To further its ‘cashless Nigeria’ policy and promote the use of eNaira, the central bank digital currency of Nigeria, the country has drastically reduced the amount of cash individuals and businesses can withdraw (CBDC).
According to Dec. 6 Circular from the Central Bank of Nigeria, only individuals and companies are now allowed to withdraw $45 (approximately 20,000 naira) every day and $225 (approximately 100,000 naira) every week from ATMs.
Individuals who withdraw more than $225 will be charged a 5% fee and businesses that withdraw more than $1,125 each week from banks will be assessed a 10% fee.
Cash withdrawal fees
The daily limit for cash withdrawals via POS machines is set at $45. Announcing the changes, Director of Banking Supervision Haruna Mustafa confirmed:
“Customers should be encouraged to use alternative channels (online banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to carry out their banking transactions.”
The restrictions are cumulative for each withdrawal, so someone who withdraws $45 from an ATM on the same day and then attempts to withdraw money from a bank will be charged a 5% service fee.
Prior to the announcement, the daily withdrawal limits for individuals and businesses were $338 ($150,000) and $1,128 ($500,000), respectively.
Nigerian retailers and merchants can take advantage of the growing global trend of cryptocurrency payments by getting the nation to accept digital currency instead of cash payments.
Apart from severely restricting the use of cash, these new rules, which come into force on January 9, are an attempt to get Nigerians to use the country’s newly issued Central Bank Digital Currency (CBDC), known as eNaira. CBDCs were introduced last year, but consumer adoption has been slow.
Since October 25, 2021, when eNaira was first launched, the adoption rate has been low. Reportedly, less than 0.5% of the population was said to have used eNaira on October 25, a year after it was launched. This indicates that the Central Bank of Nigeria has had difficulty convincing its citizens to adopt the CBDC.
Nigeria implemented “Non-cash” policy of 2012 On the basis that it will improve the efficiency of the payment system, reduce the cost of banking services and increase the effectiveness of its monetary policy.
Nigeria and CBDCs
Nigeria is one of 11 countries that have fully implemented the Convention on Biological Diversity, according to a tracker program set up by the US think tank the Atlantic Council. Another 15 countries have started pilot projects, and India is expected to follow soon.
It does not seem overly hopeful at the moment as the public seems completely uninterested in a decentralized digital currency when there are so many decentralized options freely available. People with more in-depth knowledge of cryptocurrency and blockchain technology have less interest.