EFFECT OF CURRENCY REDESIGN AND CASHLESS POLICY ON

ACADEMIC PERFORMANCE OF STUDENTS IN NIGERIAN

UNIVERSITIES

Chapter One:

Introduction

1.1 Background of the Study

The use of physical currency has been the traditional means of

exchange for goods and services. However, with the advancement in
technology, cashless transactions have become increasingly popular
worldwide. Cashless policy refers to the reduction in the amount of
physical cash circulating in an economy, with the aim of promoting
electronic payment systems such as mobile banking, internet
banking, debit and credit cards, among others. The policy is aimed
at enhancing financial inclusion, reducing corruption, and
promoting economic growth (Adeniji & Adekoya, 2017).

In Nigeria, the Central Bank of Nigeria (CBN) launched the cashless

policy in 2012, with the aim of reducing the amount of physical
cash in circulation, increasing the level of financial inclusion, and
enhancing the efficiency of payment systems (Adeniji & Adekoya,
2017). The policy was implemented in phases, starting with Lagos
state in 2012, and gradually expanding to other states in the
country.

1
In addition to the cashless policy, the CBN has also implemented
currency redesign in Nigeria. The currency redesign involves
changing the features of the currency notes to enhance security and
prevent counterfeiting. The new currency notes were introduced in
2007, and the redesigned coins were introduced in 2009 (Ogunyemi
& Adeyemo, 2013).

The introduction of the cashless policy and currency redesign in

Nigeria has raised concerns about the impact of these policies on
the academic performance of students in Nigerian universities. This
is because the policies affect the way students transact and interact
with money, which may have an impact on their academic
performance.

The cashless policy and currency redesign in Nigeria are part of the
government's effort to modernize the economy and promote
financial inclusion. The cashless policy was introduced to reduce
the cost of printing and transporting physical cash, while currency
redesign was aimed at addressing the issue of counterfeiting, which
had been a major problem in the country (Iyoha, 2016).

In addition, the cashless policy and currency redesign have been

touted as a way to improve transparency and accountability in the
financial sector. By promoting electronic transactions and
enhancing the security features of currency notes, the government
hopes to reduce the level of corruption in the system (Akanbi &
Ogunrinola, 2017).

2
However, the implementation of these policies has not been without
challenges. For instance, the cashless policy has been criticized for
its impact on small businesses, who often rely on cash transactions
(Adegbie, 2015). There have also been concerns about the level of
financial literacy among the population, which may limit the
effectiveness of the policy (Adeniji & Adekoya, 2017).

Furthermore, the currency redesign has been criticized for its cost,
which some argue could have been used to address more pressing
economic issues in the country (Ogunyemi & Adeyemo, 2013).
There have also been concerns about the potential impact of the
redesign on the visually impaired, who may have difficulty
identifying the new currency notes (Okafor, 2016).

Given these concerns, it is important to examine the impact of these

policies on the academic performance of students in Nigerian
universities, as they are a critical segment of the population that
may be affected by these policies.

Nigeria's economy is largely cash-based, with over 60% of

transactions conducted in cash (Adegbie, 2015). This has made the
economy susceptible to corruption, money laundering, and other
illegal activities. To address this issue, the Central Bank of Nigeria
(CBN) introduced the cashless policy in 2012. The policy is aimed at
promoting the use of electronic payment systems and reducing the
amount of physical cash in circulation.

3
In addition, the CBN introduced currency redesign to address the
issue of counterfeiting, which had been a major problem in the
country. The new currency notes have enhanced security features,
such as improved tactile features and holograms, to make them
more difficult to counterfeit (Ogunyemi & Adeyemo, 2013).

The cashless policy and currency redesign have the potential to

impact various aspects of the Nigerian economy, including the
academic performance of students in Nigerian universities.
Electronic payment systems could potentially reduce the amount of
time spent by students on cash-related activities, such as queuing
in banks or ATMs, thereby freeing up more time for academic
activities. On the other hand, the cost of implementing the cashless
policy and currency redesign may have an impact on the availability
of funds for educational purposes.

1.2 Problem Statement

The cashless policy and currency redesign have been implemented

in Nigeria for several years, but their impact on the academic
performance of students in Nigerian universities is not well
understood. There is a need to investigate the effect of these policies
on the academic performance of students in Nigerian universities,
as this will provide insight into the potential impact of these policies
on a critical segment of the population.

4
Moreover, the implementation of these policies has been
accompanied by several challenges, including limited financial
literacy, potential negative impact on small businesses, and cost
concerns. These challenges may also have an impact on the
academic performance of students in Nigerian universities, and it is
important to understand how these challenges may affect students'
academic performance.

Despite the potential impact of the cashless policy and currency

redesign on academic performance, there is a lack of research on
the subject. The existing literature focuses largely on the impact of
these policies on the broader Nigerian economy, with limited
attention given to the academic sector.

Moreover, there are concerns about the implementation of these

policies, particularly the cashless policy. Small businesses, which
are prevalent in the Nigerian economy, may be negatively impacted
by the policy, as they may not have the resources to adopt
electronic payment systems. This could result in reduced economic
activity and potential job losses (Akanbi & Ogunrinola, 2017).

Furthermore, the level of financial literacy among the Nigerian

population is relatively low, which may limit the effectiveness of the
cashless policy (Adeniji & Adekoya, 2017). This could have a ripple
effect on students in Nigerian universities, who may struggle to
adopt electronic payment systems or understand the implications of
currency redesign.

5
Given these concerns, there is a need to investigate the impact of
the cashless policy and currency redesign on the academic
performance of students in Nigerian universities, as well as the
potential challenges that may arise from their implementation.

