Individuals and organizations will face new cash withdrawal limits from January 9, 2023, according to the Central Bank of Nigeria (CBN).
Individuals would only be permitted to withdraw N100,000 each week (through over-the-counter, point-of-sale machines, or automated teller machines), according to a letter issued by the CBN to banks on Tuesday, while organizations will be able to withdraw N500,000 per week.
The memo, issued by Haruna Mustafa, the CBN’s Director of Banking Supervision, urged banks to load only N200 and lesser denominations into ATMs. When the regulation goes into effect, Nigerians will be limited to withdrawing N20,000 per day from ATMs.
NEWS FLASH: CBN Limits Cash Withdrawals To N100,000 Per Week
The memo read, “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 per and 10 per, respectively.
“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.
“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. Only denominations of N200 and below shall be loaded into the ATMs. The maximum cash withdrawal via the point of sale terminal shall be N20,000 daily.”
However, there is an exemption that permits individuals to spend up to N5m and business organizations to spend up to N10m once a month with certain conditions.
The CBN reminded banks that any bank that aids and abets the violation of this regulation will face harsh penalties.
PoS operators React
Following the new instruction, Victor Olojo, National President of the Association of Mobile Money and Bank Agents of Nigeria, stated that point-of-sale operators would plan to protest because the policy was aimed at eliminating their source of income.
In an exclusive interview with Newsmen, Olojo revealed that the recently stated regulation would have a detrimental influence on their business because it would result in the closure of PoS terminals.
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He said, “This news is just breaking and a lot of PoS agents are already complaining bitterly. Some are calling for protests as this policy, which limits PoS transactions to N20,000, sends them out of business. Hence they have to return to their villages.”
Speaking on the impact of the new policy on individuals and the economy, the president said it would be really tough as Nigeria was still a cash-dominant society.
He said, “Nigerians should brace up, as this is a challenge that CBN is putting out to Nigerians to embrace technology. However, the difficulty would be felt as we still have a lot of transactions done with cash, especially those that are below the pyramid such as the market women and men who are petty traders, because this in essence means that once a bag of rice or flour is to be bought, which is above N20,000, it has to be via e-banking. Looking at it, how many of these people are technology-savvy?
“The CBN wants to achieve an agenda which is not exactly bad. However, a longer notice should have been given to those at the bottom of the pyramid. I believe that, eventually, the adoption would scale and people would have to get acquainted irrespective of the difficulty, embracing it in the long run.
“However, it is still very difficult because the technological infrastructure is still not there yet, and there are those who have had bad experiences with technology as well. The implication of this policy would slow down a lot and affect a lot of things, particularly those earning more than N20,000 daily.”
Olojo expressed his anxieties and concerns that the program would be implemented at a difficult time in the Nigerian economy. Before any process is abandoned, he says, there must be an adequate alternative.
Also, a PoS operator, simply identified as Christian Onyema said, “The new CBN policy will affect our business because pegging daily transaction limit to N20,000 is not helpful for us. For instance, a customer who wanted to transact business came to withdraw N500,000 today, I made my gains and he was able to do his own business. This will no longer be possible by January when the policy takes effect. The economy will suffer and insecurity will rise too because some operators will definitely go out of jobs.”
Another operator who gave his name only as ‘Small’ said, “This will really affect PoS business, a situation where customers can’t withdraw more than N20,000 daily means those who withdraw more than that normally will be limited.”
Transporters Kick
However, ABC Transport’s Deputy Managing Director, Jude Nneji, praised the idea.
He said, “At least, it will limit some of these crimes. If somebody knows he can’t get cash from you, he won’t bother to attack you. If you also consider the cost of printing this money, you’ll want to use electronic means.”
When asked if this would not affect his transport business, he said, “No doubt, it’s going to encourage people to hoard funds but for people like us whose customers pay through electronic means, we don’t have a problem. However, we hope that government has good intentions too.”
The Chief Executive Officer, Rivers Link, Mr Obinna, said, “This will affect our business, some of us are businessmen and there may be things you want to buy that will be more than N20,000, and some of us may prefer cash, so it will surely affect businesses.”
