On January 9, 2023, commercial banks in Abuja began implementing the Central Bank of Nigeria (CBN)’s new cash withdrawal policy, setting weekly limits at N500,000 for individuals and N5 million for corporate organizations. Announced by the CBN on December 21, 2022, the policy has sparked mixed reactions, with many customers expressing reservations about its impact, particularly on rural transactions and business operations. This initiative, detailed in circular BSD/DIR/PUB/LAB/015/073 and signed by Director of Banking Supervision Mr. Haruna Mustapha, aims to reshape Nigeria’s financial landscape.
Policy Details and Implementation
The CBN’s directive, effective from January 9, 2023, replaces earlier limits of N100,000 for individuals and N500,000 for corporates, reflecting a significant adjustment to encourage a shift toward digital transactions. Withdrawals exceeding these caps require additional documentation: a valid means of identification (National ID, International Passport, or Driver’s License), the payee’s Bank Verification Number (BVN), Tax Identification Numbers (TIN) for both payee and payer, and written approval from the bank’s Managing Director. Third-party cheques above N1 million are also barred from over-the-counter withdrawals, with strict sanctions promised for banks aiding policy circumvention.
Visits to various deposit money banks in Abuja, including those in Garki, confirmed compliance. An Operations Manager from a second-generation bank noted, “Yes, we have commenced the new cash withdrawal policy and customers are complying too. I cannot speak more than that.” This adherence signals a coordinated effort across the financial sector to enforce the CBN’s vision.
Customer Reactions and Challenges
Despite the policy’s rollout, concerns are mounting among bank users. A customer highlighted the difficulties for cash-reliant businesses, stating, “I don’t agree with the policy because it won’t be easy for a lot of people doing business. How many days will you withdraw five hundred thousand to buy things?” He added that his brother, a car dealer in Lagos, struggled with limited access, and distrust in digital transfers due to fraud could push people to hoard cash at home. “If I need 2 million for the market next week, do you think I’ll keep my money in the bank?” he questioned, suggesting a potential shift away from banking.
An accountant, Bashir Yusuf, echoed these worries, noting, “Where is the source of the money? After some time, it will be hard for people to get cash, especially when they need it urgently.” A POS attendant in Area 7, Garki, simply dismissed the idea, saying, “I don’t know about the policy, and don’t like the whole idea.” These sentiments reflect a broader unease about adapting to the new limits.
Mixed Perspectives on Adaptation
Some customers see potential benefits. Mr. Raphael Uzoma, a client at a second-generation bank, acknowledged the CBN’s oversight role, suggesting, “The policy is a welcomed development, but initially, it might affect people’s daily needs. Along the line, they will key into it.” However, a staff member from a first-generation bank, speaking anonymously, questioned the practicality for corporates, asking, “How will corporate organizations manage a maximum cash withdrawal of N5 million per week across all channels?” The required documentation, including BVN and TIN, could pose obstacles for some transactions.
Ayuba Blessing offered a balanced view, stating, “The policy is good, but the effect may not go easy with customers. Nigerians will find it difficult to adapt. If the CBN can adjust the daily limit, it would be appreciated.” Meanwhile, Edozie Chidi expressed surprise at the rapid implementation, saying, “I am actually shocked that the policy would be implemented this fast. Though I haven’t withdrawn above N100,000, I think it’s for the better, but adaptation might be tough.”
Implications and Future Outlook
The policy’s aim to curb cash dependency and bolster financial oversight is clear, but its success hinges on public acceptance. The CBN’s warning of severe sanctions for non-compliant banks underscores the seriousness of this shift. As customers navigate the transition, the impact on rural areas and cash-based businesses remains a critical concern. Whether the policy fosters a move to digital payments or drives cash hoarding will shape its long-term effectiveness.
For now, Abuja’s banking sector is adjusting, with customers and staff alike weighing the pros and cons. The coming weeks will reveal how well the policy integrates into daily life, balancing economic restructuring with the practical needs of Nigerians.
