Nigeria Limits Weekly, Daily ATM Cash Withdrawals to Push Digital Currency Use

Nigeria Limits Weekly, Daily ATM Cash Withdrawals to Push Digital Currency Use
People wait within markings to use the ATM, as authorities ease a lockdown following a COVID-19 outbreak, in Abuja, Nigeria, May 4, 2020. Afolabi Sotunde/Reuters
Katabella Roberts
Updated:

Nigeria is set to begin limiting cash withdrawals from ATMs to just US$45 a day as the country moves toward its goal of becoming a cashless economy and embraces digital currency, including its own “eNaira” cash.

In a letter (pdf) to all banks and other financial institutions sent on Dec. 6, Nigeria’s Central Bank said they must comply with new rules pertaining to over-the-counter and ATM withdrawals.

Specifically, the bank has capped the maximum customer and corporate organization over-the-counter withdrawals at 100,000 naira (US$225) per week and 500,000 naira (US$1,123) respectively.

“Withdrawals above these limits shall attract processing fees of 5 percent and 10 percent respectively,” the bank stated.

Maximum weekly cash withdrawals from ATMs are also capped at 100,000 naira (US$225) while daily ATM withdrawals and withdrawals via point-of-sale terminals are capped at 20,000 naira (US$45) per day, the bank stated.

“Only denominations of [200 naira] and below shall be loaded into the ATMs,” the bank stated.

Third-party checks above 50,000 naira (US$112) also will not be eligible for payment over the counter, the bank noted, adding that “extant limits of 10,000,000 on clearing cheques still subsist.”

“In compelling circumstances, not exceeding once a month, where cash withdrawals above the prescribed limits is required for legitimate purposes, such cash withdrawals shall not exceed [5 million naira] (US$11,287)] and [10 million (US$22,575)] for individuals and corporate organizations, respectively,” the bank said, noting that these will also be subjected to the 5 to 10 percent processing fees.

Nigerians Slow to Adopt eNaira

Additionally, those withdrawals will be subjected to enhanced due diligence and further information requirements, including a notarized public declaration from the customer regarding the purpose of the withdrawal and written approval from the bank’s CEO.

The letter was signed by Haruna Mustafa, the director of banking supervision, who noted that “customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.”

Previously, limits on daily cash withdrawals were 150,000 naira (US$338) for individuals and 500,000 naira (US$1,128) for businesses.

The new limits on withdrawals will take effect across Nigeria on Jan. 9, 2023, according to the letter.

Nigeria’s Central Bank launched its digital currency, the eNaira, in October 2021 after partnering with the Barbados-based fintech startup, Bitt Inc., for its creation.

At the time, the bank said in a statement that the digital currency would help make “financial transactions easier and seamless for every strata of the society” while simultaneously reducing corruption and boosting financial inclusion. The currency came despite the government clamping down on cryptocurrencies.
However, adoption of the digital currency appears to have been slow, with less than 0.5 percent of Nigerians using it one year after its launch despite government incentives to use it, according to Bloomberg.

The lack of adoption among the population is in part owing to confusion over the rollout of the digital currency at the same time as a clampdown on crypto, according to the report.

Additionally, nearly 40 million people in the country don’t have bank accounts or access to them and instead utilize a large informal economy that runs throughout the country, which isn’t subject to government tax or monitoring.

Katabella Roberts
Katabella Roberts
Author
Katabella Roberts is a news writer for The Epoch Times, focusing primarily on the United States, world, and business news.
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