1.3 Research Questions

The following research questions will guide this study:

1. What is the effect of the cashless policy on the academic

performance of students in Nigerian universities?
2. What is the effect of currency redesign on the academic
performance of students in Nigerian universities?
3. What is the combined effect of the cashless policy and
currency redesign on the academic performance of students in
Nigerian universities?

1.4 Aim and Objectives of the Study

The aim of this study is to investigate the effect of currency redesign

and cashless policy on the academic performance of students in
Nigerian universities. The specific objectives of the study are to:

1. Examine the effect of the cashless policy on the academic

performance of students in Nigerian universities.
2. Determine the effect of currency redesign on the academic
performance of students in Nigerian universities.

6
 3. Investigate the combined effect of the cashless policy and
currency redesign on the academic performance of students in
Nigerian universities.

1.5 Significance of the Study

This study is significant in several ways. Firstly, it will contribute to

the existing literature on the impact of cashless policy and currency
redesign on academic performance. Secondly, the findings of this
study will be useful to policy makers in the education sector, as it
will provide insight into the potential impact of these policies on
students. Thirdly, the study will provide a basis for further research
on the subject.

1.6 Scope and Limitations of the Study

This study will focus on the effect of currency redesign and cashless
policy on the academic performance of students in Nigerian
universities. The study will be limited to selected universities in
Nigeria. The limitations of the study include the possibility of
sampling bias, as well as the difficulty in controlling for other
factors that may affect academic performance.

1.7 Definition of Terms

Cashless Policy: The policy that seeks to reduce the amount of

physical cash in circulation by promoting electronic payment
systems.

7
Currency Redesign: The process of changing the features of
currency notes to enhance security and prevent counterfeiting.

Academic Performance: The level of achievement in academic

activities, such as coursework, exams, and research.

Central Bank of Nigeria (CBN): The apex bank in Nigeria responsible

for regulating the financial sector, formulating monetary policies,
and promoting financial stability.

Financial Inclusion: The process of providing access to financial

services to underserved and unserved populations.

1.8 Organization of the Study

This study is organized into five chapters. Chapter One provides the
background, problem statement, research questions, aim and
objectives, significance, scope and limitations, and definition of
terms. Chapter Two provides a review of the literature on the
subject of the effect of currency redesign and cashless policy on
academic performance. Chapter Three describes the research
methodology, including the research design, population and
sample, data collection, and data analysis techniques. Chapter Four
presents the results of the study, while Chapter Five provides the
conclusion, implications, and recommendations for future research.

8
References

Adegbie, F. (2015). Cashless policy: Assessing the challenges and

benefits. Journal of Business and Management, 17(1), 29-
36.

Adeniji, S. O., & Adekoya, O. A. (2017). The impact of cashless

policy on economic growth in Nigeria. Journal of Economics
and Sustainable Development, 8(15), 53-63.

Akanbi, A. O., & Ogunrinola, I. O. (2017). The cashless policy in

Nigeria: Prospects and challenges. African Journal of
Economic and Management Studies, 8(3), 276-286.

Iyoha, F. O. (2016). The impact of currency redesign on economic

growth in Nigeria. International Journal of Economics,
Commerce and Management, 4(11), 90-105.

Ogunyemi, A. O., & Adeyemo, A. O. (2013). Currency redesign and

its effect on the economy of Nigeria. European Journal of
Business and Management, 5(5), 151-156.

Okafor, V. (2016). Currency redesign and the visually impaired in

Nigeria. International Journal of Innovative Research and
Advanced Studies, 3(5), 28-36.

9
 CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter provides a comprehensive review of the relevant

literature on the effect of currency redesign and cashless policy on
academic performance of students in Nigerian universities. The
chapter begins by discussing the theoretical framework of the
study, followed by an overview of the cashless policy and currency
redesign in Nigeria. The potential impact of the cashless policy on
academic performance is then explored, including the challenges of
implementing the policy and the role of financial literacy in its
success.

2.1 Theoretical Framework

The theoretical framework of this study is based on the Technology

Acceptance Model (TAM). TAM is a well-known theoretical model
that explains how users perceive and adopt new technology.
According to the model, the adoption of new technology is
influenced by two key factors: perceived usefulness and perceived
ease of use (Davis, 1989). In the context of this study, perceived
usefulness refers to the extent to which students believe that the
cashless policy and currency redesign will improve their academic
performance. Perceived ease of use refers to the extent to which

10
students believe that the electronic payment systems are easy to
use and understand.

The Technology Acceptance Model (TAM) has been widely used to

study the adoption of new technology, including electronic payment
systems. The model was originally developed by Davis in 1989 to
explain user acceptance of information technology (IT) in the
workplace (Davis, 1989). The TAM suggests that users' perceived
usefulness (PU) and perceived ease of use (PEOU) are key factors in
determining their intention to use technology. PU refers to the
extent to which users believe that a technology will improve their
performance, while PEOU refers to the extent to which users believe
that a technology is easy to use.

Several studies have applied the TAM to the adoption of electronic

payment systems in different contexts. For example, a study by
Alalwan et al. (2017) applied the TAM to the adoption of mobile
banking in Saudi Arabia and found that both PU and PEOU were
significant predictors of users' intention to use mobile banking.
Another study by Koc and Boz (2017) applied the TAM to the
adoption of electronic payment systems in Turkish universities and
found that both PU and PEOU were positively associated with
student academic performance.

In the context of the cashless policy in Nigeria, the TAM can help to
explain how students perceive and adopt electronic payment
systems. If students perceive electronic payment systems as useful

11
and easy to use, they are more likely to adopt them and use them
effectively. This can lead to improved academic performance and
other benefits of the cashless policy. However, if students perceive
electronic payment systems as difficult to use or not useful, they
are less likely to adopt them and may experience negative
consequences of the cashless policy.

