The Central Bank of Nigeria (CBN) has disclosed that Nigerians do not withdraw more than N500,000.00 on a weekly basis, stressing that 94% of all cash transactions fall below the N500,000.00 new weekly cash withdrawal limit for individuals.
TheNewsGuru.com (TNG) reports Mr Godwin Emefiele, CBN Governor, represented by the CBN Deputy Governor in charge of Financial Systems Stability, Mrs Aisha Ahmad made the disclosure at a House of Representatives briefing on Thursday.
The apex bank also disclosed that 82 per cent of corporate transactions are below the new limit, noting that the adjustments to the revised cash withdrawal limits have sufficiently addressed fears over possible negative implications of the limits.
The CBN also disclosed that 500 million pieces of the redesigned naira notes were ordered from the Nigerian Security Printing and Minting Company Limited while also disclosing that the lower denominations of Naira were not redesigned because they were the ones mainly used in the rural areas of the country.
Emefiele explained that the new cashless policy was not based on any political consideration as the CBN is an independent institution, whose decisions are based on research, data and the efforts of many teams working together across its different directorates.
Justifying the policy and the expected gains, he said the cashless policy will reduce the cost of processing cash, cost of destroying mutilated cash, cost of printing new notes as well as reduce kidnapping and other forms of criminalities associated with cash movement.
On the issue of fake currency, he said, “We are doing a lot of sensitization because we believe that sensitization can’t just be the newspapers, the television and radio. We need to go into the rural areas, the markets and use people in the communities to actually drive home the message. It takes time but over time it improves”.
The CBN Governor disclosed that electronic money transfers in the country as at October 2022 stood at N300 trillion from N3 trillion in 2012, when the cashless policy was introduced, representing about 7, 000 per cent increase.
He also said in 2012 when the pilot scheme was launched in Lagos, the country had N48 billion in POS transactions, adding that this has increased to about N6 trillion today
He said the policy pronouncement on December 5 was a continuation of the cashless policy started 10 years ago and was in recognition of the positive changes recorded in the financial and payment system since it first launched.
He said, “Today, we have a very robust payment system that includes bank branches, branches of micro-finance banks, POS machines, ATM machines, agent banking, E-Naira and many other options.
“To be specific, between the bank and the micro-finance banks, we have 6,500 locations, 900,000 POS terminals, 14,000 ATMs across the country and 1.4 million agents nationwide and every single local government in Nigeria has agent represented. We also have a proliferation of electronic transactions. Just by way of quick example, in 2012, we had N48 billion in POS transactions. Today, we have N6 trillion in POS transactions.
“On electronic transfers, we had N3 trillion in 2012. Today, we have 300 trillion as at October, 2022. That’s a 7,000 percent increase. We have also seen an improvement in financial inclusion to 54.1 per cent and lastly, perhaps, more importantly, we have seen the evolution of the Nigerian payment system on the global stage.
“Nigeria is judged 6th in the world for instant real payment and we are only behind countries like India, China, Thailand, Brazil and South Korea. We are the only African country in the top 10 and this has been as a result of some of the initiatives that have gone on. Also, electronic payment and real time data payments have been estimated to contribute about 0.67 percent to our GDP.
“Going to the cash withdrawal limit that was issued in response to the feedback from Nigerians in response to the comments made by this revered chamber, we took those feedback on board. CBN mentioned that we will be flexible in the implementation of this policy in response to the stakeholders’ sentiments.
“We have since reviewed the limit significantly from N100,000 that we had per week to N500,000 per week for individuals; from N500,000 per week for corporate to N5 million per week for corporate. We have also amended the processing from 5.0 and 10 per cent downward to 3.0 and 5.0 per cent.
“We have clarified the strategic importance of agents as important participants in the financial system because they play a key role in certain underserved segments in the rural areas and in certain markets areas and they as well would be covered by this new revised rule.
“Just to roundup, I thought it was important Mr. Speaker, to give some justifications as to why this limits are required now and why it is time for us to get cashless nationwide.
“I have seen some misconceptions about the fees that we are charging the fees on the entire amount that wants to be withdrawn. No. The fees are to be charged on any withdrawal above the limit.
“For example, if you are withdrawing N550,000, the fee will be on the N50,000. We also looked at transactions for agents. So, transactions by Nigerians that go to the agent’s location and transactions by the agent’s themselves, the average cash transactions of agents is N2,184,000 which is clearly within the current limit.
“The average transaction per individual that walks up to an agent is about N18,000. What the policy is trying to do is to encourage more people to come into the formal payment system because of the numerous benefits that accrue. It means opening up our rural areas, the underserved areas to economic opportunity, to payment opportunity and connecting them into the formal system.
“During the COVID-19 period, we saw the negative impact of physical cash. No one could go anywhere. We couldn’t go to the banks. People couldn’t leave their homes. It was the electronic banking system that protected and served those below the poverty lines that had their livelihood at risk.
“To clarify some misconceptions, I think it is also important to mention from the data that we have, we have seen the denominations that are not going to be redesigned, the N100, N50, N10 and N5 are predominantly used in the hinterlands and in the rural areas and those are not going to be affected by the policy.
“Also, you have access to your money. So, there is prohibition in terms of what you want to collect. It is for certain large amount, you need to provide additional information”.
“We just want to reiterate the overall benefits of the cashless policy. It is to reduce cash processing cost, minting cost, the cost of destroying old notes and cost of moving the physical cash from place to place.
“All these costs are passed on typically to the banking public. Getting rid of these costs means that charges will be less on that respect. Also this is an opportunity to promote Nigeria’s positive image from money laundering perspective.
“Even the recently passed anti-money laundering law has limits for cash for a reason because cash is usually the medium by which some of these nefarious activities are done. Suffice it to say that the advantages around protecting people from armed robbery, kidnapping, terrorism financing goes without gainsaying.
“We will continue to be open, engage, listen as we implement this policy in response to the sentiments of Nigerians. It is not intended to disenfranchise anyone particularly those in vulnerable situations, in the rural areas, markets, it is meant to bring everyone into the significant economic opportunity that comes when you are fully included,” he said.