The Central Bank of Nigeria’s restrictions are a part of a larger effort to promote electronic financial transactions.
Nigeria has dramatically curtailed the amount of cash that people and businesses can withdraw in an effort to advance its “cash-less Nigeria” policy and promote the usage of the eNaira, the country’s digital currency (CBDC).
In a Dec. 6 circular, the Central Bank of Nigeria stated that as of now, people and businesses were only permitted to withdraw $45 (20,000 Nigerian naira) daily and $225 (100,000 naira) weekly from ATMs.
Additionally, there will be weekly withdrawal limits of $225 (100,000 naira) for individuals and $1,125 (500,000 naira) for businesses. Any amounts taken out in excess of those limits will incur a 5% fee for individuals and a 10% fee for businesses.
The daily cap for cash withdrawals from point-of-sale terminals is also $45 (20,000 naira). Haruna Mustafa, director of banking supervision, announced the modifications and noted:
“Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.”
The restrictions are cumulative for each withdrawal, so someone who withdraws $45 from an ATM on the same day and then tries to withdraw money from a bank will be charged a 5% service fee.
Prior to the announcement, the daily cash withdrawal caps for individuals were $338 (150,000 naira) and enterprises were $1,128 (500,000 naira).
Since the 25th of October 2021, when eNaira first launched, adoption rates have been poor. Less than 0.5% of the population was reported to have used the eNaira as of October 25, a year after its launch. This indicates that the Central Bank of Nigeria has had difficulty persuading its citizens to use the CBDC.
Nigeria implemented its “cash-less” policy in 2012 with the justification that doing so would improve the efficiency of its payment system, lower the cost of banking services, and increase the efficacy of its monetary policy.
On October 26, Godwin Emefiele, the governor of Nigeria’s central bank, stated that 85% of all Naira in circulation was stored outside of banks and that as a result, new banknotes would be issued in an effort to promote the transition to digital payments.
Nigeria is one of 11 nations that have fully implemented a CBDC, according to a tracker created by the American think tank Atlantic Council. Another 15 nations have started pilot projects, and India is expected to follow soon after.