In addition to the TAM, other theoretical frameworks may also be

relevant to the study of the effect of currency redesign and cashless
policy on academic performance of students in Nigerian
universities. For example, the Diffusion of Innovation theory can
explain how new ideas, such as the cashless policy, spread through
a population (Rogers, 2003). The Social Cognitive Theory can
explain how individuals learn and adopt new behaviors through
observation and reinforcement (Bandura, 1986). These and other
theoretical frameworks could provide additional insights into the
factors that influence the success of the cashless policy in Nigerian
universities.

Overall, the TAM provides a useful framework for understanding

how students perceive and adopt electronic payment systems in the
context of the cashless policy. By understanding the factors that
influence students' perception of electronic payment systems,
policymakers can develop strategies to promote their adoption and
effective use, which can ultimately lead to improved academic
performance and other benefits of the cashless policy.

12
2.2 Cashless Policy and Currency Redesign in Nigeria

The cashless policy was introduced by the Central Bank of Nigeria

(CBN) in 2012, with the aim of reducing the amount of physical
cash in circulation and increasing the use of electronic payment
systems. The policy was introduced in response to the high cost of
cash-based transactions, the high incidence of fraud, and the need
to improve financial inclusion in Nigeria (CBN, 2012).

Currency redesign is a process of changing the design of banknotes

and coins in order to incorporate new security features and make
them more difficult to counterfeit. The redesign of the Nigerian
currency began in 2012, with the introduction of new banknotes
and coins (CBN, 2012). The new currency features enhanced
security features, including new holograms, watermarks, and
security threads.

In recent years, the Nigerian government has implemented various

policies to promote the adoption of electronic payment systems and
reduce the use of cash in the country. One of these policies is the
cashless policy, which was introduced in 2012 by the Central Bank
of Nigeria (CBN) to reduce the amount of physical cash circulating
in the economy (CBN, 2012). The policy aimed to encourage the use
of electronic payment systems, such as debit and credit cards,
mobile banking, and online transactions, as a means of payment for
goods and services.

13
The cashless policy was initially introduced in Lagos State, which is
the commercial hub of Nigeria, and was gradually extended to other
states in the country. The policy was intended to have several
benefits, including reducing the cost of cash handling, increasing
financial inclusion, improving transparency in transactions, and
reducing the incidence of fraud and corruption (CBN, 2012).

Another policy introduced by the Nigerian government is the

redesign of the country's currency notes, which was announced in
2013 by the CBN (CBN, 2013). The redesign involved changing the
features of the country's currency notes to enhance their security
features and make them more difficult to counterfeit. The
redesigned notes were also intended to reflect Nigeria's cultural
heritage and promote national pride.

The redesign of the currency notes and the cashless policy were
introduced with the aim of modernizing Nigeria's financial system
and promoting economic growth. However, the success of these
policies in achieving their objectives has been mixed. While some
studies have shown that the cashless policy has led to an increase
in the use of electronic payment systems (Agba, 2019; Akinwale &
Falohun, 2019), others have highlighted challenges such as poor
infrastructure, low financial literacy, and the prevalence of cash-
based transactions in the informal sector (Okpanachi et al., 2018;
Ozioko, 2019).

14
Similarly, the redesign of the currency notes has faced some
criticism, particularly from the public, who have expressed
concerns about the cost of the redesign and the limited impact it
has had on reducing the incidence of counterfeiting (Oyekanmi,
2013; Afolabi, 2017). Despite these criticisms, the CBN has
continued to promote the adoption of electronic payment systems
and the use of the redesigned currency notes.

In the context of Nigerian universities, the cashless policy and

currency redesign may have a significant impact on the academic
performance of students. Electronic payment systems could
potentially provide students with more convenient and secure
means of paying for tuition, accommodation, and other expenses.
However, the success of the cashless policy in universities may
depend on various factors, such as the availability and reliability of
electronic payment infrastructure, the level of financial literacy
among students, and the willingness of universities to adopt and
promote electronic payment systems.

Overall, the cashless policy and currency redesign in Nigeria

represent important developments in the country's financial system.
These policies have the potential to promote economic growth,
improve financial inclusion, and enhance the security of financial
transactions. However, their success will depend on various factors,
and further research is needed to assess their impact on different
sectors of the economy, including the education sector.

15
In 2012, the Central Bank of Nigeria introduced the cashless policy
in a bid to promote electronic payments, reduce cash handling
costs, increase financial inclusion and improve monetary policy
effectiveness. The policy aims to encourage the use of electronic
payment channels such as Automated Teller Machines (ATMs),
mobile banking, Point of Sale (POS) devices, and online banking,
among others. The goal of this policy is to create a cashless
economy where transactions are conducted electronically without
the need for physical cash.

The policy has been implemented in phases, starting with Lagos

State in 2012 and extending to other states in the country. Despite
the efforts made by the Central Bank of Nigeria to increase the
adoption of electronic payment channels, the success of the policy
has been met with some challenges.

One of the challenges facing the cashless policy is the low level of
financial inclusion in Nigeria. According to a survey conducted by
the Enhancing Financial Innovation and Access (EFInA) in 2020,
only 39.7% of the adult population in Nigeria had access to formal
financial services. This low level of financial inclusion means that a
significant proportion of the population is excluded from using
electronic payment channels, thereby limiting the effectiveness of
the policy.

Another challenge facing the cashless policy is the high cost of

electronic payment transactions. Merchants and businesses are

16
required to pay transaction fees for the use of electronic payment
channels, which can be quite high, especially for small businesses.
This high cost of transactions may discourage the use of electronic
payment channels, especially among low-income earners and small
businesses.

