CBN And Cashless Policy

The Central Bank of Nigeria (CBN) has just introduced a daily cash transaction limit of N100,000 per individual customer for Point-of-Sale (PoS) agents as part of its latest move to promote its cashless policy and tackle the current cash scarcity in the country.

According to a circular addressed to all Deposit Money Banks (DMBs), microfinance banks, mobile money operators and super-agents, titled ‘Cash-out limits for agent banking transactions,’ the apex bank reeled out new directives, which all principals of agents must comply with.

Some of these directives are: “Issuers shall set a cash withdrawal limit (cash-out) per customer (regardless of channel) to N500,000.00 per week”

“Ensure that all agent banking terminals are set to a daily maximum transaction cash-out limit of N100,000.00 per customer, and ensure that each agent’s daily cumulative cash-out limit shall not exceed N1,200,000.00.”

They are also to “Ensure that agency banking activities are consummated exclusively through agent float accounts maintained with the principals, monitor accounts associated with the agents’ BVN(S) with a view to identifying agent banking activities which may be conducted outside the designated float account(s)”, among other measures.

As to be expected, this move has elicited diverse reactions from stakeholders, especially considering the fact that the apex bank had issued many similar directives in the past with different outcomes.
It would be recalled that the cashless policy was introduced in phases, starting from Lagos on April 1, 2012, before it was extended to five other states (Abia, Anambra, Kano, Ogun and Rivers) and the Federal Capital Territory (FCT) in July 2013.

Under the policy, a daily cash transaction limit of N500,000 and N3 million for withdrawals and lodgements was imposed for individual and corporate customers, respectively, with surcharge imposed on those going beyond the limit. The planned nationwide implementation slated for April-October 2017 was suspended by the apex bank but the policy went full throttle in the FCT, Lagos, Abia, Anambra, Kano, Ogun and Rivers in September of the same year.

In January 2023, the suspension on the implementation of the policy was lifted, largely due to the expansion of financial access points and a seeming proliferation in electronic banking across the country. New cash withdrawal limits were introduced including ₦500,000 per week for individuals and ₦‎5,000,000 per week for corporate bodies across all channels (Branch, ATMs, POS agents) while third-Party cheques above N100,000 became ineligible for payment over the counter, all with valid means of identification.
Interestingly, some, including members of the Organised Private Sector (OPS), are still arguing against the cashless policy, advancing mundane excuses why the apex bank should slow down. For instance, some are saying that at present rural communities are without financial institutions while many others are underserved, even as awareness remains low. Others say it will hurt small business.

But the truth is, the era of moving about with sacs of physical cash cannot continue if we want to check the activities of kidnappers or even those moving from one local market to another, mopping up grains and hoarding them in clear violation of our financial regulations.

When the CBN disclosed recently that a significant part of the nation’s currency is circulating outside banking system, you don’t need anyone to tell you that most of these banknotes are in the hands of terrorists and other questionable characters, who are everyday trying to avoid the eyes of the law-enforcement agencies.

Speaking recently at a workshop for security-based committees, Speaker of the House of Representatives Abbas Tajudeen noted that “In Nigeria, the brief implementation of the cashless policy and the attempted currency redesign in early 2023 demonstrated the potential of financial measures to combat insecurity. They notably disrupted the financial networks that facilitate crimes such as kidnapping and banditry. However, these policies also underscored the critical need for proper implementation that accounts for Nigerians’ needs and realities.”

Tellingly, despite its negative impact, the failed naira redesign policy saw kidnapping fell by 50% during the implementation period of October 2022 and March 2023, according to Armed Conflict Location & Event Data (ACLED) data.

This is why the decision to check the activities of PoS operators by CBN is necessary. Rather than making it easier for people to access money, some PoS operators have now been turned into money laundering points by people with skeleton in their cupboards. Some of these PoS operators now carry out transactions well beyond their legally allowed limits, mostly without requiring valid means of identification. Because of this, some no longer use the banks for any of their transactions, all in their efforts to avoid trace. They go from PoS to PoS mopping up cash and stashing same at home.

– Nasir writes from Abuja

Indeed, to meet the demands of these questionable customers, PoS operators now strike deals with filling stations and others dealing in physical cash in order to meet their ever-increasing supply. Inasmuch as the banks have their own issues, they are sometimes powerless in this regard, because these questionable characters continue to intercept the Naira notes before they reached the banks.
What we need to do is to make sure we all play our role to help the cashless policy to succeed so that we can have a more transparent financial system, where criminals are not given the chance to continue hurting us in the wicked ways.
Banks should also improve their digital services so that the issue of failed transactions will not continue to push people away from electronic means of payments. It is indeed a vote of no confidence on our banks for the people to resort to pre-banking era practices of keeping their money. The government should also ensure that power supply is reliable and accessible to Nigerians whether they live in rural areas or urban settlements.
People need to be educated on the benefits of a cashless economy, which saves them time, makes it easy for businesses and even individuals to track their financial records. With the use of mobile wallets gradually making inroads into many rural communities, the need to do business only in cash is now archaic, dangerous and time consuming.
Like many analysts and financial experts have explained, the recent CBN move is one of the best anti-dotes to the problem of inflation, which is wreaking havoc on the economy. We can also not talk about price stability when people, aided wittingly or unwittingly by PoS operators and others, continue to keep money and transact business outside the banking system.

– Lawal Nasir writes from Abua