Businesses Fume.
Dr Adebayo Adams, the Lagos State Chairman of the Nigerian Association of Small and Medium Enterprises, said the policy will hurt firms, particularly MSMEs.
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“If other channels are well-organised, then it is good. However, every other thing is going to affect us because, as from December 15, 2022, most people will be skeptical about accepting old notes.
“Most people will not like to discard old naira notes with them because there is no point in taking away the one I have to the bank and find out the new naira notes are not yet available.
“How can you say I can’t access more than N100,000 in a week? What do I do with N100,000? So, it is going to have a serious effect on the local market. These people are selling on a daily basis at Ketu , Igboyi, Oyigbo market, most of them do not have PoS or ATM. So, it will affect the speed of transactions and movement of goods.
“Now, it is people with cash that will be able to buy goods. Because if I say I want to transfer and no one is taking the transfer from me, they will tell you they cannot accept that mode of payment because they have no bank account.
“Now, CBN is talking about N100, 000 a week, but how will that work when a bag of rice is N45,000? So, if I buy a bag of rice, won’t I buy something to eat? It is a very bad policy and will affect every small business owner because they won’t have money for transactional purposes.”
Bad Timing
Dr. Uju Ogunbunka, President of the Bank Customers Association of Nigeria, stated that while the aims of the cashless policy were reasonable, the execution and timing were not, emphasizing that these were areas where serious difficulties would emerge.
“From the cashless policy point of view, we should appreciate that, as much as possible, the government is trying to limit the use of cash for transactions, more so, now that they are redesigning the currency. And they may not have enough in print, so for it to go around, they have to find a way to limit us from using cash.
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“The second thing is that the government wants to drive the use of online banking, which is good for our economy. Unfortunately, there have been so many complaints about failed transactions.
“At least, to the best of my knowledge, there is hardly any week without complaints in the banking hall. You will see people shouting with regard to transfer failures. Have we put enough structure to take care of some of these things? The answer is, we are yet to, we are making progress, yes, but we should give enough room and time for some of these things to play out rather than short-circuit the system.
“If all of us, including market women and men, have to go online today, can the infrastructure carry all of us through successfully? This question should be able to deal with some of these things.
“Some of us do not need too much cash to operate. For instance, if I go to the bank in a week and withdraw N100,000, what will I be spending that money on? I mean that should be enough to use for one week. If I can do other transactions online, why not? But it is not everybody that can do this, particularly those who are trading. Most of them still depend on people coming with cash and, then, they will carry the cash to the bank to pay in. This means there will still be a need for people to have cash; otherwise, what we are going to tell people is that you have to hold on till you have cash to do your transaction if you cannot do online banking.
“And the aforementioned can stall businesses. For example, the market woman going to buy food stuffs needs physical cash. Where will she do online banking with that? And can N20,000 today solve that problem for one week for a family? That’s not possible, so there might be a need for a rethink unless you are targeting people in the towns.
“Even in towns, I do not see the effectiveness of this policy let alone in the rural environs. It is a good policy, but we should streamline to see what is possible in the kind of economy we operate, especially with inflation at double- digit. The practical situation on ground does not support this policy.”
Excellent policy
Dr Sam Nzekwe, former President of the Association of National Accountants of Nigeria, stated that the CBN was limiting withdrawals to reduce cash in circulation and increase financial inclusion, which was not a negative thing.
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He said, “They are trying to limit cash in circulation so that people will have little cash. I think they are trying to drive financial inclusion with the policy.”
Nzekwe also stated that with more money in the banks, the institutions would be able to provide financial assistance to those in need in order to stimulate the economy.
“With more money in banks, the banks can use the money for their financial intervention role in the economy,” he said.
He urged banks, however, to ensure that Nigerians could trust their systems sufficiently to keep their money in them.
He stated that the possibility of customers losing money in their bank accounts due to cyber-attacks and fraudsters may dissuade them from maintaining money in banks.
Nzekwe advised banks to solve this issue and foster greater confidence among Nigerians in order to promote financial inclusion and security in the country.
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