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Experts raised concerns over a recent policy announced by the Central Bank of Nigeria (CBN) heavily limiting withdrawals of money from banking sources to facilitate a cashless economy
Experts raised concerns over a recent policy announced by the Central Bank of Nigeria (CBN) heavily limiting withdrawals of money from banking sources to facilitate a cashless economy. The new monetary policy will apply to ATMs, banks, and cashback from purchases. The new policy follows the launch of Nigeria’s newly designed currency notes to control the money supply.
The CBN limited weekly over-the-counter cash withdrawals to 100,000 nairas (US$225) for individuals and 500,000 nairas (US$1,124) for corporations. A processing fee will be charged to withdraw more. The policy will take effect from January 3, 2023.
From January 3, 2022, ATMs will no longer dispense Nigeria’s high denominations of 1,000 nairas (US$2.25) and 500 nairas (US$1.10) while withdrawals from ATMs and point-of-sale terminals also will be limited to 20,000 nairas ( US$45) daily. The withdrawal limits, policymakers say, would bring more people into the banking system and curb currency hoarding, illicit flows, and inflation. However, analysts have a different take. They maintain that digital payments are often unreliable in Nigeria. Therefore, they apprehend that the initiative could hurt daily transactions that people and businesses make.
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The majority of people work in the informal sector, such as farming, street and market trade, and public transport. They are outside the legal framework and government regulation of this type. This would create hardships for such people. On top of it, only 45% of adults in Nigeria have accounts with regulated financial institutions. In the absence of bank accounts, point-of-sale terminals have emerged as one of the fastest-growing areas of financial inclusion in the country. Through the withdrawal limits, the central bank is directly attacking such agency banking services, leading to the hoarding of their money without using banking sources for parking their deposits.
