Nigeria Limits Cash Withdrawals To Force Use of CBDCs

EDITOR’S NOTE: Nigeria limits cash withdrawals to boost digital currency usage—are Americans next? Despite the benefits that a central bank digital currency (CBDC) might bring, the risks are much too great for any citizen to support. What are the risks? It’s an instrument for government surveillance and control. Nigerian citizens are experiencing this now, as their government has banned ATM withdrawals over a certain amount to “force” citizens to use CBDCs. It appears as if Nigeria may be among the first to end, and possibly win, the War on Cash, privacy, and freedom. What can’t a government manipulate or monitor in the realm of financial matters with CBDCs as its primary currency? In this case, cash is obviously trash, digital cash is servitude, and physical gold and silver are your only means for financial privacy, freedom, and “real” wealth.

The withdrawal 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 Nigerian nairas) per day and $225 (100,000 nairas) per week from ATMs.

Individuals and businesses will also be limited to withdrawing $225 (100,000 nairas) and $1,125 (500,000 nairas), 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 nairas) 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 nairas) for individuals and $1,128 (500,000 nairas) 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 from its launch.

Related: The impact of CBDCs on stablecoins with Bitget's Gracy Chen

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 that 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 toward 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.

Originally published on Coin Telegraph.