This is a new redesign and the digital age is here in Nigeria. Yes, the Central Bank of Nigeria wants to kill cash – and it has unleashed the biggest arsenal possible via clusters of policies.
First, provide e-naira and move more Naira transactions to the electronic domain. Secondly, mop all the informal cash vaults and bring them into the official vaults by redesigning Naira. Now, make it impossible to transact in cash by setting a limit on withdrawals unless you want to lose some money: N100k weekly and N20k on POS daily. With that, we have an end-to-end fiat execution of digitization.
In such, “banks have also been directed to load only N200 and lower denominations into their ATM.” I support the CBN on this. If you say you are rich in Nigeria, we expect you to pay taxes and with this visibility, expect the tax receipts to improve. Those underground economies must normalize now. It is about time.
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Yet, CBN must ensure its policies do not harm our non-literate or elderly citizens who cannot transition into this digital world. I expect a nuanced policy to ensure everyone is carried along. Take this case study. An Eziukwu palm oil seller comes to Oriendu Market Ovim to sell his palm oil. The total amount is N150k. If the buyer from Umuahia cannot pay cash, the implication is that CBN must ensure that Eziukwu has a bank to ensure that seller can use that money when he returns back to Eziukwu (6 hours trek away from Ovim). This policy must not just work for Lagos, Owerri, Kano and Uyo; it needs to work also in rural areas.
From the circular, courtesy of Punch:
The Central Bank Of Nigeria has imposed fresh cash withdrawal limits on individuals and organisations, which takes effect from January 9, 2023.
According to a new memo to banks issued on Tuesday and signed by the Director of Banking Supervision, Haruna .B. Mustafa, individuals will only be able to withdraw N100,000 per week ( from over the counter, Point of Sale Machines or the Automated Teller Machines), while organisations can access N500,000 per week.
Banks have also been directed to load only N200 and lower denominations into their ATM.
The memo read, “Further to the launch of the redesigned naira notes by the President, Major General Muhammadu Buhari (retd.), on Wednesday, November 23, 2022, and in line with the cashless policy of the CBN, all deposit money banks and other financial institutions are hereby directed to note and comply with the following:
“1. The maximum cash withdrawal over the counter by individuals and corporate organisations per week shall henceforth be N100,000 and N500,000 respectively. Withdrawals above these limits shall attract processing fees of 5% and 10%, respectively.
“2. Third-party cheques above N50,000 shall not be eligible for payment over the counter, while extant limits of N10,000,000 on clearing cheques still subsist.
“3. The maximum cash withdrawal per week via Automated Teller Machine shall be N100,000 subject to a maximum of N20,000 cash withdrawal per day.
“4. Only denominations of N200 and below shall be loaded into the ATMs.
“5. The maximum cash withdrawal via the point of sale terminal shall be N20,000 daily.”
The CBN said in compelling circumstances, not exceeding once a month, where cash withdrawals above the prescribed limits would be required for legitimate purposes, such cash withdrawals shall not exceed N5,000,000.00 and N10,000,000.00 for individuals and corporate organisations, respectively, and shall be subject to the referenced processing fees in (1) above, in addition to enhanced due diligence and further information requirements.
It also said banks were required to obtain the following information at the minimum and upload same on the CBN portal created for the purpose:
“a. Valid means of identification of the payee (National Identity Card, International Passport, Drivers License.). b. Bank Verification Number of the payee. c. Notarised customer declaration of the purpose of the cash withdrawal. d. Senior management approval for the withdrawal by the Managing Director of the drawee, where applicable. e. Approval in writing by the MD/CEO of the bank authorising the withdrawal.
“Please further note the following: i. Monthly returns on cash withdrawal transactions above the specified limits should be rendered to the Banking Supervision Department. ii. Compliance with extant AMUCFT regulations relating to the KYC, ongoing customer due diligence and suspicious transaction reporting etc., is required in all circumstances. iii. Customers should be encouraged to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS. eNaira, etc.) to conduct their banking transactions.
“Finally, please note that aiding and abetting the circumvention of this policy will attract severe sanctions.
“The above regulatory directives take effect nationwide from January 9, 2023. Please be guided accordingly,” the memo added.
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It’s the way to go, and no one expects it to be a smooth process from the beginning, but overtime – it will become the new normal. Not many people believed that ATM and POS would take hold and scale, but massive progress has been made there. With withdrawal limits, more people will make digital and electronic payments their default.
The rural areas will still tag along, just like they did with GSM, adaptation is human, and human is adaptation.
Now there needs to be explosion in payment services, from agency to digital, and everything in between.
Let all entrepreneurs and innovators go to work, the harvest is ready.
Yes, the harvest is ready
ÓFÓnOGÚ IDENTITY BASED UNIVERSAL BASIC INCOME PERSONAL CURRENCY will resolve this challenge and create/provide liquidity in the community.
Prof, I totally agree with you in regards to ensuring the policy carries the people living in the village. My village does not have a bank, the closest bank is 45 minutes to 1 hour drive. This will make live hard for people in the rural areas.
*life