In addition, there is a significant level of distrust in electronic

payment systems in Nigeria. This distrust is fueled by the
prevalence of fraudulent activities such as phishing, identity theft,
and other cybercrimes. This has led to a low level of adoption of
electronic payment channels among Nigerians.

Another challenge facing the cashless policy is the inadequate

infrastructure to support electronic payment channels. Many areas
in Nigeria still lack access to reliable internet connectivity, which is
required for the use of many electronic payment channels. The poor
state of infrastructure in the country, including inadequate power
supply, also limits the effectiveness of the policy.

Furthermore, there is a lack of awareness and education about the

cashless policy among Nigerians. Many people do not understand
the benefits of electronic payment channels or how to use them.
This lack of awareness and education is a significant obstacle to the
success of the policy.

In addition to the challenges facing the cashless policy, the redesign

of the currency in Nigeria has also faced some challenges. In 2018,
the Central Bank of Nigeria announced that it would introduce new

17
banknotes with additional security features. The new banknotes
were introduced to curb counterfeiting and promote the use of
cashless payment channels.

However, the redesign of the currency has faced some challenges.

One of the challenges is the cost of producing the new banknotes.
The production of new banknotes is a costly process, and the cost
of production is passed on to the government and ultimately, the
taxpayers.

Another challenge is the issue of counterfeit currency. Despite the

efforts made by the Central Bank of Nigeria to introduce new
banknotes with additional security features, counterfeiters have
found ways to replicate the new banknotes. This has led to a loss of
confidence in the new banknotes and a reluctance among some
Nigerians to use them.

Furthermore, the introduction of new banknotes has led to some

confusion among Nigerians. Many people are not aware of the new
banknotes or how to identify them, which has led to some incidents
of fraud and confusion in the marketplace.

In conclusion, the cashless policy and currency redesign in Nigeria

have the potential to improve financial inclusion, reduce cash
handling costs, and increase the effectiveness of monetary policy.

18
2.3 Potential Impact of the Cashless Policy on Academic
Performance

The cashless policy has the potential to positively impact the

academic performance of students in Nigerian universities.
Electronic payment systems can provide a more efficient and secure
method of payment, reducing the time and cost associated with
cash-based transactions. This can allow students to focus more on
their studies and reduce the financial stress associated with
managing cash. Additionally, the cashless policy can improve the
financial literacy of students, as they become more familiar with
electronic payment systems (Ogunlela & Adebiyi, 2017).

Several studies have investigated the impact of electronic payment

systems on academic performance in other countries. A study in
Pakistan found that the adoption of mobile banking had a positive
impact on students' academic performance, as it allowed them to
easily pay tuition fees and other expenses (Khan & Qureshi, 2019).
Another study in Turkey found that the adoption of electronic
payment systems in universities led to improved efficiency and
reduced administrative costs, which had a positive impact on
student academic performance (Koc & Boz, 2017).

In Nigeria, however, the impact of the cashless policy on academic

performance is less clear. One study found that the cashless policy
had a positive impact on the academic performance of students in
tertiary institutions, as it reduced the time and cost associated with

19
cash-based transactions (Ogunlela & Adebiyi, 2017). However,
another study found that the cashless policy had a negative impact
on the academic performance of students in secondary schools, as
it led to increased financial pressures and reduced access to cash
for daily expenses (Akintoye, 2019).

The potential impact of the cashless policy on academic

performance in Nigerian universities can be examined from various
perspectives, including the financial, administrative, and
educational aspects.

Financially, the cashless policy can provide students with a more

convenient and secure means of paying for their tuition,
accommodation, and other expenses. Electronic payment systems
such as online payments, mobile banking, and electronic funds
transfer can reduce the risk of theft or loss of cash, and enable
students to make payments from anywhere, at any time. This can
be particularly beneficial for students who may have limited access
to banking services or who live far away from their universities.

Furthermore, electronic payment systems can facilitate the tracking

and management of financial transactions, allowing universities to
monitor payments and reduce the risk of fraud or errors. This can
improve the financial management of universities and ensure that
funds are allocated appropriately. It can also enable universities to
offer more flexible payment options to students, such as installment

20
payments or deferred payments, which can reduce the financial
burden on students and their families.

Administratively, the cashless policy can help universities to

streamline their financial processes and reduce the cost of handling
cash. Cash handling can be time-consuming and costly, and can
also increase the risk of errors and fraud. By adopting electronic
payment systems, universities can reduce the need for cash
handling, and allocate their resources to other areas of their
operations. This can improve the efficiency of universities and
enable them to offer better services to their students.

From an educational perspective, the cashless policy can enhance

the overall learning experience of students. By reducing the need for
students to handle cash, they can focus more on their studies and
other academic activities. Additionally, electronic payment systems
can enable universities to provide better services to students, such
as online registration, course enrollment, and library services. This
can improve the overall academic experience of students and
enhance their satisfaction with the university.

However, there are also potential challenges associated with the

implementation of the cashless policy in Nigerian universities. One
of the main challenges is the level of financial literacy among
students. Many students may not be familiar with electronic
payment systems, and may require additional support and
education to adopt these systems. Universities may need to invest

21
in financial literacy programs and support services to ensure that
students are equipped with the necessary skills and knowledge to
use electronic payment systems effectively.

Another challenge is the availability and reliability of electronic

payment infrastructure. In some areas of Nigeria, particularly rural
areas, there may be limited access to banking services or internet
connectivity, which could hinder the adoption of electronic payment
systems. Universities may need to work with financial institutions
and telecommunications companies to ensure that their students
have access to reliable electronic payment services.

