CBN governor insists on new withdrawal limits as House of Reps orders suspension

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, on Thursday, insisted on the new withdrawal limits proposed by the apex bank on Tuesday.

After meeting with President Muhammadu Buhari at his native hometown of Daura in Katsina state, Emefiele said the Nigerian economy was overdue to go cashless as the Federal Government had sufficiently invested in the required payment system infrastructure to make the transition seamless.

“I think it’s important for me to say that the cashless policy started in 2012. But on almost three to four occasions, we had to step down the policy because we felt that there is a need for us to prepare ourselves and deepen our payment system infrastructure in Nigeria,” Emefiele said

“Between 2012 and 2022, almost about 10 years, we believe that a lot of electronic channels have been put in place that will aid people in conducting banking and financial service transactions in Nigeria.

CBN Governor

“And we think Nigeria as the biggest economy in Africa needs to leapfrog into the cashless economy. We cannot continue to allow a situation where over 85 per cent of the cash that is in circulation is outside the bank. More and more countries that are embracing digitisation have gone cashless.”

Yesterday, the Central Bank of Nigeria (CBN) was ordered by the House of Representatives to suspend the new cash withdrawal limits it announced on Tuesday.

Reacting to the National Assembly’s disproof of the policy, Emefiele said the withdrawal limits would be reviewed upwards with time.

After the announcement on Tuesday, the house invited the CBN governor, Godwin Emefiele for a session with lawmakers who grilled him on policies that the body has introduced in recent times.

In a letter to financial institutions, the Nigerian apex bank said that with effect from January 9, 2023 bank withdrawal limits for individuals and organisations will be 100,000 and 500,000 Naira respectively. The letter also stated that ATMs shall only dispense 200 naira notes and withdrawals will be capped at 100,000 Naira per week, with a 20,000 naira maximum per day. PoS withdrawals will be capped at 20,000 Naira daily.

The new policy was immediately met with condemnation from elected officials including the Senate President, Ahmad Lawan, APC – Yobe North, who said on the floor of the Senate yesterday that this aggressive move towards a cashless society is premature and not thought through..

Read also: How the new CBN policy on over-the-counter withdrawals affects PoS transactions

“As good as the cashless policy may be,” he said “it shouldn’t be jumped at, at once.  The way the CBN is going about the policy, many Nigerians would be cut off and that won’t be accepted. Motion on the policy will be thoroughly debated in the Senate on Tuesday next week after adequate information has been gotten on it.”

According to The Nation, “there was anger in the House on Thursday as members took turns to condemn the new cash withdrawal policy, saying it will grossly affect small businesses and the economy since most rural communities don’t have access to banks.”

CBN’s new withdrawal limits may be beneficial in the long run

However, some analysts say that the policy will be very effective in ushering Nigeria further into a cashless society.

The wealth management and business development consultant, Ibrahim Shelleng speaking to This Day newspaper said that the initiative is a “step in the right direction” for the country.

“Several initiatives by the CBN have tried to encourage both financial inclusion and a cashless society, however, these have been largely ineffective. The new CBN policy will certainly aid in accelerating the monetary policy objectives, whilst also tackling the insecurity challenges and encouraging financial inclusion,” he said.

“Though there will undoubtedly be implementation challenges, it is a step in the right direction for sanitizing the economy. The excess liquidity floating around in the economy needs to be mopped as this will also help inflation,” he added.

Some analysts have also said that the move could increase the value of the naira which has been in steady decline all year. A US dollar is sold for about 739 Naira on the black market.

The managing director and chief executive officer of Dignity Finance and Investment Limited Chijioke Ekechukwu told This Day that the scarcity of the Naira could make foreign currencies surplus which could elevate the worth of the Naira.

“In other words, the measure would improve the value of the Naira against other currencies. It is always a play of demand size against supply size. If there is a scarcity of naira, foreign currencies would become surplus in the market to exchange for scarce naira,” he said

“It will also help CBN to manage the supply of the redesigned currency which may not be very available to cover the demand for it in all states of the federation at the same time,” he added.

The new withdrawal policy will form the backbone of questions that senators will ask President Muhammadu Buhari’s nominees for deputy governor of the CBN; Aisha Ahmad and Edward Adamu. The Senate according to a Punch report will begin screening the duo for the role on Friday.

Editor’s Note: This article was updated with the statement of the CBN Governor after meeting President Muhammadu Buhari on the 9th of December 2022