in payments. The card based payment system has several players. On the one hand, are the providers of the card based payment system- first of which is the card companies like MasterCard and Visa who provide their payment network for the system to function. The second set of providers are the banks that act as acquires for merchants and issuers for cardholders and reach the card payments services to the ultimate users. For the two parties, the card payment system is an income generating initiative and they are motivated to run the system as they are able to generate adequate profits out of their operations. The benefits these two players derive from the system are manifold- the convenience of electronic transaction, the ease of credit availability, increased sales, increased purchasing power, to list a few. Since they are the end users of the convenience the card payment system generates, they are the ones who bear the cost of the system. Developing countries are just improving their payments infrastructures, enabling wider adoption and greater usage of non – cash means and channels.





In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.


Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.


According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.

This study was carried to examine Impact of Introduction of Cashless System On The Nigerian Economy. First Bank Plc Afikpo form the population of the study.




This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.




It is important to ascertain that the objective of this study was to ascertain impact of introduction of cashless system on the Nigerian economy (a case of first bank plc Afikpo). In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing impact of introduction of cashless system on the Nigerian economy


This study was on impact of introduction of cashless system on the Nigerian economy (a case of first bank plc Afikpo).. Three objectives were raised which included: To determine the effect of cashless system on Nigerian economy, to study the adoption of cashless system in the rural areas, to study the precondition of the introduction of cashless system in the Nigeria economy, to study the workability of the cashless system in the Nigerian economy and to determine the possible solution to anticipated problems. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from first bank plc Afikpo . Hypothesis was tested using Chi-Square statistical tool (SPSS).


As Nigeria progresses towards a more digitized financial landscape, it is essential for stakeholders, including financial institutions like First Bank PLC, policymakers, and the public, to collaborate in overcoming obstacles and maximizing the benefits of a cashless system. This study serves as a valuable resource for understanding the dynamics of this transition and provides a foundation for further research and policy development in the realm of digital finance in Nigeria


  1. Implement robust public awareness campaigns to educate individuals and businesses about the benefits and security features of digital payment systems. This will help alleviate concerns and resistance to the adoption of cashless transactions.
  2. Continue to invest in and upgrade the technological infrastructure supporting digital payment systems. This includes improving network reliability, enhancing cybersecurity measures, and ensuring that the systems are user-friendly and accessible to individuals across different socio-economic segments.
  3. Foster collaboration between financial institutions, such as First Bank PLC, and regulatory bodies to create a conducive regulatory environment for the growth of digital financial services. This includes addressing regulatory challenges and ensuring that policies support innovation while safeguarding the interests of consumers.
  4. Expand financial inclusion initiatives to reach underserved and remote areas. First Bank PLC and other financial institutions should work towards creating tailored solutions that cater to the needs of diverse communities, ensuring that everyone has access to and can benefit from digital financial services.
  5. Actively engage with key stakeholders, including government agencies, businesses, and local communities, to build partnerships that facilitate the seamless integration of cashless systems into the broader economic ecosystem. Collaboration will be essential in addressing challenges and fostering a supportive environment for digital financial innovation.


  • Ajaji, S.I. and O.O Ojo (2006) – Money and Banking: Analysis and Policy in the Nigerian Context, Second Edition, University of Ibadan, Daily Graphics Nigeria Ltd. Ajayi M., “Banking Sector Reforms and Banking Consolidation: Conceptual Framework”. Bullion, Vol. 29, No. 2, 2006
  • Akhalumeh, P.B., and Ohiokha, .F (2011): Nigeria’s Cashless Economy; The Imperatives. International Journal of Management & Business Studies. Vol. 2 pp. 12 – 17
  • Azeez K, “Fresh Hurdles for CBN Cashless Economy Plan” National Mirror, October, 2011
  • Azeez K, (2011), “Cyber Insecurity Threatens Nigeria Cashless Economy Drive”. [Online] Available:…/22594/html
  • Central Bank of Nigeria (2011), Money Market Indicators & Money and Credit Statistics, CBN Statistical Bulletin, CBN Publications
  •  Claudia, C. and P. De Grauwe (2001): Monetary Policy in a Cashless Society, Brussels, CEPR Discussion on Study.
  • Echekoba, F.N., and Ezu, G.K (2012): Electronic Retail Payment Systems: User Availability & Payment Problems in Nigeria. Arabian Journal of Business & Management Review. Vol. 5, pp. 60 – 63
  • Humphrey, D.B. (2004): – Replacement of cash by cards in U.S Consumer Payments, Journal of Economics and Business, 56, 211 – 225
  • Marco, A. and L. Bandeira (2004): Monetary Policy, Monetary Areas and Financial Development with Electronic Money, IMF Working Study, IMF.
  • Moses – Ashike, H. (2011). “Cashless Economy can Reduce Risk of Carrying Huge cash”. [Online] Available: http://businessdayonline/…/22217
  • Roth, B.L. (2010). “The Future of Money: The Cashless Policy Economy – Part 1 [Online] Available: https://www.xcom/…/future-money-cashless-economy – part i
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