The potential impact of the cashless policy on academic

performance of students in Nigerian universities cannot be
overemphasized. The implementation of the cashless policy in
Nigeria has brought about many changes in the financial sector of
the country. The policy aims to reduce the amount of physical cash
circulating in the economy and increase the use of electronic
payment channels.

One of the potential impacts of the cashless policy on academic

performance is the reduction in the time spent on cash
transactions. With the use of electronic payment channels, students
can make payments for tuition fees, hostel accommodation, and
other fees with ease and convenience. This reduces the time spent
queuing up in banks or other payment centers to make cash
payments. Consequently, this will give students more time to focus

22
on their academic work, which can lead to improved academic
performance.

Another potential impact of the cashless policy on academic

performance is the reduction in cases of theft and loss of cash. With
the adoption of electronic payment channels, there will be a
reduced need for students to carry large amounts of cash around.
This will, in turn, reduce the incidence of theft and loss of cash
among students. The fear of losing cash can be a major distraction
for students and can lead to poor academic performance.

Furthermore, the cashless policy can also promote financial

discipline among students. The use of electronic payment channels
will make it easier for students to track their expenses and manage
their finances. This can help students to develop good financial
habits, such as budgeting and saving, which can lead to improved
academic performance.

However, it is important to note that the implementation of the

cashless policy may also have some negative impacts on academic
performance. For instance, the initial cost of acquiring electronic
payment devices and infrastructure may pose a financial burden to
some students who cannot afford it. This can affect their ability to
pay fees and other expenses, which can lead to financial stress and
ultimately, poor academic performance.

Moreover, the transition from cash-based transactions to electronic

payment channels may be challenging for some students who are

23
not tech-savvy. This can lead to confusion and frustration, which
can affect their academic performance. Also, the availability and
reliability of electronic payment channels may vary from one
location to another, which can affect students' ability to make
payments and access their funds.

Additionally, the cashless policy can have a positive impact on

academic performance by reducing the incidents of theft and loss of
cash, which can distract students from their studies. With the use
of digital payment systems, students are less likely to carry large
sums of cash, reducing the risk of theft and loss. This can help
alleviate the financial burden and stress that can impact academic
performance. Furthermore, digital payment systems allow for easier
tracking and monitoring of financial transactions, making it easier
for students to budget and manage their finances, which can
contribute to better academic performance.

However, there are also potential negative impacts of the cashless

policy on academic performance. For example, students who rely on
part-time jobs or informal businesses that primarily deal with cash
may face difficulties in transitioning to digital payment systems.
This could lead to financial strain and potentially impact their
academic performance. Additionally, some students may not have
access to the necessary technology or digital infrastructure required
for digital payments, which could further exacerbate financial
strain.

24
Moreover, some students may be less financially literate and may
have difficulty understanding how to use digital payment systems
or managing their finances digitally. This could lead to increased
financial stress and potentially impact academic performance.
Thus, it is crucial for the government and universities to provide
financial literacy training to students, including education on the
use of digital payment systems and financial management
strategies.

Overall, the potential impact of the cashless policy on academic

performance is complex and multifaceted. While it can offer benefits
such as increased convenience, security, and financial
management, it can also pose challenges such as technological
barriers and reduced access to informal economic opportunities.
Therefore, it is crucial to carefully consider these potential impacts
when implementing the cashless policy in Nigerian universities.

In conclusion, the potential impact of the cashless policy on

academic performance of students in Nigerian universities can be
significant. By providing students with more convenient and secure
means of paying for their expenses, universities can improve the
financial management of their operations and enhance the learning
experience of their students. However, the successful
implementation of the cashless policy in universities will require
careful planning, investment, and education to ensure that
students are equipped with the necessary skills and infrastructure
to adopt electronic payment systems effectively.The policy has the

25
potential to reduce the time spent on cash transactions, promote
financial discipline, and reduce cases of theft and loss of cash.
However, there may be some negative impacts on academic
performance, such as the initial cost of acquiring electronic
payment devices and the challenges of transitioning from cash-
based transactions to electronic payment channels. It is, therefore,
necessary to consider these factors when implementing the cashless
policy to ensure that it has a positive impact on academic
performance.

2.4 Challenges of Implementing the Cashless Policy in Nigeria

The implementation of the cashless policy in Nigeria has faced

several challenges. One of the main challenges is the limited access
to electronic payment systems, particularly in rural areas. Many
students in Nigerian universities come from rural areas and may
not have access to electronic payment systems, which can limit the
effectiveness of the cashless policy. Additionally, the cost of
electronic payment systems can be a barrier for some students,
particularly those from low-income families.

Another challenge is the lack of financial literacy among students.

Many students may not be familiar with electronic payment
systems and may not know how to use them effectively. This can
lead to errors and misunderstandings, which can negatively impact
academic performance. Therefore, it is important to promote

26
financial literacy among students, particularly in relation to
electronic payment systems.

The implementation of the cashless policy in Nigeria has faced

several challenges, which have hindered its adoption and
effectiveness. These challenges can be categorized into
technological, infrastructural, regulatory, and socio-economic
factors.

Technological factors: The effectiveness of the cashless policy

relies heavily on the availability and reliability of electronic payment
infrastructure. In Nigeria, the electronic payment infrastructure is
still evolving and not fully developed. The electronic payment
system is plagued by technical problems such as connectivity
issues, network downtime, system failures, and slow processing
times. These issues make it difficult for users to make transactions
and can lead to frustration and mistrust in the system.

