The Central Bank of Nigeria (CBN)’s new withdrawal policy will cap the maximum cash withdrawal over the counter (OTC) by individuals and corporate entities per week at N100,000 and N500,000, respectively. This is in an effort to lessen reliance on cash and speed up the digitization of the economy. January 9, 2023, will see the start of the new policy.
In a memo released on December 6, 2022, the apex bank stated that withdrawals beyond the set limit will now be subject to processing fees of 5% and 10% for both individuals and corporate entities. This is coming two weeks after the launch of the redesigned N200, N500, and N1,000 notes.
Additionally, while the current clearing cheque restrictions of N10 million are still in effect, third-party cheques over N50,000 will not be eligible for OTC payment.
The policy suggests that Deposit Money Banks (DMBs) and other financial organizations have the authority to determine whether a customer’s request to withdraw N100,000 is valid or not.
The new withdrawal policy also set a weekly limit of N100,000 on the most cash that may be withdrawn from an ATM, with a daily limit of N20,000. Also, only notes worth N200 or less can be loaded into the ATMs.
A good policy?
Many Nigerians have argued that while the strategy might deter currency hoarding and restrain inflationary pressures, it might also be ineffective and inconvenient for the poor.
For instance, there is the issue of how PoS operators would finance their operations with only a N20,000 weekly withdrawal cap. Some fear that it could encourage extortion because the operators may be forced to increase remittance fees for customers.
Enforcing the policy may also prove challenging in a nation like Nigeria where many older and lower income earning citizens favour cash transactions over electronic payments.
In line with this viewpoint, Olisa Metuh, a former national publicity secretary for the PDP, said in a statement that it was incomprehensible that the Central Bank would decide to force the policy on lowest class of the citizenry with PoS devices in an economy plagued by arbitrary and repeated bank charges.
According to Metuh, [how does the CBN] “… expect Nigerians to patronise the banana and fruit sellers? Should we stop buying from petty traders because of network delays in effecting transactions? What of the attendant ceaseless and multiple deductions from the accounts of these petty traders?
In spite of these reservations and drawbacks, it is hoped that the policy will strengthen the naira, facilitate cashless transactions for the uneducated, and lessen cash-related crimes.
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