CBN Withdrawal Limits and Cashless Policy: In Whose Benefit?

The new cash withdrawal limits policy imposed by the Central Bank of Nigeria has continued to generate uproar and tension across the length and breadth of the country.

According to experts and other analysts, this is not unconnected to the serious negative impact that the decision might have on small and medium enterprises as well as other individuals who are yet to familiarize themselves with the cashless economy policy. In fact, pundits argued that the new development may lead to the collapse of the informal economy sector.

As a result, many hardworking people may end up losing their job especially the Point of Sale (PoS) operators whose means of livelihoods depend on money transactions. To that effect, the association of the operators has given the apex bank an ultimatum to rescind this stern decision.

Specifically, the “PoS operators had in a petition dated December 16, 2022 called on the CBN to review its policy and save 1.4m bank agents from losing their means of livelihood.”

Furthermore, even the lawmakers including the Senate and House of Representatives members have knocked the CBN Governor, Godwin Emefiele over this decision and therefore ordered for its review.

Not only that, the State Governors were also antagonistic against the decision and have since offered to send a delegation to meet President Muhammadu Buhari with a view of rescinding the policy.

However, Emefiele continued to remain adamant and very firm with the decision, saying that there is no going back on the new withdrawal policy.

To that effect, since December 12th, Nigerians and corporate organisations were no longer able to withdraw cash above N100,000 and N500,000 per week by individuals and corporate entities as per the directives of the CBN to deposit money to banks and other financial institutions.

The CBN said, “withdrawals above these amounts will attract fees of 5 per cent and 10 per cent, respectively”.

Another thing that gives concern to the citizens is the one that sets N100, 000 as the maximum cash that can be withdrawn from Automatic Teller Machines, subject to a maximum of N20,000 cash withdrawal per day.

Sequel to that, prominent Nigerians like Mr. Femi Falana faulted the withdrawal limitation, noting that it violated the constitutional human right.

“Since the money laundering act, 2022 (which has fixed maximum cash withdrawal to N5 million) has not been amended, the limitation of cash withdrawal of not more than N20,000 per day and N100,000 per week fixed by the Central Bank of Nigeria is illegal, null and void in every material.

“For example “section 2 of the act, limits cash withdrawals by individuals and corporate entities to N5 million and N10 million, respectively.” Falana added.

The Senate on their part ordered the CBN to increase the limit and set up a committee to look into cash withdrawal policy, after expressing concern that the policy would have a negative effect on the economy and also directed a committee to embark on aggressive oversight of the CBN on its commitment to flexible adjustment of the withdrawal limit and periodically report the outcome to the chamber.

Meanwhile, the policy could be a welcome development, but there are certain factors to consider before the takeoff date. For instance, the rural people who have very little interaction with banks due to factors like proximity to the banks and Point of Sale (POS) operators that are scattered in the country who are likely to be out of business with this policy. It is only when all of these are put in place and addressed that the CBN can proudly implement this cashless policy.

In the political space, the fundamental importances of the cashless policy could be that it will discourage rigging, hence, Nigerians are cautioned to ignore the view politicians who are complaining about the policy and focus on this will impact their lives.

With some of the potential benefits, one wonders why the government rushed to announce and set a very close date to implement this policy without studying whether the banks have the necessary infrastructure to handle an increase in customer base and the employees to handle any uncertainty and without also considering how long it will really take for Nigerians to undergo full transition.

It is necessary for the government to provide the infrastructure to ensure a seamless implementation, especially with the takeoff date getting closer daily. In a country with very limited infrastructural and other facilities, including a financial technological infrastructure that will ease transactions in any remote area, this factors should be critically examined.

Transaction failure currently is high for online transactions, which is due to poor communication networks which must be tackled with speed; if the cashless policy is here to stay, those lapses must be corrected.

Therefore, there’s need for all the relevant authorities to join forces to ensure that issues bordering infrastructure, such as power, internet access and connectivity are adequately addressed.

Also, there is a need for a massive campaign for all Nigerians to understand the need for this policy and to get their buy-in. If these are not done, most of the rural dwellers will be cut off from this programme, and no policy can be described as a success if a larger target of the population loses out.

Banks who are responsible for convincing customers to open accounts with them must convince people that with the new policy, risks like bank fraud will be mitigated.

They must guarantee the customers that their cash will be returned in any eventuality which did not result from their carelessness. Banks must also provide affordable financial products and services that meet people’s needs, like credit, payment, savings, and insurance.

Finally, there’s the need to recognise the fact that there are different segments of the Nigerian population that need different conditions to become part of the plan and if they are not factored in, a question will then arise, who does the cashless policy stand to favour?

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