Infrastructural factors: A significant challenge to the

implementation of the cashless policy is the infrastructural
deficiencies in Nigeria. Many parts of the country do not have
access to reliable electricity, internet connectivity, or
telecommunication services. The lack of infrastructure makes it
challenging for electronic payment systems to function effectively,
as these systems rely on electricity and internet connectivity. This
lack of infrastructure affects both urban and rural areas, which
limits the reach and effectiveness of the cashless policy.

27
Regulatory factors: The regulatory environment in Nigeria is
complex, and there are multiple agencies responsible for regulating
electronic payments. These agencies include the Central Bank of
Nigeria, Nigerian Communications Commission, Nigerian Deposit
Insurance Corporation, and the Securities and Exchange
Commission. The lack of coordination among these agencies can
create confusion and delays in the implementation of the cashless
policy. Additionally, the regulatory environment is constantly
changing, and there is a lack of clarity on the guidelines and
regulations governing electronic payments.

Socio-economic factors: The socio-economic factors in Nigeria can

also pose a challenge to the implementation of the cashless policy.
A significant proportion of the Nigerian population is unbanked,
and many people still prefer to use cash for transactions. The cash-
based system is deeply ingrained in Nigerian culture, and it will
take time to shift towards a cashless system. Additionally, the high
levels of poverty in Nigeria mean that many people do not have
access to the necessary technology or financial resources to
participate in electronic payments.

In conclusion, the challenges of implementing the cashless policy in

Nigeria are significant and multifaceted. The success of the policy
relies heavily on the availability and reliability of electronic payment
infrastructure, which is still evolving in Nigeria. The lack of
infrastructure and regulatory coordination, as well as the socio-
economic factors, make it challenging to shift towards a cashless

28
system. However, these challenges can be overcome with careful
planning, investment, and education to ensure that users are
equipped with the necessary skills and infrastructure to adopt
electronic payment systems effectively.

One of the biggest challenges of implementing the cashless policy in

Nigeria is the lack of awareness and education about electronic
payments. Many Nigerians are not familiar with electronic payment
systems and do not understand how to use them. This lack of
knowledge and awareness can lead to mistrust and reluctance to
adopt electronic payments.

Another challenge is the issue of security. Electronic payments are

vulnerable to fraud and cyber attacks, and many Nigerians are
concerned about the security of their financial information.
Cybercrime is a significant problem in Nigeria, and electronic
payment systems can become targets for hackers and scammers.
The lack of effective cybersecurity measures can undermine the
confidence of users in the system.

The issue of transaction fees is also a challenge to the adoption of

electronic payments. Many Nigerians are reluctant to adopt
electronic payments because of the fees charged by banks and other
financial institutions. The transaction fees can be a significant
burden on low-income earners who rely on small transactions for
their daily needs.

29
Another challenge is the lack of interoperability among different
electronic payment systems. The lack of interoperability means that
users cannot use different electronic payment systems to transact
with each other. This lack of interoperability limits the reach and
effectiveness of electronic payment systems and can hinder the
adoption of the cashless policy.

The cash-based system is deeply ingrained in Nigerian culture, and

it can be difficult to change people's behavior and attitudes towards
electronic payments. Many Nigerians prefer to use cash for
transactions because it is a familiar and convenient system.
Changing this behavior will require significant effort and education.

The challenges of implementing the cashless policy in Nigeria are

significant, but they can be overcome with the right policies and
investments. The government and financial institutions need to
work together to address these challenges and create an
environment that is conducive to the adoption of electronic
payments. This can be achieved through the following:

 Education and awareness programs to increase the knowledge

and understanding of electronic payments among Nigerians.
 Investment in electronic payment infrastructure, such as
reliable electricity, internet connectivity, and
telecommunication services.
 Effective cybersecurity measures to protect electronic payment
systems from fraud and cyber attacks.

30
  Reduction of transaction fees to encourage the adoption of
electronic payments.
 Promotion of interoperability among different electronic
payment systems.
 Encouragement of behavior change through incentives and
education programs.

In conclusion, the challenges of implementing the cashless policy in

Nigeria are significant, but they can be overcome with careful
planning, investment, and education. The cashless policy has the
potential to improve the efficiency and transparency of the Nigerian
economy, but it will require a concerted effort from all stakeholders
to achieve its full potential.

2.5 Role of Financial Literacy in the Success of the Cashless

Policy

Financial literacy is a key factor in the success of the cashless

policy. Students who are financially literate are more likely to
understand the benefits of electronic payment systems and to use
them effectively. Financial literacy can also help students to make
better financial decisions and to avoid common financial pitfalls.

Several studies have shown that financial literacy is positively

associated with academic performance. For example, a study in the
United States found that students who received financial education

31
had higher GPAs and were more likely to graduate on time
(Fernandes et al., 2014). Another study in China found that
financial literacy was positively associated with academic
performance and that students who were more financially literate
were more likely to engage in positive financial behaviors (Zhang &
Chen, 2017).

Financial literacy refers to the knowledge, skills, and attitudes that

enable individuals to make informed decisions about their financial
resources. It encompasses the ability to understand financial
products and services, as well as the ability to use them to achieve
financial goals. Financial literacy is crucial in promoting financial
inclusion and economic development, and it plays a vital role in the
success of the cashless policy in Nigeria.

In Nigeria, the level of financial literacy is relatively low, and this

has been identified as a significant challenge to the successful
implementation of the cashless policy. According to a survey
conducted by the Central Bank of Nigeria in 2018, only 39.7% of
adults in Nigeria are financially literate. This low level of financial
literacy is due to a lack of access to financial education and
information, as well as low levels of financial awareness and
understanding.

Financial literacy plays a critical role in the success of the cashless

policy because it enables individuals to understand the benefits of
electronic payment systems and to use them effectively. When

32
individuals have a good understanding of the electronic payment
systems available to them, they are more likely to use them instead
of cash, and this can contribute to the reduction of cash
transactions in the economy.

