By Ayo Adams
A cashless economy is supposed to make life easier. But when Nigerians, no thanks to cash scarcity, had to solely rely on cashless channels, the unintended consequences of the platforms’ inadequacies made healthcare one of the worst hit sectors. Nigerians, due to the scarcity of cash, had to solely rely on cashless channels. For years, the government of Nigeria, the country’s finance sector regulator — the Central Bank of Nigeria (CBN), their partners and others had aggressively campaigned and incentivized Nigerians to adopt going cashless, describing its cashless policy as an economic enabler that will drive the development and modernization of Nigeria’s payment system in line with Nigeria’s vision 2020 goal of being among the top 20 economies by the year 2020.
But when the regulator’s decision to redesign high denomination currency notes forced many in the country to switch to cashless transactions, the stark realities suggested several inadequacies and, for the health sector, deciding who gets the last pint of O Rhesus D Negative blood in the blood bank largely relied not on who needed it more urgently but the first payment notification that the lab received.
The CBN officially commenced the process of changing to a cashless economy in January 2012 and the main reason for the policy was to reduce the amount of cash — Naira notes (and coins) used for business transactions. While the goal was not to eliminate cash usage, the regulator stressed that the country’s economy’s utilization of too much cash for transactions for goods and services, especially for buying and selling, was not how it is done in other progressive countries of the world where there are other payment options like Debit and Credit Cards, Bank Transfers, Bank Direct Debits, Automated Teller Machines ( ATMs) , and even Mobile Phone Money.
“These achievements have been brought about by the changing needs of their people, competition among banks, and other companies, including changes in technology. Our major focus is to increase the volume of all available payment instruments in Nigeria,” CBN stated. For individuals, CBN promised going cashless will increase convenience, provide more service options, reduce risk of cash-related crimes, lower the cost of access to banking services and improve access to credit.
But when more citizens had to embrace cashless transaction channels following the cash scarcity that highlighted the currency change policy of the regulator, the inability of the channels to allow for smooth user experience further discouraged individuals and establishments from further embracing the available channels, choosing instead to accept cash, thus further worsening the cash crunch impacts on individuals and businesses.
“Root of the ugly cashless crisis in Nigeria that is costing lives and incomes and will decimate the rural economy,” said Kwabena Smith, an African tech landscape analyst.
Long before the Nigerian regulator began to ideate, formulate and introduce its cashless policy, the nation’s health sector’s over-reliance on out-of-pocket had been described as worrisome. With over 90% of Nigerians paying out-of-pocket for healthcare according to both WHO and World Bank statistics, the major concern used to be that households who live below the poverty line often do not use healthcare services when the need arises. But the recent currency scarcity suggested that individuals who live above the poverty line are not exempted from some of the shortcomings of an out-of-pocket payment-reliant system.
Abigail Amusan took her mother to the hospital for medical checkup and they had to deal with an urgent demand for cash payment, which was not readily available. The hospital was also not accepting transfers, making the situation even worse. “I took my mom to the hospital for some checkup and they were insisting that they wanted cash. But cash was not available so we were begging them to accept a cashless transfer,” she told HealthNews.NG. “I was not the only person there. There were other people who wanted to pay for one thing or the other, probably, someone whose wife was in labor. But they insisted that they wanted cash.”
Temilade Awopetu and her family members suffered a similar fate during this period when they accompanied her mother to the hospital for her dialysis treatment. Some pay points accepted cash or card payments, while some hospitals insisted on cash. “I didn’t have cash and my ATM card was faulty around that time. So I had to keep calling my brother to send his card to me. It took a lot of time before the card would even get to me, so we had to hold on. We even persuaded them to accept a transfer, and we didn’t mind waiting for them to confirm payment before we proceed with treatment. They refused. They insisted on POS or cash payment,” she added.
