What is the new CBN policy? Benefits and bad sides of CBN withdrawal limit


What is the new policy?

The Central Bank of Nigeria (CBN) issued a new directive to banks and other financial institutions on Tuesday, December 6, 2022, to reduce cash transactions in the country. According to the letter sent to banks, the new order will limit ATM and PoS terminal withdrawals to 20,000 ($27) per day.

Nigerians have reacted in a variety of ways to the news. While some expressed their displeasure, citing the need for more cash transactions due to the country’s low digital penetration, others believe that restricting cash transactions will help the dying currency.

While the CBN claims that the new directive is intended to advance its cashless policy, here are some of the implications for the country’s financial ecosystem.



According to the new CBN policy,

  • The highest cash withdrawal over the counter ( Bank Withdrawal) for an individual is N100,000, while the maximum for a corporate organisation is N500,000 per week; anything above that shall attract processing fees of 5% and 10%, respectively.
  • A third-party check above N50,000 shall not be paid across the counter.
  • You cannot withdraw more than N20,000 daily and N100,000 weekly at an ATM.
  • You cannot withdraw more than N20,000 per day at the POS.

What is the new CBN policy and Benefits of the directive

Reduced risk of money laundering

Cash transactions are generally more difficult to track than online transactions. While there are ways to make online transactions untraceable, cash remains the preferred mode of transaction for the majority of criminals.

According to a paper published in 2018 titled Cash, Crime, and Anti-Money Laundering by C. Cash is the primary means of transaction in money laundering/terrorist financing reports, according to King et al.


Online transactions, such as those involving cryptocurrencies, online auctions, and proxy servers, are more difficult to track.

However, in Nigeria, where most transactions are cash-based, the majority of money laundering activities may take place offline.


Financial institutions will flag large or suspicious deposits as part of anti-money laundering activities implemented by financial regulators. Because cash transactions are being restricted, large sums of money will not be transferred from legitimate accounts to illegitimate offline transactions.

Potential for small businesses to go digital

Small businesses account for 96% of all companies in Nigeria, and cash is used for 91% of in-store purchases, according to the 2020 World Play Global Payment Report.

As a Nigerian, these figures reflect the realities of the country’s small businesses. The directive to reduce cash transactions may compel businesses to accept digital payments, allowing them to easily track daily sales and manage inventories.


Digital payments for small businesses could also save time on data entry and invoice processing. It also makes readily available financial records to the business in its loan applications.

According to Statista, more than 60% of Kenyan small businesses use mobile money for transactions. As a result, Kenya’s financial market has grown, and loan disbursement and repayment have improved.


Improve financial inclusion for underserved communities

Financial inclusion evangelism has been ongoing in Nigeria for many years. Fintechs and other financial institutions have been established to address this issue, but many Nigerians remain unbanked.

According to the , Nigeria is one of seven countries that account for half of the world’s 1.7 billion unbanked people.


Because unbanked citizens will need to transact digitally, the CBN’s new directive may compel financial institutions and regulators to step up economic inclusion efforts.

This could also provide leverage for Nigeria’s Payment Service Banks (PSBs) — MTN (Momo PSB), Airtel (SmartCash PSB), Globacom (Moneymaster PSB), and 9mobile (9PSB) — in encouraging more Nigerians to use mobile money.

While the value of mobile money transactions has increased over the years — from 1.1 trillion to 5.1 trillion between 2017 and 2019 — there is still a long way to go, with cash accounting for 63% of transactions in Nigeria.


The bad side.

What are the implications of the new CBN policy?

  •  If a market woman needs N5,000, she will pay N25,000 to the Buhari government as a processing fee.
  • It will be very difficult for all POS operators since most of them get their cash from ATMs. They will pay N25,000 for every N500,000 before other POS operating charges if they withdraw cash OTC.
  • It will be difficult for most of our mothers, who don’t operate bank accounts, to do business or trade.
  • Scammers will now use fake credit alerts to scam most Nigerians.
  • In an emergency, if you make a transfer and it fails, your wards who need the money to survive may die before they reverse the failed transfer.
  • It will be very difficult to borrow money.
    and many more.

While the new directive may be beneficial in combating illicit transactions and improving the payments ecosystem, it may also have some negative consequences.


Potential inconvenience for individuals and organisations with high cash transaction needs

Cash is the most valuable asset for people who operate point-of-sale (PoS) terminals and organisations that facilitate these transactions, such as Moniepoint. Like everyone else, these PoS agents get their cash from banks, and the cash withdrawal limit makes it difficult for them to serve customers.

Individuals such as artisans who accept cash for their services may find it difficult to receive payments under the new policy because they do not have bank accounts or even bank verification numbers (BVNs).

56 million of Nigeria’s 109 million adults have BVNs. When cash is scarce, this leaves 53 million Nigerian adults without access to digital payment systems.

According to the National Bureau of Statistics (NBS), 34.4 million of Nigeria’s 39.6 million micro, small, and medium-sized enterprises are informal. According to another NBS report, only 22% of the 34.4 million informal businesses use the Internet daily.

Limited infrastructure to support digital payments

While the CBN has stated that its latest policy will push the country’s cashless policy even further, the country still lacks the necessary infrastructure to support digital transactions. Apart from the fact that Nigerians pay more for data, Internet connectivity failure is a common occurrence in the country.

Other digital payment infrastructures, such as USSD, have been known to fail frequently as well. Cash payments, on the other hand, do not require an Internet connection or mobile phone.

As previously stated, cash transactions are quick and instant; the digital equivalent would be contactless payments, which are still uncommon in Nigeria’s payment ecosystem.

According to November 1, 2022, Business Day article, the CBN recently added contactless payment as a new payment option for the financial sector. While the new payment method is novel, it is rarely used in the industry.

Creation of a naira black market

There have been online speculations that the CBN’s cash withdrawal limit will lead to the development of a naira black market.

“By imposing limits, you create room for speculation, leading to a black market and hoarding,” writes user @MikaelCBernard. This policy will not lead to a cashless society; it will only lead to black markets.”


“It will create a black market and hardship for ordinary people,” said another user, @excel nonso. Elites will still find a way around it.”


Bans and restrictions in Nigeria have sometimes had the opposite effect of what was intended. The country’s rice ban is an example of how restrictions have led to bad actors establishing a lucrative black market.

According to Dataphyte, a media research firm, 2 million metric tonnes of rice are smuggled into the country each year.

With rice consumption rates higher than local production rates, illegal rice importation into the country may continue for some time. The same scenario could play out with the current cash withdrawal limit.

Due to a lack of digital paym ent infrastructure, Nigerians may seek cash in unregulated financial markets.

However,  the Nigerian House of Representatives has ordered CBN to suspend the new cash withdrawal limit policy but  CBN Governor Emefiele replied to the National Assembly stating that the apex will not be deterred by the order of the lawmakers

Our WhatsApp Channel



Please enter your comment!
Please enter your name here