Nigeria bans ATM cash withdrawals over $225 a week to force use of CBDC

[Hydrogen]

The limits set by the Central Bank of Nigeria are part of a broader push to encourage digital financial transactions.

Nigeria has drastically reduced the amount of cash individuals and businesses can withdraw as it attempts to push its “cash-less Nigeria” policy and increase the use of the eNaira — Nigeria’s Central Bank Digital Currency (CBDC).

The Central Bank of Nigeria issued the directive to financial businesses in a Dec. 6 circular, noting that individuals and businesses would now be limited to withdrawing $45 (₦20,000) per day and $225 (₦100,000) per week from ATMs.

Individuals and businesses will also be limited to withdrawing $225 (₦100,000) and $1,125 (₦500,000) respectively at banks per week, with individuals hit with a 5% fee and businesses with a 10% fee for amounts above those limits.

The maximum cash withdrawal via point-of-sale terminals is also capped at $45 (₦20,000) per day. Announcing the changes the Director of Banking Supervision Haruna Mustafa noted:

“Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.”

The limits are cumulative limits for each withdrawal, so an individual withdrawing $45 from an ATM who then tries to withdraw cash from a bank on the same day would be hit with the 5% service fee.

The previous limits on daily cash withdrawals prior to the announcement were $338 (₦150,000) for individuals and $1,128 (₦500,000) for businesses.

Adoption rates for eNaira have been low since its launch on Oct. 25, 2021. As reported by Cointelegraph on Oct. 26 the Central Bank of Nigeria has struggled to convince its citizens to use the CBDC with less than 0.5% of the population reported having used the eNaira as of Oct. 25, a year on from its launch.

Nigeria established its “cash-less” policy in 2012, suggesting a shift away from physical cash would make its payment system more efficient, reduce the cost of banking services, and improve the effectiveness of its monetary policy.

On Oct. 26 the Governor of Nigeria’s central bank, Godwin Emefiele, noted 85% of all Naira in circulation was held outside of banks and as a result it would be reissuing new banknotes in an effort to drive the shift towards digital payments.

According to a CBDC tracker from the American think-tank, Atlantic Council, Nigeria is one of 11 countries to have fully deployed a CBDC, 15 other countries have launched pilot programs with India set to join the ranks later this month.

https://cointelegraph.com/news/nigeria-bans-atm-cash-withdrawals-over-225-a-week-to-force-use-of-cbdc

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Weren't there news articles published earlier in 2022 claiming nigeria might embrace something closer to a gold standard to prop up its local economy? What ever happened to those developments?

In any case, the title says ATM withdrawals are capped at $225 a week to push CBDC (central bank digital currencies).

However, caps on bank withdrawals have also been implemented in various regions in recent times, to prevent bank runs. There could be multiple motives in play behind measures like these being put in place.

Withdrawal caps could also incentivize businesses and consumers to search for alternatives. Which could drive them into bitcoin and cryptocurrency. There isn't much that has been said in recent times (that I've seen) discussing the current state of crypto in nigeria or africa. I think everyone knows that banks in those regions have closed accounts that dealt in crypto. That occurred some time ago. Without much in the way of updates since.

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[hugeblack]

Personally, I see that such methods are to dry up liquidity in the hands of citizens, and thus limit the economy, including controlling inflation. If this is the case, then it is a bad way to manage the economy, and the citizen will pay the price when restrictions are re-lifted, as inflation will accelerate excessively.

As for the above arguments, they are illogical or unconvincing, and if they turn out to be true, then the ideas of the economic staff are sterile and the Nigerian economy will enter into problems.

I remember reading somewhere that their use of an SMS remittance service was working (or something close to that)

[Die_empty]

Withdrawal caps could also incentivize businesses and consumers to search for alternatives. Which could drive them into bitcoin and cryptocurrency. There isn't much that has been said in recent times (that I've seen) discussing the current state of crypto in nigeria or africa. I think everyone knows that banks in those regions have closed accounts that dealt in crypto. That occurred some time ago. Without much in the way of updates since.

This policy is a big blow to most medium and small-scale businesses in Nigeria. So many businesses would be affected and there would be massive loss of job especially in the Point of Sale vendors industry. They would have to pay high fees to exceed the stipulated withdrawal or transaction limits. These business would start looking for alternatives such as opening multiple bank accounts, as well as using other unconventional means to invade this policy. This is indeed a great opportunity for bitcoin to penetrate the financial system of Nigeria because it would be a very viable payment options. Although banks are restricted from engaging in bitcoin transactions but P2P trading has prospered in Nigeria. .  

[franky1]

the atm and bank cash teller limits are more than someones monthly wage at minimum wage. its not affecting normal people
its also is not stopping larger amounts but putting a FEE on top of 5-10% for amounts above limit.
its not a FORCE. its a persuasion to use other methods of value transfer to avoid fee's

even looking at the chinese CBDC they dont care about the little guy. they want to chase the big guys like businesses and ensure they can grab the tax from the big guys.

making it harder for the rich to "bank-run" with suitcases of cash is good. because many rich earn too much anyway so should be paying fair tax. even if they get away with not paying a national/state tax they are atleast losing 5-10% by trying to evade national/state tax if doing a suitcase of cash run

however. what will happen is the rich will stop depositing paper cash. and do hand to hand swaps of cash between each other to then swap bank balance for bank balance. thus create a dark market of cash in hand outside bank deposit/withdrawal systems..
africa done this many times in many places over many decades of economic changes before

[stompix]

This policy is a big blow to most medium and small-scale businesses in Nigeria. So many businesses would be affected and there would be massive loss of job especially in the Point of Sale vendors industry. They would have to pay high fees to exceed the stipulated withdrawal or transaction limits. These business would start looking for alternatives such as opening multiple bank accounts, as well as using other unconventional means to invade this policy.