Confidence Ibikunle on the other hand fell ill after standing for a long time in queues at banks waiting to collect cash. At the hospital, she was diagnosed with malaria and the hospital, although they accepted cashless transfers, only treated patients after the payment was verified. During the cash scarcity period, Sheriff, whose wife was due to deliver of a baby, was also affected by the cash crunch, and he was worried about how he would be able to pay for the delivery.
These stories highlight the difficulties Nigerians faced when they tried to access healthcare services due to the cashless policy. Hospitals and medical institutions have strict policies requiring cash payments, which has created a ripple effect for Nigerians trying to pay for medical treatments. The lack of access to cash also affected healthcare workers. A medical official told our correspondent he was unable to obtain cash and had to go home without pay. The cashless policy also affected patients’ health, with Temilade Aladesuyi recounting how the cash issue impacted her mother’s health and her ability to care for her.
Healthcare officials and hospital managers attributed their decision to be reluctant to fully go cashless to the numerous problems encountered, one of which was the unreliability of the services. Dawodu Abayomi noted that the services were failure-prone and were generally considered to be unreliable for high-risk large volume transactions. “I remember a scene that happened in our facility. A service user made a transfer via his banking app. It showed the payment was made and he even received a debit alert. But the money was not credited to us for the five days that his wife spent on our ward. He did not get refunded. We never got credited and the banks did not help either,” Abayomi said.
Even though the lockdown of banks and other institutions and indoor public places during the early weeks of the COVID-19 pandemic provided indications regarding the importance of a cashless economy, tech experts including the telecommunications regulator disagreed on who is responsible for the failures that discouraged hospitals from accepting cashless transactions. “By the time cashless banking fully took off in late 2022, the connectivity platforms on which electronic transactions ride have become robust to the extent of being able to absorb the surge in demand for cashless transactions,” said Prof. Umar Danbatta, Executive Vice Chairman, Nigerian Communications Commission (NCC).
The banks were also blamed for inadequate preparation for cashless transactions. “I think the banks did not prepare for this”, said Simeon Balogun, a Nigerian tech analyst.
Oby Ezekwesili, a former vice president of the World Bank, agreed. She said the country’s financial institutions were not yet ready for CBN’s cashless policy.
Abayomi noted that the government should have ensured that everything was in place for a smooth implementation of the cashless policy. He said this would have ensured that hospitals, medical institutions and others did not struggle with the transition to online transactions when cash scarcity hit the country. While the policy may have been intended to simplify banking and reduce fraud, Temilade noted that it created a host of issues in the healthcare sector and clearly shown both the true capacities of the finance sector and broader impacts of such policies on far-reaching sectors like healthcare.
On the other hand, fintech experts described the fate of hospitals as an eye-opener to the limited number of solutions that specifically cater for the sector and could have minimized the vulnerability of healthcare to such moves. “As the country moves towards becoming 100% cashless, it is essential to address these issues to ensure that Nigerians have access to quality healthcare services. Otherwise, the healthcare system will continue to struggle, and people’s lives will be at risk,” Sheriff said. The respondents urged medical institutions and hospitals to equally adopt digital payment methods and educate their staffs and patients on how to use them. “Patients must also be given access to alternative payment methods, such as mobile transfers, debit/credit cards, and other digital payment options,” Dawodu said.
He urged the stakeholders to use the insights gained from the fallout to work to address the concerns that the entire service and supply chain in the nation’s health sector have regarding cashless transactions — guaranteeing the system works, protecting them for culpability or losses during downtimes, unsuccessful or reversed operations. According to him, getting the system to work well for the health sector is a really good way to promote a cashless economy and to encourage citizens and other industries to adopt it.
“While the cashless policy was introduced to reduce cash handling by banks and citizens, its impact on the healthcare sector has been problematic. It is essential to address these issues to ensure that Nigerians have access to quality healthcare services. The government, medical institutions and hospitals must work together to create an environment where digital payment methods are widely adopted and made accessible to all,” he concluded.