The new Central Bank Of Nigeria (CBN) policy was met with mixed reactions from citizens and different political actors, including lawmakers in the National Assembly. The policy which was announced to banks on December 6, 2022, by the Director of Banking Supervision, Haruna Mustafa, attracted a lot of resentment and outcry from Nigerians.
The CBN, by the policy, placed a limit on cash withdrawals to N20,000 daily for Point Of Sale terminals; N100,000 weekly for private individuals and N500,000 for organisations and corporate bodies weekly respectively. The apex Bank also directed that only N200 and lower denominations should be loaded into banks’ ATM machines.
The House Of Representatives, through a motion, pulled up by Aliyu Magaji (APC Jigawa) on the 8th of December, summoned the CBN Governor, Godwin Emefiele, to discuss the policy, adding that it can negatively affect small-scale businesses.
Several citizens have also viewed this policy as a personal vendetta against political parties, especially as the 2023 general election approaches, a claim the Apex Bank refuted when it eventually appeared on Thursday, before the house of representatives.
The CBN Deputy Governor, Aisha Ahmad, the policy of cash withdrawal limit is not based on politics, contrary to diverse insinuations. Ahmad noted that the policy was expected to create new jobs in the ICT sector, contrary to insinuations that it would lead to job loss.
She said the operators of Point on Sales (POS) would not be affected by the policy, adding that the CBN was aware that the POS had created a means of livelihood for about 44 million Nigerians.
CBN reverses cash withdrawal policy
In a new circular signed by Haruna Mustafa, Director of Banking Supervision and issued to all banks late Wednesday, the CBN said it increased the maximum weekly limit for cash withdrawal across all channels.
Going forward, individuals and corporate organisations can now withdraw N500,000 and N5,000,000 cash.
The circular was It reads in part: “In compelling circumstances where cash withdrawal above the limits is required for legitimate purposes, such requests shall be subject to a processing fee of three percent and five percent for individuals and corporate organisations, respectively.”
In the case of third-party cheques above N100,000, the CBN directed that it cannot be eligible for payment over the counter, while the extant limit of N10 million on clearing cheques still subsists.
The new directive takes effect nationwide from January 9.
Experts Examine Policy
Samuel Oyekanmi, a Financial Analyst, said that the withdrawal policy would definitely have a lot of impact on the Nigerian economy.
Oyekanmi opined that while it is not certain that the new CBN policy will strengthen the naira, the policy however has the potential to make the naira stronger relative to the current state of the country.
“The withdrawal policy would definitely have a lot of impact on the Nigerian economy, good and bad, depending on how we spin it. Bad in the sense that we do not currently have the kind of infrastructure capable of handling the increased mobile transactions that would follow. We still hear issues of failed transactions, unreversed debits, and account hacks amongst others. On the positive note, it will improve financial inclusion, curb corruption to a large extent, ensure the CBN monetary tools are more effective, rein in on inflationary pressure, etc.” he said
Oyekanmi who reacted to the possibility of the policy reducing inflation said “Understanding the source of Nigeria’s inflation problem and exchange rate quagmire is a big step towards finding a lasting solution. We have huge infrastructural gaps like roads, value chain disruption, insecurity, insufficient local production, over-reliance on imports, and currency hoarding amongst others. Solving these issues is a step closer to better macro numbers”
While noting that the policy will have a positive effect on vote-buying in elections, he expressed fear over the possibility of some corrupt individuals exploiting its loopholes.
“Restricting the amount of cash in circulation will to an extent curb vote buying and I think the government is also following up on this too by restricting cash transactions and withdrawals. Unfortunately, the corrupt nature of some people in the country will most likely exploit any loopholes in the policy.” Oyekanmi said.
Also reacting, Abdulazeez Kuranga, macroeconomic Strategist, the Naira redesign has no economic impact, as it is expected to ‘just replace the old naira note with a new one’.
He said to reduce inflation, the CBN should stop its fiat-led interventions and debt monetization, as they both contribute to increased naira liquidity, stoking demand side factors, and affecting inflationary pressures.
“To reduce inflation, the fiscal authorities should step up with the function of addressing productivity to solve the supply side problems of infrastructure deficit, security challenges, and improving the agriculture value chain. At the same time, the CBN should stop its fiat-led interventions and debt monetization, as they both contribute to increased naira liquidity, stoking demand side factors affecting inflationary pressures” he said