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Nigeria further restricts cash withdrawals: CBDC use is to be enforced

 


Nigeria has drastically reduced the amount of cash that individuals and businesses can withdraw in a bid to promote its “cashless Nigeria” and encourage the use of eNaira, the Central Bank of Nigeria (CBDC) digital currency.


The Central Bank of Nigeria issued an order for financial firms in a December 6 circular , noting that individuals and businesses can now withdraw from ATMs for just US$45 per day and US$225 per week.


Private individuals and companies are also only allowed to withdraw USD 225 and USD 1,125 per week from banks. Individuals pay a fee of 5 percent and companies pay a fee of 10 percent for amounts that exceed these limits.


You can also only withdraw a maximum of 45 US dollars per day via cash register terminals. Haruna Mustafa, Director of Banking Supervision, announced these changes, stating:


"Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to do their banking."

These limits are cumulative caps on each withdrawal, so someone who withdraws $45 from an ATM and then attempts to withdraw cash from a bank that same day faces the 5 percent processing fee.


Previous caps on daily cash withdrawals prior to the announcement were $338 for individuals and $1,128 for businesses.


Adoption of the eNaira has been low since its launch on October 25, 2021. As Cointelegraph reported on Oct. 26, Nigeria's central bank is struggling to convince its citizens to use CBDC. Less than 0.5 percent of the population used the eNaira as of October 25, a year after its launch


Nigeria launched its "cashless" policy in 2012 as the country believed that moving 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 October 26, Nigerian central bank governor Godwin Emefiele indicated that 85 percent of all naira in circulation is held outside of banks and the central bank will therefore issue new banknotes to encourage the transition to digital payments.


According to a CBDC tracker from American think tank Atlantic Council, Nigeria is one of 11 countries that have fully deployed CBDC, 15 other countries have started pilot programs, and India will launch CBDC later this month .

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