There are industries that serve no real purpose and that can be easily replaced by just building adequate infrastructure.
The whole PoS stuff in Nigeria is mind-blowing to any outsider and in the previous topics explaining how this works most of us have been surprised such a thing can even exist. You have people acting like ATMs, taking fees and making a living by handling you cash, this is something that shouldn't have existed in the first place.
It reminds me of the whole madness before the euro when on a 800km trip you needed 5 currencies and there was a multitude of currency exchanges at every airport every major train station and city center that would just live on those extra fees you would pay.

Besides, if we think of Bitcoin, its adoption would have also killed this as there wouldn't be any need for them either.
Inefficient things have to go and will do so, sooner or later.

[Gozie51]

Personally, I see that such methods are to dry up liquidity in the hands of citizens, and thus limit the economy, including controlling inflation. If this is the case, then it is a bad way to manage the economy, and the citizen will pay the price when restrictions are re-lifted, as inflation will accelerate excessively.

I think the Nigerian government is biting more than she can chew. They are still struggling with the redesigning of the currency amidst litigation of not going through the right processes in the first place. The government is abrogating, doing the wrong thing at the right time. How do we juxtapose banning of bitcoin trading and account linked to the bank and now forcefully chasing masses to adopt CBDC ?

These whole currency thing is just like a sheep in human clothing, it has no real face but rather having political current with the general election approaching, it is witch hunting of certain political affiliates. The decision is I'll planned and coming just when an administration was coming to an end. The present administration will conduct an election in February and will hand over in May 2023. So why the haste after being in office for 8 whole years.

The challenges to Nigerian economy and inflation amidst insecurity is more basic than the currency regulation. Inflation will be push down if the economy do more of production, to fix the refinery, electricity, agriculture, transportation are more basic to reduce cost and scarcity that kept pushing inflation up. If the economy was running better then currency regulation will be more sane.

[Davidvictorson]

The agenda by the Federal Government of Nigeria to force Nigerians to use the Nigeria’s Central Bank Digital Currency (CBDC) is dead on arrival. It can't work and it will never work. Most Nigerians have no interest in using the eNaira. As a matter of fact they haven't even signed up on the platform. The level of trust for the government is at its lowest because the government hasn't put the needs of the masses at the fore of their policies. What I can say is that there are other advantages of this restriction. The country's currency is very weak and with this move there is hope that we might see it rise against the dollar.

[Aanuoluwatofunmi]

Regardless of the ban placed this cannot affect bitcoin except for those that acquired it through centralized exchanges and still have it with them, the use of fiat withdrawal points such as PoS has nothing to do with the role of their digital CBDC because that will not attract the citizens to opt in for it, they equally know what they want which is bitcoin and not CBDC, they will prefer to exchange thier digital currency bitcoin into fiat and expenses and use the third party agents operating PoS and withdraw through them, i only pity those that have their asset on centralized exchanges because they will suffer the cost for sanction from government whereas others can easily operate p2p from their own wallet which they have the keys to.

[hugeblack]

The challenges to Nigerian economy and inflation amidst insecurity is more basic than the currency regulation. Inflation will be push down if the economy do more of production, to fix the refinery, electricity, agriculture, transportation are more basic to reduce cost and scarcity that kept pushing inflation up.

I am not familiar with the details of the situation in Nigeria, but politics is what controls the economy in many countries.
Reducing inflation by economic means takes time, and if the election date is in May 2023, it will not be enough time to bring about a noticeable change, so the easiest solution is to drain liquidity in this way, which will lead to a rapid reduction in inflation.

They are all hypotheses, but regulating the currency needs a healthy economy and is not full of crises, so I am not likely to be this reason.

[dbc23]

however. what will happen is the rich will stop depositing paper cash. and do hand to hand swaps of cash between each other to then swap bank balance for bank balance. thus create a dark market of cash in hand outside bank deposit/withdrawal systems..
africa done this many times in many places over many decades of economic changes before

This is a perfect solution but the biggest fear is insecurity. If the rich stop depositing paper cash in banks the will high level of rubbery and the set up will come from fellow business partners who wants to eliminate a competitor from the market. This whole move from the Nigerian CBN is to closely monitor how much goes in and out of the country and also promote the eNaira. My concern is for the illiterate and aged parents who will have to trust people to carry-out transactions for them and by so doing they might be exposed to fraud, scam or rubbery.

[The Sceptical Chymist]

“Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.”

That's an ominous statement if I ever heard one.  

Most Nigerians have no interest in using the eNaira. As a matter of fact they haven't even signed up on the platform.

This is kind of what I was wondering, and if it's true I wouldn't be surprised--any thinking person who realizes the implications of a currency system through which all privacy is lost would never want to get on board.  And even with most people doing day-to-day transactions with a bank/credit card, smartphone, or some other means of e-payment the government could still peek at your financials with very little trouble--and that's in addition to banks knowing all of it.

I remember maybe a year or so ago this was all just a theory, an idea that most of us seemingly didn't think would become a reality....now it's looking scary.  Eleven countries have already implemented CBDCs?  I don't know which countries those are, but I'm wondering how it's working out and what the people think of it.  And this shit appears to be making its way across the globe.  

Besides, if we think of Bitcoin, its adoption would have also killed this as there wouldn't be any need for them either.

If citizens truly had freedom when it comes to money, that would certainly be true, but if a government wants a CBDC to become the norm do you think they wouldn't immediately pass laws banning the use of or severely restricting bitcoin?  It's true that nothing can stop people from using bitcoin, but if it were to become illegal I'd venture that the majority of folks would rather play along with big daddy government than risk running afoul of the law.