Nigeria: In a Move That May Prevent Vote Buying, CBN Sets New Withdrawal Limits

In an apparent move to tackle vote buying as the 2023 general elections draw closer, and control the amount of cash in circulation, the Central Bank of Nigeria (CBN) yesterday introduced new cash withdrawal limits for banks and other financial institutions.

The new policy followed its recent currency redesign project in which it had expressed concerns over the high volume of cash outside the banking system.

Under the new dispensation, the central bank restricted the maximum cash withdrawal over the counter (OTC) by individuals and corporate organisations per week to N100,000 and N500,000 respectively.

This was just as President Muhammadu Buhari yesterday asked the Senate to confirm the appointments of two serving deputy governors, Mr. Edward Adamu and Mrs. Aisha Ndanusa Ahmad for second and final terms in office.

The directive on the new cash withdrawal limits was contained in the CBN letter dated December 6, 2022, which was addressed to all Deposit Money Banks, and Other Financial Institutions, Payment Service Bank (PSBs), Primary Mortgage Banks (PMBs) and Microfinance Banks (MFBs).

The correspondence was signed by CBN Director, Banking Supervision Department, Mr. Haruna Mustafa.

The CBN stated however, that withdrawals above the thresholds would attract processing fees of five per cent and 10 respectively for individuals and corporate entities going forward.

In addition, third party cheques above N50,000 shall not be eligible for OTC payment while extant limits of N10 million on clearing cheques still remains.

The new withdrawal regime further pegged the maximum cash withdrawal per week via Automated teller Machine (ATM) at N100,000 subject to a maximum of N20,000 cash withdrawal per day.

Also, only denominations of N200 and below shall be loaded into ATMs while the maximum amount that can be withdrawn via Point of Sale (POS) terminal was limited to N20,000 daily.

The central bank, however stated that in compelling circumstances not exceedingly once a month, where cash withdrawals above the prescribed limits was required for legitimate purposes, such withdrawals shall not exceed N5 million and N10 million for individuals and corporate organisations respectively, and shall be subject to the referenced processing fees.

This, would be in addition to an enhanced due diligence and further information requirement, the apex bank stressed.

The CBN further noted that monthly reruns on cash withdrawal transactions above the specified limits should be rendered to the Banking Supervision Department while compliance with extant Anti-Money Laundering/CFT regulations relating to KYC, ongoing customer due diligence and suspicious transaction reporting among others is required in all circumstances.

The bank also encouraged bank customers to use alternative channels including internet banking, mobile banking apps, USSD, cards/POS, eNaira among others to conduct their banking transactions.

The CBN warned banks and other financial institutions that aiding and abetting the circumvention of the new policy would attract severe sanctions.

On October 26, the CBN Governor, Mr. Godwin Emefiele had announced moves to redesign the naira in the variation of N200, N500 and N1,000.

Emefiele, who pointed out that the change was a sequel to the approval of President Muhammadu Buhari, had said circulation of the new banknotes would commence on December 15, 2022.

He said the development was also aimed at checking the increasing ease and risk of currency counterfeiting evidenced by several security reports, and the increased risk to financial stability as well as the worsening shortage of clean and fit currency, with the attendant negative perception of the central bank.

Emefiele said there was significant hoarding of naira notes by members of the public, with statistics showing that over 80 per cent of the currency in circulation was outside the vaults of the commercial banks.

He said as of September 2022, a total of N3.2 trillion was in circulation, of which N2.73 trillion was outside the vaults of the banks, describing the development as unacceptable.

The CBN governor explained that the new and existing notes would remain legal tender and circulate together until January 31, 2023, when the existing currencies shall cease to be legal tender.

As a result, he said all banks currently holding the existing denominations of the currency might begin returning the notes to the CBN immediately, adding that the newly designed currency would be released to the banks on a first come, first served basis.

Emefiele also urged bank customers to begin paying into their bank accounts the existing currency notes to enable them to withdraw the new banknotes once circulation begins in mid-December 2022.

Meanwhile, the central bank yesterday revealed that it recorded N8 billion transactions on its digital currency platform, the eNaira, one year after it was launched.

The eNaira project which was launched on the 25th of October, 2021 by President Muhammad Buhari.

Nigeria was the first country in Africa and one of the pioneer countries in the world to develop an official digital currency.

The Director of Information Technology, CBN Hajiya Rakiyat Mohammed, while delivering an address at the Presentation and Unboarding of e-Naira session during the Second Africa Payment Systems Conference in Abuja on Monday, assured subscribers on the eNaira platform of seamless peer-to-peer transactions at no charge.

She further explained that the eNaira was developed to broaden payment platforms in Nigeria, foster digital financial inclusion with a potential for fast-tracking intergovernmental and social transfers, capital flow and remittances.

Represented by the Deputy Director, Information Technology of CBN, Abayomi Oyeleke, the director said Nigerians who subscribe to eNaira platform stood to gain a lot benefits including real-time transactions on secured digital wallet with zero down time, adding that the digital solution was supported with a resilient blockchain technology.

She said the introduction of the eNaira has changed the business ecosystem, reduced cash transactions, eliminated the risks associated with cash transactions and opened more digital financial frontiers for bank customers.

According to her, the eNaira also opened business opportunities, enhanced financial inclusion as the teeming unemployed youths in Nigeria can cash into the opportunities by provide financial services to bank customers in remote, unbanked, and underbanked parts of the country.

She said the eNaira platform would be expanded in the nearest future to include more financial products.

She further hinted that several layers of security and transaction limits have been consciously put in place to ensure that customers’ wallets are not compromised.

“Since its launch, a total of N8 billion, consisting of over 700,000 transactions has passed through the eNaira platform.

“As part of the CBN’s effort to further integrate and broaden the usage of the eNaira, it was assigned an Unstructured Supplementary Service Data (USSD) code, enabling payments by simply dialling *997# on a mobile phone” she said.

In his speech, the Director General of Nigeria Information Technology Development Agency (NITDA) Inuwa Kashifu Abdullahi said the future of cash was bleak.

According to him, investing in cashless infrastructure would not only reduce the cost implication of cash maintenance, curb insecurity, reduce corruption, reduce financial losses but more importantly lead to more investment in financial infrastructure, job creation and ensure that financial services are available in all parts of the country.

Gen Dr. Amb. Willam Wallace, Hon. Consul General of Antigua & Barbuda to Nigeria and more others.

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