Nigeria will soon start limiting ATM withdrawals to just $45 a day as part of efforts to move the country towards cashless economy.
The policy – which will also cover banks and refunds on purchases – after launch West African nation a new design of money tokens to control the money supply.
FILE: Customers use ATMs at a United Bank of Africa Plc (UBA) branch in Lagos, Nigeria, Tuesday, Nov. 22, 2022.
(Benson Ibeabuchi/Bloomberg via Getty Images)
The Central Bank of Nigeria limits weekly OTC cash withdrawals to 100,000 naira ($225) for individuals and 500,000 naira ($1,124) for corporations, with a processing fee required to access higher amounts.
When the policy takes effect in January, ATMs will no longer dispense high denominations of 1,000 naira ($2.25) and 500 naira ($1.10), and withdrawals from ATMs and merchant terminals will also be limited to 20,000 naira ($45) daily. .
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Haruna Mustafa, director of the banking supervision department, said cash withdrawals could be allowed in “extreme circumstances, but not more than once a month.”
Policymakers say withdrawal limits and the central bank’s recent monetary initiatives will bring more people into the banking system and curb currency hoarding, illicit flows and inflation.
FILE: Godwin Emefiele, left, governor of the Central Bank of Nigeria (CBN), attends the presentation of new banknotes after Nigerian President Mohammed Buhari, right, unveiled a new banknote design due to counterfeiting and growing security concerns on November 23, 2022 in Abuja, Nigeria.
(President of Nigeria/Anadolu Agency via Getty Images)
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But other analysts worry that the initiative could hurt the day-to-day transactions people and businesses make, given the unreliability of digital payments in Nigeria.
Nigeria’s economy is heavily dependent on the “informal sector” – activities outside the legal framework and government regulation, such as farming, street and market trading, and public transport. In this sector, where most Nigerians work, cash is usually preferred for transactions because many do not have bank accounts.
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According to the World Bank, only 45% of adults in Nigeria have accounts with regulated financial institutions. Due to the lack of bank accounts, point-of-sale terminals have become one of the fastest-growing areas of financial integration in the country.
The Associated Press contributed to this report.
