By Richard Hines
The Federal Government of Nigeria, under its central bank, has put limits on naira withdrawals across all mediums.
With the highest amount that can be withdrawn at the bank by individuals and business entities now pegged at 100,000 naira and 500,000 naira respectively, the bank intends to encourage the exploration of other mediums of banking.
Other classes are included in the two-page memorandum, which is bound to kick off by the 9th of January next year.
Nigerians Urged To Explore Other Means Of Banking
With the 6-paragraph letter released by the central bank of Nigeria yesterday, it is indeed apparent that the government of the Federal Republic of Nigeria is urging its citizens to adopt other means of banking, especially virtual banking and the use of its digital currency (CBDC), e-naira.
The letter, which had the appendage of Haruna Mustafa, who is the director of banking supervision, was directed to the financial institutions in the country and had a number of directions that ultimately lead to the promotion of the supremacy of cashless banking.
First off, the highest amount of money that can now be withdrawn at a bank’s counter by private individuals and businesses has been reduced to 100,000 naira and 500,000 naira.
A clause of a fee to the tune of 5% and 10% of the total money to be withdrawn each has been given in case one wants to go above the limit, but it can not be more than 5,000,000 naira and 10, 000, 000 naira, which must not be more than once in a month.
In addition to that, third-party cheques will no longer exceed 50,000 naira as anything above that will render them ineligible to be cashed, while the price limit of 10, 000, 000 naira still applies to clearing cheques.
Using automated teller machines (ATM), the maximum amount of money that could be withdrawn in a week has been pegged to 100,000 naira with a limit of 20,000 naira per day. Also, as a matter of policy, the denominations of the money will not be higher than the 200 naira note.
In line with the above, the highest amount of money that could be withdrawn at a point of sale (POS) has been pegged at a maximum of 20,000 naira daily.
According to the memo in the letter, these financial institutions are expected to take notice of the directives and ensure that they comply with them starting on January 9, 2023.
Nigerians Bemoan The New Policy
Since the rollout of the e-naira in 2021, relatively few Nigerians use the money. According to Bloomberg, there are about 270,000 users of CBDC who are quite active. That is quite small compared to the country’s total population, which is over 211.4 million.
Also, it appears as if most Nigerians prefer to deal with cash, which sometimes leads to them hoarding naira, a behaviour that finally led to the CBN redesigning the 200 naira, 500 naira, and 1000 naira in order to have people deposit their money in the bank, a strategy that apparently worked as banks all around the country received a total of 52 billion naira in deposits.
With the latest development from the CBN, many Nigerians have commended the move, while even larger numbers of Nigerians have started to make complaints of hardship.
There are complaints of an inability to use digital banking due to illiteracy and bad network problems. As it is, a quite sizable number of businesses such as points of sale (POS) are about to shut down as the federal government is literally cutting their means of survival, the Nigerian cash.
For now, all fingers are crossed to see whether the central bank’s decision is a good one after all