Cashless Lagos: High Customs Duty Frustrates Banks, Says CBN



Sunday, February 12, 2012 / Festus Akanbi, Thisday
The imposition of a 20 per cent duty by the Nigerian Customs Service on imported Point of Sales (PoS) terminals ordered by the various money deposit banks has been blamed for the delay in the take off of the pilot scheme of the cashless policy of the Central Bank of Nigeria (CBN) in Lagos.
Under the scheme, code-named Cashless Lagos, which was supposed to have commenced on January 1, banks are expected to deploy 40,000 PoS terminals in the state preparatory to the full blown commencement of the cashless policy nationwide in April.
However, a random survey conducted by THISDAY in Lagos last week showed that it was business as usual as the ATM cardholders awaited the deployment of PoS terminals by banks.
When contacted, CBN deputy governor, operations directorate, Mr. Tunde Lemo blamed the delay on the decision of the Nigerian Customs to impose a 20 percent duty on the terminals being imported by banks for the programme.
Industry operators said they could not understand the motive behind the decision by the Customs Service to unilaterally hike the custom duty payable on the terminals from 5 per cent to 20 per cent.
In view of the fact that the programme is running behind schedule, Lemo said banks have been instructed to pay the 20 per cent duty, pending the resolution of the issue.
According to him, “The delay was partly caused by the Customs Service that refused to collect 5 per cent duty on PoS terminals. They insisted on 20 per cent and we have told the banks to go ahead and pay.
“But we are going to make a case for them with the Minister of Finance so that subsequently, imports will be based on five percent.
“The banks are currently rolling out massively and you will see the result soon. We are on top of the situation,” the CBN chief said.
He said it is not unusual to have a few delays when a popular policy is being rolled out. Lemo was confident that the programme will fully take off by end of February, explaining that the apex bank is already talking to banks on the need to speed up the process of importing the terminals so that the policy will commence fully in Lagos.
He explained that there were other issues which the regulatory authorities and the banks are contending with, but this, he added, will be fully addressed before the end of the month.
Such issues, according to him, included availability of bandwidth, and the role of telecommunications companies, among others.
Meanwhile, spokesperson for the Nigerian Customs Service, Mr. Chris Osunkwo denied the charge of a unilateral increase in the duty payable on imported PoS terminals.
He explained that import duties on items are reviewed from time to time, adding that the current duty is expected to last between 2008 and 2012.
According to the initial timetable drawn by the CBN, the banking system was supposed to have rolled out 40,000 PoS terminals before the end of last year in preparation for the January 1, 2012 take-off of the pilot scheme in Lagos before transiting to other parts of the country.
The apex bank explained that this was expected to signpost the settlement of transactions electronically alongside other e-payment options.
The CBN had in a circular to all banks set April 1, 2012 as the take-off date for the implementation of charges relating to the violation of cash-lite policy rules. CBN instructed the banks to comply with all the rules guiding the implementation of the policy to foster growth.
In the circular, the apex bank directed electronic payments to suppliers, all forms of taxes, salaries and pensions by both private and public organisations with more than 50 employees/pensioners in Nigeria.
Lemo had in December last year said “We have a target of deploying 150,000 PoS by the end December 2012, which will be scaled up to 375,000 PoS by end 2015 when we hope to have attained our benchmark PoS penetration of 2,247 PoS per 100,000 adult population as obtainable currently in Brazil.
The PoS terminals are expected to be deployed to several locations where cash is used as means of payment. These include schools/educational institutions, filling stations, worship places/religious organisations, retail/wholesale shops, travel agencies, hotels, telecoms companies, etc.
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