Not surprisingly, when the Central Bank of Nigeria recently announced that it was going to place a N20,000 daily withdrawal limit on individual accounts and N50,000 limit on over the counter third party cheques, not a few persons screamed blue murder.
The announcement was sequel to the apex bank’s announcement of its new policy of redesigning N200, N500 and N1,000 notes, a development which had elicited mixed reactions.
In announcing the new development on the withdrawal limit policy and related issues, the CBN in a circular dated December 6, 2022 and signed by the CBN Director, Banking Supervision, Haruna Mustafa, revealed that effective January 9, 2023, only N200 notes and below will be loaded by banks into their Automated Teller Machines (ATMs). The CBN said withdrawal limits must not exceed N100,000 and N500,000 per week.
The circular from CBN maintained that withdrawals above these limits would attract processing fees of five per cent for individuals and 10 per cent for corporate organisations.
The circular made it clear that the maximum cash withdrawal per week via ATM shall be N100,000 subject to a maximum of N20,000 cash withdrawal per day as only denominations of N200 and below shall be loaded into the ATMs.
It said: “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 N5,000,000.00 and N10,000,000.00 for individuals and corporate organizations, respectively, and shall be subject to the referenced processing fees in (1) above, in addition to enhanced due diligence and further information requirements.”
In a quick reaction to the development, an apparently disenchanted House of Representatives asked the CBN to suspend the policy holding that development intended to foster a cashless economy, would not be favourable to the rural and illiterate population in Nigeria.
Similarly, the National President, Association of Mobile Money and Bank Agents in Nigeria, Victor Olojo, said in an interview that while its association was not against the policy, the CBN should review it to allow PoS have access to more money. He said the limitation of N20,000 via PoS, or N100,000 over the counter was not enabling to them.
He said the policy affect the operators negatively because “Nigeria is still a cash-dominant economy, and other alternative ways of payment have not been fully embraced”. He said the “rule of mobile money agents at this time is that we bridge the gap between the banks and the Nigerian masses. This new policy states that we can only withdraw a limit as an individual, what this means is that all I have in a week to do business as a mobile money agent is N100,000. This means I am practically out of business. In the year 2021, we did a cumulative of 6.4 trillion in terms of value on PoS transactions, this year we have exceeded 6.4 trillion within the first nine months of this year, what this means is that with this policy in place, we would not be able to meet the needs of Nigerians”.
Speaking further, he said, “The true essence of the policy is very good, but the question is, is Nigeria as a country ready for this? What is the percentage of the population that has a bank verification number, national identity number, smartphones, or that have heard of mobile money and bank transfers? The point we are trying to make is very simple, while it is a good policy, this time, it is practically difficult for a policy like that to be fully actualised in its real and main essence. Hence, if the agenda of the CBN is to ensure that we go digital, then the next question is, what is the digital infrastructure we have as a country to support the financial flow? As we speak right now, we are still battling with issues of electronic banking, we have a high rate of failed transactions, a high rate of declined transactions, we have a high rate of fraud in the system, we have a high rate of missing money without resolution, and high rate of Nigerians who have lost trust in the system because they have been defrauded or their issues were not resolved. So, we need to get some factors right first before diverting everybody into the electronic system”.
Eminent lawyer, Mr. Femi Falana, on his own part, averred that the new policy was an infringement of section 2 of the Money Laundering Act, 2022, which provides for a N5 million withdrawal limit for an individual and N10 million for a corporate organisation.
He said: “Since the Money Laundering Act 2022 (which has fixed maximum cash withdrawal to N5 million) has not been amended, the limitation of cash withdrawal of not more than N20,000 per day and N100,000 per week fixed by the Central Bank of Nigeria is illegal, null and void in every material. We urge the Nigerian people to ignore the illegal announcement.
“However, we are compelled to call on President Muhammadu Buhari to direct the management of the CBN to withdraw the illegal guideline and stop announcing more policies that are designed to sentence poor citizens to more excruciating economic hardship”.
While the debate continues, we at Diademng posit that the new policy on withdrawal limits is not necessarily a bad thing while we acknowledge and appreciate the concerns of those opposed to it. We maintain that there are immense benefits to having viable cashless economy in a country where people hoard currency at home and untraceable transactions are carried out.
One cannot say the withdrawal limit policy is wrong when large amounts of money are paid as ransoms to kidnappers. We live in a country where terrorism-related funds are moved around.
Yet, the concerns about how negatively the policy could impact on the common people are not something to ignore. We, therefore, call on all stakeholders; the CBN, the House of Representatives, and others find a way to address these concerns. It is not enough for lawmakers to scream like “bus-stop” analysts but to proffer solutions.
This isn’t the time for grandstanding. The CBN though has the legal authority to formulate monetary policy yet none of its decisions must contravene provisions of the law.
We think that more consultations could lead to a resolution acceptable to most stakeholders.
