CBN’s latest policy on cash withdrawals and its effect on under-banked
Dr. Boniface Chizea
A circular issued by CBN’s Director of Banking Supervision has limited drastically, cash transactions within the economy. As a matter of fact, what has just been announced has been on the cards since the commencement of the CBN cashless policy. One already expected that CBN would not allow the opportunity of the currency change to go by without the apex bank taking maximum advantage to push the cashless policy.
With effect from January 09, 2023, individuals are restricted to maximum daily withdrawal of 20,000 Naira with a cap of 100,000 Naira a week while organisations are restricted to a maximum cash withdrawals of 500,000 Naira per cent. We must note that in case of justifiable needs, these limits could be breached by the payment of 10% of the amount in excess for corporate bodies while individuals will pay a processing fee of the equivalent of 5%.
The challenge really will be how these change in policy would affect the under-banked; particularly those in the outlying areas of the country because most of such folks have not been included and mainstreamed into the financial sector. There will be the urgent need for the Central Bank to embark on aggressive urgent enlightenment particularly as most of such compatriots might not have the luxury of the use of alternative transactions channels.
What leaves one wondering is how CBN will be able to implement effective monitoring schemes which will be largely automated and electronic. For the restrictions not to be observed in the breach this is one area we can envisage some challenges as this is implemented. Of course, it is axiomatic to note that without enforcement that the laudable objectives of this policy will not be realised.
There is the need to pay attention so that network issues will be minimised. Often these days as you use your debit cards the sing song of “Declined” could be frustrating. This is the logic behind the maintenance of many bank accounts and holding of several debit cards by bank customers. One expected that as we fully adopt the 5G network that definitive improvement in service experience will be the result.
There is no doubt that these measures would push further down the road the desire to make the Nigerian economy truly cashless and to that extent impact on the effectiveness of CBN many policy thrusts. It should deal a heavy blow on criminality particularly the payments of ransom. As it becomes increasingly difficult to find cash and as the awareness gains ground some bad individuals among us might be forced to change address for better productive engagements.
We expect also that as cash is drained from the economy that might reduce demand pressure for dollars thereby impacting positively the exchange rates of the Naira. There is no doubt that there will be collateral negative consequences for those who deal largely in cash. Collections at churches and other prayer places where cash is the medium will be impacted negatively. There are many compatriots engage in POS transactions that might also be affected. And therefore there will be the inevitable need for adjustments and repositioning.
But a word of caution; the enemy is in effective implementation. Therefore, to say the obvious; the CBN has its job cut out and must be intentional about effective implementation.
Dr. Boniface Chizea, an Economist, wrote in from Lagos
