The cash withdrawal limitations policy was defended by the Central Bank of Nigeria on Thursday, stating that it was not intended to protect the weak.Information Guide Nigeria
Aisha Ahmad, the Deputy Governor of the CBN’s Financial System Stability Division, defended the policy in front of the House of Representatives and asserted that Nigeria could run a cashless economy, noting that 82% of cash withdrawals from corporate accounts and 94% of personal account withdrawals fell under the revised N5 million per week cap.
Godwin Emefiele, the governor of the Central Bank of Nigeria, was represented by Ahmad. Emefiele had twice missed the opportunity to testify before the parliamentarians in support of the policy, which had drawn widespread criticism from Nigerians.
The House had been informed by the apex bank that Ahmad will represent the Committee of Governors in front of the MPs rather than Emefiele, who would not personally appear before the House.
The CBN deputy governor also made note in her presentation to the House that despite concerns from certain critics over the paucity of commercial bank branches, particularly in rural regions, evidence gathered by the CBN revealed that individuals in remote areas had embraced internet banking choices.
The CBN ordered 500 million of the newly designed N200, N500, and N1,000 notes through the Nigerian Security Printing and Minting Plc, Ahmad added.
The cashless policy was initially introduced in 2012 based on sections 2(d) and 47 of the CBN Act, according to Ahmad, who requested five minutes to explain the policy to the MPs.
She also recounted how the CBN started the pilot test in Lagos State, introducing restrictions on transactions of N500,000 and N3m for individual and corporate clients, respectively, with fees for any amount above these.
She added, “The pilot was very successful and following that, the policy was extended to six other states – Abia, Anambra, Kano, Ogun and Rivers – in July 2013. Over the years – and it has been 10 years now since we first launched this – the policy had been amended severally due to feedback from stakeholders and also to ensure that we develop the infrastructure and financial access points required to support the policy.
“We suspended processing fees on excess lodgment in the past, in 2014. In 2017 and 2019, we also suspended the nationwide rollout of the cashless policy. Currently, we suspended fully any payments or charges on excess lodgment.”
The CBN deputy governor added that the nationwide restrictions set by the CBN on December 5, 2022, were a continuation of the cashless policy first introduced ten years prior and were “in recognition of the positive changes that have occurred in the financial and payment system since the cashless policy first launched.”
The CBN president listed “a wide proliferation of financial access points” as one of the developments. We were still referring to bank branches as the only place to acquire financial services around the year 2012.
She stated, “Today, we have a very robust payment system that includes bank branches, branches of micro-finance banks, POS machines, ATMs, 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 local government area in Nigeria has agents represented. We have also seen a proliferation of electronic transactions.
“Just by way of a quick example, in 2012, we had N48bn in POS transactions. Today, we have N6tn in POS transactions. On electronic transfers, we had N3tn in 2012; today we have N300tn as at October 2022. That is a 7,000 per cent increase.
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“We have also seen an improvement in financial inclusion to 64.1 per cent and lastly, perhaps, more importantly, we have seen the evolution of the Nigerian payment system on the global stage. Nigeria is adjudged 6th in the world for an 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.’’
Giving more data, Ahmad further stated, “Also, electronic payment and real-time data payments have been estimated to contribute about 0.67 per cent to our GDP.
“Going to the cash withdrawal limits that were issued in response to the feedback from Nigerians; in response to the comments made by this revered chamber, we took those feedbacks on board and we did mention that we would be flexible in the implementation of this policy in response to stakeholders’ sentiments.”
She admitted that the CBN reviewed the policy based on the “sentiments” expressed by the public.
“In response, we have since reviewed the limits significantly from N100,000 that we had per week to N500,000 per week for individuals; from N500,000 per week for corporate to N5m per week for corporate. We have also amended the processing fees from 5 and 10 per cent downward to 3 and 5 per cent (respectively).
“We have clarified the strategic importance of agents as important participants in the financial system because they play a key role in certain under-served segments in the rural areas and in certain market areas, and they as well would be covered by this newly revised rule,” she explained.
The head of the Central Bank of Nigeria (CBN) stressed the need to “provide some arguments as to why these constraints are required now and why it is time for us to get cashless nationally.”
She claims that the data made available to the apex bank demonstrates that 82% of corporate transactions and 94% of all cash transactions are below the N500,000 threshold. This includes transactions made in regions of the nation that are not covered by the cashless policy.
“What does this mean? It means that 94 per cent of all individual transactions would not be affected by these fees that we have talked about. 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 locations and transactions by the agents themselves, the average total 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.
“This gives you the perspective around what the policy is trying to do; it 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 under-served areas – to economic opportunity, to payment opportunity and connecting them to the formal system,” the deputy CBN governor said.
