To further its “cash-less Nigeria” policy and promote the usage of the eNaira, Nigeria’s Central Bank’s Digital Currency, the country has dramatically curtailed the amount of cash that people and businesses can withdraw (CBDC).
According to a 6 December circular from the Central Bank of Nigeria, people and businesses are now only permitted to withdraw $45 (about 20,000 Naira) each day and $225 (almost 100,000 Naira) every week from ATMs.
A 5% fee will be assessed to individuals who withdraw more than $225 and a 10% fee will be assessed to corporations who withdraw more than $1,125 every week from banks.
Fees on cash withdrawals
The daily cap on cash withdrawals through point-of-sale terminals is set at $45. Director of Banking Supervision Haruna Mustafa underlined the following when announcing the changes,
“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.
Before the announcement, the daily cash withdrawal caps for individuals and enterprises were $338 ($150,000) and $1,128 ($500,000), respectively.
Nigerian retailers and merchants could benefit from the expanding global trend of crypto payments by urging the nation to accept digital currency instead of cash payments.
In addition to severely restricting the usage of cash, these new regulations, which go into effect on 9 January, are an effort to get Nigerians to use the nation’s recently issued central bank digital currency (CBDC), known as eNaira. The CBDC was introduced last year, but consumer adoption has been sluggish.
Since 25 October 2021, when eNaira first launched, adoption rates have been poor. Reportedly, less than 0.5% of the population was claimed to have used the eNaira as of 25 October, a year after its inception. This indicates that the Central Bank of Nigeria has had difficulty persuading its citizenry to adopt 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.
Nigeria and CBDCs
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 experimental projects, and India is expected to follow soon after.
It’s not looking too hopeful right now because the general public seems utterly uninterested in a centralized digital currency when there are many freely accessible decentralized alternatives. People with more in-depth knowledge of cryptocurrencies and blockchain technology have even less interest.