Business & Economy - National - News - December 7, 2022

Mixed reactions trail CBN’s policy on cash withdrawal limit

By Bassey Udo

Mixed reactions have continued to trail the decision by the Central Bank of Nigeria (CBN) the cash withdrawal limit by individuals and corporate bank customers in the country.
policy of the will have serious unintended adverse consequences and expressed hope that the apex bank would review its decision.

The apex bank in a circular to all banks and other financial institutions on Tuesday restricted over-the-counter cash withdrawals per week by individuals and corporate customers to N100,000 and N500,000, respectively.

Also, the CBN, through a circular by its Director of Banking Supervision, Haruna Mustafa, asked banks to restrict weekly cash withdrawals through Automated Teller Machines (ATMs) to N100,000 only subject to N20,000 withdrawals per day.

Mustafa said the policy, which would become effective January 9, 2023, would also affect third-party cheques above N50,OOO, which would not be eligible for payment over the counter.

However, since the announcement of the policy, which the CBN said was in line with its cashless policy, mixed reactions have come from a cross-section of Nigerians, with most criticizing it that it was capable of creating unintended consequences on sectors of the economy.
For Odilim Enwegbara, an Abuja-based Financial Consultant and Chairman/CEO, Pan Africa Development Corporation, a largely undeveloped economy, without the basic infrastructure to operate an electronic payment system, requires cash to transact business.

“70% of Nigerians are not educated and cannot afford to do without cash in their daily activities,” he said.

The Managing Director, Compass Investments and Securities Limited, Sam Ndata, said the new policy would create an artificial scarcity of funds in the economy, as people would be forced to resort to keeping money in their homes to be able to use in their business.

Being allowed to withdraw only N100,000 and N500,000, Ndata argued, would be too small to cover the financial commitments by some individuals and companies.

Describing the policy as a bad development for the economy, Ndata cited the example of a contractor handling a building project and needing to pay workers on site.

“How would the contractor pay labour hands that do not have any bank accounts? How do you tell a rural labourer who has never owned any bank account before that he or she should open one so his or her money would be transferred to him or her? How many people will accept payment by electronic means?

Some of the reasons the CBN has given in support of the policy have been that it would help to mop up excess liquidity in the financial system, promote the cashless policy, fight inflation, ensure financial inclusion, boost the value of the Naira and combat terrorism financing.

The Managing Director of Valmond Securities Limited, Tajudeen Olanyinka, agreed there was a positive side to the policy, saying it would encourage the adoption of electronic payment platforms, like the eNaira, in transactions.

“What the CBN is trying to do is to trigger scarcity of cash, so that everyone will embrace the use of eNaira wallet. In their calculation, allowing people to carry on with much use of cash will negate the idea of redesigning the Naira,” he said.

At the moment, the use of electronic payment channels, particularly among market women and traders has been very low, as major prefer cash in their businesses.

“At a time the CBN is talking about financial inclusion, placing a limit on cash withdrawals will affect these micro, small and medium enterprises that rely on cash to transact their businesses. Without access to cash, these categories of people would further be excluded from the financial system,” he argued.

For Frank Tietie, an Abuja-based lawyer and Executive Director, Citizens Advocacy for Social & Economic Rights (CASER), the policy by the CBN is simply a violation of the people’s human rights.

Tietie criticized the thinking in CBN that a near cashless society was we preferrable to the people against their freedom and privacy that go with a cash-based economy.

He said the policy was not only a recipe for untold hardships on the people, but a control measure that would strip Nigerians of control over their money.

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