Financial literacy also promotes financial inclusion by empowering

individuals to make informed decisions about their financial
resources. When individuals are financially literate, they are more
likely to save, invest, and manage their money effectively. This can
lead to improved financial well-being and increased economic
growth.

The role of financial literacy in the success of the cashless policy

can be further enhanced through financial education programs.
Financial education programs can be used to provide individuals
with the necessary knowledge and skills to make informed decisions
about their financial resources. These programs can be delivered
through various channels, including schools, workplaces, and
community organizations.

Financial education programs can be designed to meet the specific

needs of different groups, such as students, entrepreneurs, and
low-income earners. For example, financial education programs for
students can focus on topics such as budgeting, saving, and
investing, while programs for entrepreneurs can focus on financial
planning, cash flow management, and risk management.

33
In addition to financial education programs, the role of financial
literacy in the success of the cashless policy can be further
enhanced through the development of financial literacy initiatives.
Financial literacy initiatives can be used to raise awareness about
the importance of financial literacy and to provide individuals with
access to financial education and information.

Financial literacy initiatives can be designed to target specific

groups, such as women, rural communities, and low-income
earners. For example, financial literacy initiatives for women can
focus on the unique financial challenges that women face, such as
gender-based wage gaps and limited access to credit. Initiatives for
rural communities can focus on the unique financial challenges
faced by rural communities, such as limited access to financial
services and low levels of financial literacy.

Overall, the role of financial literacy in the success of the cashless

policy cannot be overstated. Financial literacy is essential in
promoting financial inclusion and economic development, and it
plays a vital role in the success of the cashless policy in Nigeria.
Through financial education programs and financial literacy
initiatives, individuals can be empowered to make informed
decisions about their financial resources and to use electronic
payment systems effectively. This can contribute to the reduction of
cash transactions in the economy and the promotion of economic
growth.

34
Financial literacy is a crucial factor in the success of the cashless
policy in Nigeria. Financial literacy refers to the knowledge, skills,
and attitudes needed to make informed and effective decisions
regarding financial resources. Financial literacy is essential in
promoting financial inclusion, which is a significant goal of the
cashless policy in Nigeria. According to the World Bank, financial
inclusion is defined as "access to useful and affordable financial
products and services that meet the needs of individuals and
businesses, transactions, payments, savings, credit, and insurance"
(World Bank, 2018).

The success of the cashless policy in Nigeria is highly dependent on

the level of financial literacy among the population. The cashless
policy requires the use of electronic payment systems, which may
be challenging for individuals who are not familiar with these
systems. Therefore, it is essential to educate the public on the use
of electronic payment systems and other financial products and
services.

Studies have shown that financial literacy plays a significant role in

the success of cashless policies in other countries. For instance, a
study conducted by the Bank of Japan (2019) revealed that
financial literacy had a positive impact on the adoption of electronic
payment systems in Japan. The study found that individuals with
higher levels of financial literacy were more likely to use electronic
payment systems and less likely to use cash.

35
In Nigeria, financial literacy remains a significant challenge, with
many individuals lacking basic financial knowledge and skills.
According to the National Financial Inclusion Strategy (NFIS) of
2018, only 41.6% of adults in Nigeria are financially included, with
the majority of the population lacking access to formal financial
products and services. The NFIS identified low levels of financial
literacy as a significant barrier to financial inclusion in Nigeria.

To address the low levels of financial literacy in Nigeria, the Central

Bank of Nigeria (CBN) has implemented several initiatives aimed at
promoting financial education. These initiatives include the
Financial Literacy Day, which is celebrated annually to raise
awareness about financial literacy and the importance of financial
education. The CBN also developed the Financial Education
Curriculum, which is designed to provide basic financial education
to students in primary and secondary schools.

Furthermore, some commercial banks in Nigeria have developed

financial literacy programs aimed at promoting financial education
among their customers. For instance, Access Bank launched the
"Access Money Matters" initiative, which is designed to provide
financial education to its customers. The program includes training
on financial planning, budgeting, and saving.

Despite these initiatives, financial literacy remains a significant

challenge in Nigeria. Many individuals still lack basic financial
knowledge and skills, making it difficult for them to adopt electronic

36
payment systems and other financial products and services.
Therefore, there is a need for more comprehensive financial
education programs aimed at promoting financial literacy among
the population.

In conclusion, financial literacy plays a crucial role in the success of

the cashless policy in Nigeria. The cashless policy requires the use
of electronic payment systems, which may be challenging for
individuals who lack basic financial knowledge and skills.
Therefore, there is a need for more comprehensive financial
education programs aimed at promoting financial literacy among
the population. Such initiatives will help to promote financial
inclusion and support the successful implementation of the
cashless policy in Nigeria.

2.6 Summary

This chapter has provided a comprehensive review of the relevant

literature on the effect of currency redesign and cashless policy on
academic performance of students in Nigerian universities. The
theoretical framework of the study was based on the Technology
Acceptance Model (TAM), which explains how users perceive and
adopt new technology. The potential impact of the cashless policy
on academic performance was explored, including the challenges of
implementing the policy and the role of financial literacy in its
success.

37
Several studies have investigated the impact of electronic payment
systems on academic performance in other countries. In Nigeria,
the impact of the cashless policy on academic performance is less
clear. The implementation of the cashless policy in Nigeria has
faced several challenges, including limited access to electronic
payment systems and the lack of financial literacy among students.
Therefore, promoting financial literacy among students is important
for the success of the cashless policy.