Ahmad recalled that during the COVID-19 pandemic period, the world saw the negative impact on physical cash as no one could go anywhere, stressing that “it was the electronic banking system that protected and served those below the poverty lines that could have had their livelihood at risk.”
Clearing the misconceptions about policy, Ahmad clarified that the N100, N50, N10 and N5 notes are predominantly used in the hinterlands and the rural areas, and these would not be affected by the policy.
The CBN boss stated, “Finally, we just want to reiterate the overall benefits of the cashless policy. It is to reduce cash processing costs, minting costs, the cost of destroying old notes and the cost of moving the physical cash from place to place; the cost of protecting it. All these costs are passed on typically to the banking public. Getting rid of these costs means that charges will be less in that respect.
“Also, this is an opportunity to promote Nigeria’s positive image from a 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, and terrorism financing go without gainsaying.”
Despite Ahmad’s remarks, a number of House members voiced their worries about the policy and criticized the CBN for neglecting to consult with all pertinent parties prior to its announcement and hasty implementation.
Ali Shettima, a member from Yobe State, brought up the problem of rural residents’ inability to distinguish between genuine and phony naira notes.
Anambra State resident Chinedu Benjamin questioned whether the All Progressives Congress’s (APC) use of the cash withdrawal restrictions to target other parties ahead of the general elections in 2023.
Isiaka Ibrahim enquired as to whether the CBN obtained information from the National Bureau of Statistics and other pertinent governmental organizations.
Another member from Katsina, Sada Soli, said, “The CBN must not restrict people’s choices through coercion of a policy for their own good. Can the CBN tell Nigerians how much was printed out of this currency? Because today if you go into the bank and you want to withdraw money, the money is not available.
“The most successful countries that succeed in a cashless economy are Sweden, Finland and Denmark; their population is not up to Lagos State. We must consider three sectors: the banking sector we know does not have the infrastructure, the power sector and telecoms to make this policy successful.JAMB portal
“The CBN should be retrospective. They should slow down. You know the role cash plays in the economy of this country. The trading that takes place is basically a cash transaction. CBN should have this policy with a human face.”
From Oyo State, Tolulope Akande-Sadipe revealed that the Association of Mobile Money and Bank Agents of Nigeria had petitioned the House, spelling out some of the concerns highlighted by the sellers.
In response to a few queries, Ahmad mentioned that there are two methods for keeping an eye on financial activity at the grassroots level in local markets.
In rural areas, she observed, people frequently utilize money agents connected to an electronic system run by a super agent.
“We are able to see the flow of transactions: the average size of the transaction and the total transactions and we are able to understand what they spend it on,” she added.
Ahmad further pointed out that the CBN conducts monthly household surveys that examine consumer spending and market behavior.
Reacting to concerns on the possibility of fraudsters exploring ways to scam Nigerians through the new policies, Ahmad said, “You talk of fear of online banking and the issue around fake alerts. The truth is that for any initiative, there will be challenges. What matters is that the benefits must outweigh the risks. The CBN has an active consumer protection department that is looking at issues of fraud, issues of cyber security and issues of bank conduct in terms of how they charge customers and every time we hold the banks to account when they flout those rules.NYSC portal
“We just want to say that we will continue to be open, engage, and listen as we implement this policy in response to the sentiments of Nigerians. It is not intended to disenfranchise (sic) 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.”
In his remarks, the Speaker, the House of Representatives, Hakeem Gbajabiamila said, “We have taken your brief under consideration. The House would meet and deliberate.”
The Speaker reiterated the claim made earlier by a member, Mark Gbillah, that the CBN had violated the CBN Act regarding routine consultations with and approvals from the National Assembly on monetary policies when Emefiele was governor.
He said, “It was not optional; it is obligatory of the CBN under Section 8 of the CBN Act to brief this House on your monetary policies. There is a reason that provision is in the law. That was not done. It took the prompting of the House, not once, not twice but three times to have the CBN come for this briefing that we are not even asking for. It is an obligatory briefing under the CBN Act, Section 8.
“Two, I want to address the issue of – although you may say the horse has left the stable – the redesigning of the naira. All your policies may be of good intentions, but they say the road to hell is sometimes paved with good intentions.
“We are aware of the Bank of England, we are aware of the US. Just recently, the Bank of England changed their notes to the King Charles notes, and the bank made a publication that it would not come into effect until 2024. In other words, they gave a year’s notice in a cashless society.
“How then can we rationalise two, three months’ notice in a ‘cashfull’ society? And not only do they give that kind of notice, in the United States, and in other places, even when the law or the policy takes effect, you are allowed to continue to use the old notes at the same time until it is completely phased out. So, these are questions that are begging for answers.”JAMB Result
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