Topic: Nigeria bans ATM cash withdrawals over $225 a week to force use of CBDC (Read 143 times)

Most Nigerians have no interest in using the eNaira. As a matter of fact they haven't even signed up on the platform.

Besides, if we think of Bitcoin, its adoption would have also killed this as there wouldn't be any need for them either.

however. what will happen is the rich will stop depositing paper cash. and do hand to hand swaps of cash between each other to then swap bank balance for bank balance. thus create a dark market of cash in hand outside bank deposit/withdrawal systems..
africa done this many times in many places over many decades of economic changes before

The challenges to Nigerian economy and inflation amidst insecurity is more basic than the currency regulation. Inflation will be push down if the economy do more of production, to fix the refinery, electricity, agriculture, transportation are more basic to reduce cost and scarcity that kept pushing inflation up.

Personally, I see that such methods are to dry up liquidity in the hands of citizens, and thus limit the economy, including controlling inflation. If this is the case, then it is a bad way to manage the economy, and the citizen will pay the price when restrictions are re-lifted, as inflation will accelerate excessively.

This policy is a big blow to most medium and small-scale businesses in Nigeria. So many businesses would be affected and there would be massive loss of job especially in the Point of Sale vendors industry. They would have to pay high fees to exceed the stipulated withdrawal or transaction limits. These business would start looking for alternatives such as opening multiple bank accounts, as well as using other unconventional means to invade this policy.

Withdrawal caps could also incentivize businesses and consumers to search for alternatives. Which could drive them into bitcoin and cryptocurrency. There isn't much that has been said in recent times (that I've seen) discussing the current state of crypto in nigeria or africa. I think everyone knows that banks in those regions have closed accounts that dealt in crypto. That occurred some time ago. Without much in the way of updates since.

The limits set by the Central Bank of Nigeria are part of a broader push to encourage digital financial transactions.

Nigeria has drastically reduced the amount of cash individuals and businesses can withdraw as it attempts to push its “cash-less Nigeria” policy and increase the use of the eNaira — Nigeria’s Central Bank Digital Currency (CBDC).

The Central Bank of Nigeria issued the directive to financial businesses in a Dec. 6 circular, noting that individuals and businesses would now be limited to withdrawing $45 (₦20,000) per day and $225 (₦100,000) per week from ATMs.

Individuals and businesses will also be limited to withdrawing $225 (₦100,000) and $1,125 (₦500,000) respectively at banks per week, with individuals hit with a 5% fee and businesses with a 10% fee for amounts above those limits.

The maximum cash withdrawal via point-of-sale terminals is also capped at $45 (₦20,000) per day. Announcing the changes the Director of Banking Supervision Haruna Mustafa noted:


The limits are cumulative limits for each withdrawal, so an individual withdrawing $45 from an ATM who then tries to withdraw cash from a bank on the same day would be hit with the 5% service fee.

The previous limits on daily cash withdrawals prior to the announcement were $338 (₦150,000) for individuals and $1,128 (₦500,000) for businesses.

Adoption rates for eNaira have been low since its launch on Oct. 25, 2021. As reported by Cointelegraph on Oct. 26 the Central Bank of Nigeria has struggled to convince its citizens to use the CBDC with less than 0.5% of the population reported having used the eNaira as of Oct. 25, a year on from its launch.

Nigeria established its “cash-less” policy in 2012, suggesting a shift away from physical cash would make its payment system more efficient, reduce the cost of banking services, and improve the effectiveness of its monetary policy.

On Oct. 26 the Governor of Nigeria’s central bank, Godwin Emefiele, noted 85% of all Naira in circulation was held outside of banks and as a result it would be reissuing new banknotes in an effort to drive the shift towards digital payments.

According to a CBDC tracker from the American think-tank, Atlantic Council, Nigeria is one of 11 countries to have fully deployed a CBDC, 15 other countries have launched pilot programs with India set to join the ranks later this month.

https://cointelegraph.com/news/nigeria-bans-atm-cash-withdrawals-over-225-a-week-to-force-use-of-cbdc