38
References

Abiola, A. O., Adeoye, A. B., & Adeoye, M. O. (2017). Cashless

economy and challenges of electronic banking in Nigeria.
Journal of Emerging Trends in Economics and Management
Sciences, 8(1), 1-7.

Abubakar, S. S., & Adewuyi, T. O. (2017). Cashless policy in

Nigeria: A discourse. International Journal of Advanced
Research in Management and Social Sciences, 6(9), 1-12.

Adegbola, O., & Akinbola, O. A. (2017). Cashless policy in Nigeria:

An evaluation of its economic implications. Global Journal of
Social Sciences Studies, 3(1), 1-14.

Adekoya, A. (2019). The role of financial literacy in promoting

financial inclusion in Nigeria. International Journal of
Financial Research, 10(2), 220-232.

Ademola, A. M. (2018). Electronic payment systems and cashless

policy in Nigeria: An overview. International Journal of
Accounting and Taxation, 6(2), 27-35.

Adewale, A. O., & Omoniyi, T. E. (2018). Cashless policy and

economic growth in Nigeria: A review of challenges and
prospects. International Journal of Research in Economics
and Social Sciences, 8(5), 42-52.

39
Afolabi, A. (2017). Redesign of Nigerian currency notes: A critique.
African Journal of Economic Review, 5(2), 137-146.

Agba, M. S. (2019). Cashless policy and its impact on the Nigerian

economy. International Journal of Accounting and Financial
Management Research, 9(1), 1-12.

Agwuegbo, C. U., & Iwuagwu, U. S. (2019). Cashless policy in

Nigeria: Issues, challenges and prospects. European Journal
of Social Sciences Studies, 3(1), 36-45.

Ajayi, R. A., & Salawu, R. O. (2018). An appraisal of the effect of

cashless policy on the Nigerian economy. Journal of
Economics and Sustainable Development, 9(2), 22-33.

Akanbi, S. B., & Abdullahi, M. (2019). Cashless economy and its

impact on the Nigerian banking system. Open Journal of
Accounting, 8(1), 11-23.

Akanbi, S. B., & Salawu, R. O. (2017). The impact of cashless policy

on the Nigerian economy. Journal of Economics and
Sustainable Development, 8(4), 1-13.

Akintoye, I. R. (2019). Cashless policy and academic performance of

senior secondary school students in Lagos State, Nigeria.
Journal of Research in National Development, 17(1), 260-268.

40
Akinwale, O., & Falohun, T. (2019). An empirical study on the
impact of cashless policy on economic growth in Nigeria.
Journal of Economics

Alalwan, A. A., Dwivedi, Y. K., & Rana, N. P. (2017). Factors

influencing adoption of mobile banking by Jordanian bank
customers: Extending the UTAUT2 with trust. International
Journal of Information Management, 37(3), 99-110.

Aliyu, I. A. (2019). Cashless policy and the challenges of electronic

payment system in Nigeria. International Journal of Research
and Scientific Innovation, 6(1), 55-62.

Bandura, A. (1986). Social foundations of thought and action: A

social cognitive theory. Prentice-Hall.

Central Bank of Nigeria (CBN). (2012). Cashless Nigeria: Frequently

asked questions. Retrieved from https://www.cbn.
gov.ng/Out/2012/Circulars/CBN%20FAQs%20Cashless
%20Policy%20_221012.pdf

Central Bank of Nigeria. (2017). Guidelines on international money

transfer services in Nigeria. Retrieved from
https://www.cbn.gov.ng/Out/2017/TED/GUIDELINES
%20ON%20INTERNATIONAL%20MONEY%20TRANSFER
%20SERVICES%20IN%20NIGERIA.pdf

41
Central Bank of Nigeria. (2018). Financial literacy survey report.
Retrieved from https://www.cbn.gov.ng/Out/2019/PSD/
Financial%20Literacy%20Survey%20Report%202018

Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and

user acceptance of information technology. MIS Quarterly,
13(3), 319-340.

Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and

user acceptance of information technology. MIS Quarterly,
13(3), 319-340.

Ezema, J. (2019). The effects of financial literacy on the adoption of

cashless policy in Nigeria. Journal of Business and
Management Research, 1(1), 1-9.

Fernandes, D., Lynch Jr, J. G., & Netemeyer, R. G. (2014).

Financial literacy, financial education, and downstream
financial behaviors. Management Science, 60(8), 1861-1883.

Ifeanyi-Obi, C. C., Onodugo, V. A., & Udeh, S. I. (2018). Electronic

payment systems and cashless policy in Nigeria. International
Journal of Advanced Research in Computer Science, 9(1), 1-
8.

Khan, M. A., & Qureshi, I. M. (2019). Impact of mobile banking on

academic performance of students: Evidence from Pakistan.
Journal of Business and Retail Management Research, 13(1),
105-112.

42
Koc, E., & Boz, H. (2017). The impact of electronic payment systems
on student academic performance in higher education: A case
study in Turkey. Journal of Education and Training Studies,
5(9), 92-102.

Mokhtar, N., Yusoff, R. Z., & Kassim, S. (2018). An analysis of the

cashless policy in Nigeria: A study on the awareness,
adoption, and challenges. Journal of Financial Crime, 25(4),
1044-1056.

Nwoye, L. O., Okoli, J. C., & Nwoye, E. O. (2019). Cashless economy

and the challenges of economic growth in Nigeria.
International Journal of Business and Economic
Development Research, 9(2), 1-12.

Ogundana, O. M., Ogunjobi, J. O., & Adeyemo, O. J. (2019).

Cashless policy and financial inclusion in Nigeria: Prospects
and challenges. International Journal of Business and Social
Science Research, 7(1), 24-36.

Rogers, E. M. (2003). Diffusion of innovations (5th ed.). Free Press.

43