Trying to rein in an economy in which cash still dominates, Nigeria is imposing limits on how much cash its people can withdraw per day from automatic teller machines.
In a letter sent to banks on Tuesday, the Central Bank of Nigeria said that as of Jan. 9, the daily limit of money that can be withdrawn per day is 20,000 naira, which, according to Bloomberg, comes to $44.97.
The current limit is 150,000 naira.
The new edict limits weekly withdrawals of cash at no more than 100,000 naira for people and 500,000 naira for corporations. Withdrawals above those limits will trigger hefty fees, according to the letter.
Other rules include a ban on cashing checks above 50,000 naira over the counter and getting more than 20,000 naira a day through cash withdrawals at point-of-sale terminals.
“Customers should be encouraged to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS, eNaira etc.) to conduct their banking transactions,” the central bank said in its letter.
The Central Bank has been trying to wean Nigerians off of cash through a policy it calls Cash-less Nigeria.
“High cash usage enables corruption, leakages and money laundering, amongst other cash-related fraudulent activities,” the Central Bank’s website proclaims.
Bloomberg estimates that the policy has a long way to go, with about 85 percent of Nigeria’s currency held outside of banks. Almost 40 million adults do not have bank accounts.
The policy is linked to concerns over gangs that turn to kidnapping as a form of making money through ransom, according to Reuters.
Other issues the bank has cited include counterfeiting, according to a report by Agence France Presse posted by Barrons’s.
The report also linked the policy to an effort to limit buying of votes and other shady transactions as the nation approaches its presidential election in February.
The central bank has redesigned the nation’s high-denomination currency, with residents being given until Jan. 31 to exchange their current cash for the new notes.
The Central Bank is also trying to promote the use of its eNaira digital currency, which has not proven popular.
The new actions were criticized by Victor Olojo, president of the Association of Mobile Money and Bank Agents of Nigeria, according to the website Punch.
Olojo said “difficulty would be felt as we still have a lot of transactions done with cash, especially those that are below the pyramid such as the market women and men who are petty traders, because this in essence means that once a bag of rice or flour is to be bought, which is above N20,000, it has to be via e-banking. Looking at it, how many of these people are technology-savvy?
“The CBN wants to achieve an agenda which is not exactly bad. However, a longer notice should have been given to those at the bottom of the pyramid. I believe that, eventually, the adoption would scale and people would have to get acquainted irrespective of the difficulty, embracing it in the long run,” he said.
“However, it is still very difficult because the technological infrastructure is still not there yet, and there are those who have had bad experiences with technology as well,” he said.
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