The Central Bank of Nigeria imposed the restrictions as part of a larger effort to promote the use of digital financial transactions.
To promote its “cash-less Nigeria” policy and encourage greater use of the eNaira, the digital currency issued by the Central Bank of Nigeria, Nigeria has severely limited the amount of cash that individuals and businesses are able to withdraw (CBDC).
In a circular issued to financial institutions on December 6th, the Central Bank of Nigeria announced that the daily and weekly ATM withdrawal limits for individuals and businesses would be capped at $45 (20,000) and $225 (100,000), respectively.
Additionally, the weekly bank withdrawal limits for individuals are set at $225 (100,000) and for businesses they are set at $1,125 (500,000), with a 5% fee for individuals and a 10% fee for businesses for amounts over the set limits.
A daily limit of $45 (20,000) applies to cash withdrawals made at point-of-sale terminals. As part of the announcement, Director of Banking Supervision Haruna Mustafa said, “Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.”
An individual who withdraws $45 from an ATM and then tries to withdraw cash from a bank on the same day would be charged the 5% service fee because the limits are cumulative.
In the days before the announcement, the daily withdrawal limits were $338 (150,000) for individuals and $1,128 (500,000) for businesses.
Since its introduction on October 25, 2021, eNaira adoption rates have been dismal. Although the eNaira was introduced a year ago on October 25, less than 0.5% of the population was reported to have used it as of October 25, according to a report by Cointelegraph on October 26.
In 2012, Nigeria instituted its “cash-less” policy, with the idea being that doing away with physical cash would improve the efficiency of the country’s payment system, lower the cost of banking services, and make the country’s monetary policy more effective.
On October 26th, Godwin Emefiele, Governor of Nigeria’s central bank, announced that new banknotes would be issued to encourage the transition to digital payments, as 85% of all Naira in circulation was held outside of banks.
The Atlantic Council, an American think tank, maintains a tracker for CBDCs, and it shows that Nigeria is one of only 11 countries to have fully deployed a CBDC. Another 15 countries have launched pilot programs, and India will join them later this month.
