07 Dec 2022
Forcing CBDCs, Nigeria restricts more than $225 per week withdrawals from ATMs
As part of its "cash-less Nigeria" policy, the government has severely limited the amount of money citizens and businesses can take out of ATMs to encourage the use of the eNaira, the digital currency issued by the Central Bank of Nigeria.
The Central Bank of Nigeria issued a circular on 6 December limiting individuals and businesses to withdrawing $45 (about 20,000 Naira) per day and $225 (almost 100,000 Naira) per week from automated teller machines.
If you withdraw more than $225 from your checking account each week, you'll be charged a 5% fee, while businesses will be charged 10%.
Withdrawal fees for hard currency
Withdrawals from POS terminals have a daily limit of $45. When announcing the alterations, Director of Banking Supervision Haruna Mustafa emphasized the following,
"Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions."
They will charge a person who takes out $45 from an ATM on the same day and then tries to take out money from a bank a 5% service fee because the restrictions are cumulative for each withdrawal.
The daily cash withdrawal limits for people and businesses were $338 ($150,000) and $1,128 ($500,000), respectively, before the announcement.
By urging the country to accept digital currency instead of cash payments, Nigerian retailers and business owners could profit from the growing global trend of crypto payments.
These new rules, which take effect on January 9 and severely restrict the use of cash, also aim to encourage Nigerians to use the country's recently released central bank digital currency (CBDC), known as eNaira.
After being introduced last year, the CBDC has had a slow consumer adoption rate.
Adoption rates have been low since eNaira first launched on October 25, 2021. As of 25 October, one year after its launch, less than 0.5% of the population was said to have used the eNaira.
This suggests that the Central Bank of Nigeria needs help convincing the country's populace to adopt the CBDC.
With the justification that doing so would increase the effectiveness of its monetary policy, decrease the cost of banking services, and improve the efficiency of its payment system, Nigeria implemented its "cash-less" policy in 2012.
CBDCs and Nigeria
According to a tracker made by the American think tank Atlantic Council, Nigeria is one of the 11 countries that have fully implemented a CBDC.
India is anticipated to start its experimental projects shortly after the other 15 countries. Given the abundance of freely available decentralized alternatives, the general public will need more time to adopt a centralized digital currency.
Even those more knowledgeable about cryptocurrencies and blockchain technology show little interest.
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