By Ike Diaku
Crime in Nigeria has increased exponentially over the past few recent years, crime ranging from car-jacking in streets, armed robbery in homes, sometimes with POS machines to the more grievous kidnapping, abductions and other acts of terrorism.
As these problems increase, one reads in the media is calls for more investment in tracking equipment and military support. It isn’t a good security strategy to concentrate on how to intercept criminals after the crime has been committed, especially in a country like Nigeria with substantial undeveloped land mass covered mostly by dense tropical vegetation; it is better to think of how to reduce or prevent these crimes. Unfortunately with the level of poverty and unemployment in the country, things can only get worse. Speaking to a few people, corruption in every sector in Nigeria seems to take the blame for not trying to do anything. Any responsible and responsive government should live up to its first responsibility of securing the lives of citizen, even if there are other challenges the government is facing.
When there is a challenge, one first looks at the best and cheapest way to overcome the problem, starting from the root cause, of all the insecurity cases in the country, most of them if not all are motivated by money, and in most times in cash. Any intentional effort to reducing crime and insecurity should look at this area. There is corruption everywhere in the world, in the western world corruption is reduced by preventive processes, assisted by additional use of technology, and finally consequences for offenders. Nigeria’s problem lies in its processes and not necessarily only corruption.
There are a few things that need attention in the Nigerian system, We Africans indulge in denial and prayers, none of these will reduce crime or insecurity. If Nigeria truly wants to arrest crime in its society, the first thing should be to look for examples around the world to see what has worked elsewhere. If the government is sincere, and for self-perseverance of Nigerians, operations of the Nigerian Central Bank and Financial institutions need to be reviewed, they hold a crucial key.
A. The Central Bank
The Central bank must lock Nigeria down to a genuinely cashless society. Most crime are motivated by cash, to take all that risk, a criminal will expect a substantial cash reward. The Central bank may currently have cashless policies in place with no consequences for breaches. The Central Bank is a regulator and not only author of policies, if policies are partially or not enforced and defaulters go unpunished, the policies are useless. The Central Bank has not been fining Nigerian banks for non-compliance with policies, and if they do, this is not well publicised in Nigerian media, unlike in western World countries where bank fines are quite common and reported frequently. Banking is meant to be a highly regulated industry and hard to believe every banking institution is compliant.
The Central Bank should work towards a more cashless society, actions like below can be considered.
No daily over-the-counter withdrawals or deposits over N50, 000 for private and corporates (This will also check corruption in companies and corporation tax declaration). Over-the-counter withdrawals and deposits must not exceed three consecutive days and a discretionary prohibitive security deposits for firms that require exemption due to compelling business reasons; bearing in mind that exceptions are the reasons many policies fail in Nigeria
The Central bank should mandate banks to remove all charges collected on its behalf like Value Added Tax (VAT) per transaction and other fees like account maintenance fee, SMS messaging fee which you pay even if you elect for email messaging, commission on transfers and other fees associated with running standard savings or current accounts. Apart from being extortionate, these fees are unethical and a major reason low income earners avoid using banks. In the western world, you can deposit funds in a standard savings or current account, move your funds around several banks for years and lose no money. Where did we copy banking from and why was this not copied? It could be argued that cost of doing business is higher in Nigeria, but these banks post huge profits.
Banks should improve Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures and checks. No account should exist in a bank without a valid address, without account referees or any of both; this can be supported by simple KYC computer software. Banks should be mandated to implement KYC, AML and Transaction Monitoring (TM) software. A bank account does not necessarily receive all funds transferred to it, transfers of exceptionally huge values are declined until the account owner provides satisfactory explanation for the transfer flagged by TM and of course the account is flagged for further monitoring. Banks should electronically transmit KYC, AML and TM monthly reports to the CBN. Reported defaulting banks should be fined heavily by the Central Bank for every reported instance.
B. Financial Institutions/Banks
The Nigerian banking industry is quite immature when compared to what banking has evolved to elsewhere in the world in this 21st century. You go into banking halls in Nigeria and wonder what this number of customers are doing inside the bank, there is a mad rush for cash, on the other side of the bank with irate customers agitating about transaction irregularities, and these same banks have the conscience to charge account maintenance fee. Twenty five million naira can be comfortably deposited or transferred to an account without query, despite the account owner never having had a transfer or balance of more than a few hundred thousand historically.
The following reforms will help banks help Nigeria.
All charges associated with owning a standard savings or current account should be removed, this will encourage every individual to save money in banks and not under or in mattresses at home regardless of what their income is.
Implement AML and TM software systems to improve customer profiling and transaction trends and subsequently build transaction black lists. TM helps check attempts at large deposits from cybercrime or other sources till source of funds and purpose is understood.
Improve bank KYC and client onboarding procedures including
Customer address validation and identity checks against BVN and NIN. Introduction of prohibitive penalties for bank staff indicted in any investigation associated with KYC default, introduction of improved POS operation procedures and regulation; banks should flag, suspend accounts of defaulting clients and report to the CBN.
C. Media publicity for a new cashless society communicating new measures and impact
A considerable change to banking operations like these need to be well communicated to the general public by jingles or any other appropriate form of publicity where people will be made to understand the changes being introduced and actions people are meant to take. This will also help communicate the message that cash will not be available our economy anymore.
The proof of the concept of a truly cashless society was demonstrated by the recent unpopular currency redesign exercise just before the elections in 2023. It was common knowledge that it was impossible to get access to cash, violent crime reduced to a nearly non-existent level. In summary, only a truly cashless society with adequate Transaction Monitoring, regulation and consequences have the potential of reducing crime effectively. This principle is used in many parts of Europe and America. I guess some of the concepts discussed are not strange to many in Nigeria, the big question is why is CBN not driving initiatives like this. Doing nothing is not a way out of crime, this is not an indictment on anyone or group of people, Nigeria needs to draw a line at this point, put on its thinking hat, the time is now, and hours of research will make a difference.
Ike Diaku, lives in the United Kingdom.
