Several reactions have greeted the Central Bank of Nigeria’s (CBN) decision to place a limit on all cash withdrawals effective from 09 January, 2023.
The bank made this known in a circular issued by its Director of Banking Supervision, Haruna Mustafa, to deposit money banks, financial institutions, payment service banks, primary mortgage banks and microfinance banks.
The circular, as seen on the apex bank’s website, read, ‘The maximum cash withdrawal (OTC) by individuals and corporate organisations per week shall henceforth be N100,000 and N500,000 respectively’.
‘Withdrawals above these limits shall attract five percent and ten percent respectively’.
The CBN further encouraged customers to make use of alternative channels like internet banking, mobile banking apps, USSD, cards and POS to conduct their banking transactions.
What this means
The new policy, according to the apex bank, followed its recent currency redesign project in which it had expressed concerns over the high volume of cash outside the banking system.
The bank also said it is in line with its cashless policy which was first introduced in 2012. According to the bank, the policy aims to reduce the amount of physical cash circulating in the economy and encourage more electronic-based transactions.
This recent directive means that Nigerians can only make withdrawals of N100,000 per week from either the bank or ATMs, and N20,000 per day.
Also, individuals cannot get a higher denomination of bank notes via ATMs as banks have been directed to load their ATMs with denominations of N200 and below.
What are the concerns?
There are concerns that this directive by CBN will impact a sector that is critical to the nation’s economy, which is the informal sector.
The majority of trade and commerce in Nigeria occurs in the informal sector, and many operators of these businesses in the informal sector are located in remote locations where there are no bank branches.
Also, these businesses transact largely in cash, hence limiting cash withdrawals will greatly affect their businesses.
The National Bureau of Statistics (NBS) recently released data showing that 63 percent of persons (133 million) living in Nigeria are multidimensionally poor.
With the available statistics, people who are poor would not be able to afford data or smartphones to carry out digital transactions.
The mobile banking agents (POS operators) will run out of jobs, since people cannot withdraw more than a certain amount.
Following this development, members of the National Assembly have expressed reservations over the policy, saying it would make many businesses in the country collapse.
Need for sensitisation
There is a need for the CBN to gradually approach the implementation of this directive to avoid severely impacting many Nigerians.
The average Nigerian, and especially those in the informal sector, ought to be properly sensitised to why this directive is necessary and how they will benefit from it.
The banking system and financial institutions need to be strengthened to overcome whatever shocks might come with the implementation of the new policy.
Photo source: CBN
