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Editorial

Appraising CBN’s Revised Cash Withdrawal Policy

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After Sacking Emefiele, Tinubu Makes Fresh Move On Old Naira Notes Validity

The manner in which a critical section of the Nigerian establishment has railed against the Central Bank of Nigeria (CBN) justifies the wisdom of the framers of the country’s laws in entrenching the independence of CBN. According to Section 1(3) of CBN Act 2007, “the Bank shall be an independent body in the discharge of its functions.” How the House of Representatives intends to circumvent this provision by reportedly calling for the suspension of the new cash withdrawal policy being vigorously pursued by the central bank remains to be seen. Although he quickly went for a meeting with President Muhammadu Buhari, the CBN Governor enjoys such term security that he is not intended to kowtow to anybody. Nigeria is better off with strong institutions than strong men. Politicians need to do more to convince Nigerians that their opposition to this drive by the CBN isn’t because it solves the menace of vote buying.

In its quest to accelerate the digitization of the economy, the central bank in a circular to all deposit money banks and other financial institutions on Tuesday, slammed restrictions on maximum cash withdrawal over the counter (OTC) by individuals and corporate entities per week, allowing only N100,000 and N500,000 respectively. It also directed that only N200 and lower denominations should be loaded into banks’ ATMs, pegging the maximum cash withdrawal per week for individuals via Automated teller Machine (ATM) at N100,000 subject to a maximum of N20,000 cash withdrawal daily. In the same vein, the apex bank also fixed daily maximum withdrawals via a point of sale (PoS) terminal at N20,000. The apex bank must have been led into believing that Nigerians are increasingly going cashless as recent data from the Nigeria Inter-Bank Settlement Systems (NIBSS) indicated that e-payment transactions carried out in the country hit ₦32.8 trillion in September.

Also contained in the circular entitled ‘Naira Redesign Policy – Revised Cash Withdrawal’ is the caveat that withdrawals above the thresholds would attract processing fees of 5 per cent and 10 per cent respectively for individuals and corporate entities going forward. In addition, third-party cheques above N50,000 shall not be eligible for OTC payment while extant limits of N10 million on clearing cheques still remain. This new policy which implementation begins January 9, 2023, is a sequel to the ongoing redesign of some currency notes which is enforcing the deposit of 85 per cent of the money in circulation hitherto outside bank vaults. The deadline for phasing out the old N200, N500 and N1000 banknotes is January 31, 2023. Before now, the CBN had on October 25, 2021, launched the eNaira payment platform as a forerunner. While disclosing that eNaira has recorded 700,000 transactions valued at N8 billion since its take off, Emefiele said, “It [the introduction of eNaira] is deliberate. The journey has been to make Nigeria a predominantly cashless economy where people will conduct banking and financial services with little or no cash”.

In furtherance of this goal, the apex bank devised this cash withdrawal policy that has rankled not a few, including National Assembly members who feared that the policy will sound the death knell to many businesses in the country. As Senate President Ahmed Lawan puts it, “Most Nigerians will be out of business” if the central bank goes ahead with the policy. While the Senate Minority Leader warned that “our economy cannot take this shock”, the revised cash withdrawal was apparently where the CBN was headed when it set in motion the mop-up of stashed cash outside the banking system.

Only a month ago, Naija News predicted that the apex bank was out to tighten the supply of money, and pointed out that, “it is expected that the cashless policy will take full effect by January 2023 with a limit and heavy charges imposed on across-the-counter withdrawals in deposit money banks to further dissuade liquidity”. As it were, even the title of the circular containing the notice clearly indicated that the revised cash withdrawal policy is tied to the redesign of the N200, N500 and N1000 currency notes. As such, those who dismiss the new policy as cut-and-try or a knee-jerk measure by the CBN should rather see the pragmatism and systemic approach being deployed to monetary management here.

It however goes without saying that the central bank could have been more temperate hence the nationwide anxiety triggered by the policy is quite understandable. Most Nigerians work in the informal sector where cash is king. This sector accounts for over 80 per cent of trade and commerce in the Nigerian economy and controls a substantial component of jobs in the economy. A good percentage of this demography would rather not carry out electronic mediums of payment owing to hiccoughs with digital payment in the country and illegal deductions in their bank balance which are all too obvious. These were actually the demography in reference when the Senate President warned that “most Nigerians will be out of business” with the cash withdrawal policy. Lawan was however categorical that “if we want to be a cashless society, we should take time to be a cashless society and not to jump on it at once”.

Naija News is however quick to ask how much more time Nigeria needs before evolving into a cashless society. We make haste to remind everyone that the CBN has been pushing for a cashless economy since 2012. Where then is progress if the country is still averse to digitization 10 years later, especially as more forward-looking countries are increasingly phasing out cash transactions? Heavy weather has been made of a weak system infrastructure to support digital payment solutions. Indeed, tele-density across Nigeria and IT coverage problems are legitimate concerns. If these limitations did not dissuade the Independent National Electoral Commission from adopting electronic transmission of results and the use of BIVAS for next year’s general election, it shows Nigeria is ripe for a cashless economy. The fact that there is a government bureaucracy known as the ministry of communications and digital economy should make this feasible.

It is however our considered opinion that the CBN take into consideration the apprehensions and concerns being expressed by Nigerians over this Naira Redesign – Revised Cash Withdrawal policy. Good enough, the CBN Governor has assured that “We will be reviewing from time to time how this is working because I cannot say that we are going to be rigid”. It is for this reason that Naija News expects the CBN to pay attention to public opinion being expressed by the people over this issue. As a public institution which should reduce rather than exacerbate the misery of the people, the CBN must pursue every means possible to ensure that this new policy brings down the cost of living and skyrocketing inflation.

It is not out of place for the apex bank to hold town hall meetings with Nigerians and align this cashless ambition with the reality of the populace. Federal lawmakers can assist in this regard as they host and grill the CBN governor next week. Lawmakers who debated the new policy during plenary disclosed that they were inundated with calls from their distraught constituents. Let them therefore express these concerns to the apex bank chiefs when they visit next week. The people’s representatives must also be ready to relate the explanations and commitments extracted from the CBN brass to the Nigerian people.