Friday, January 6, 2023

Cash Withdrawals from Government Accounts to be banned in Nigeria

Nigeria will ban cash withdrawals from government accounts from March 1.

Modibbo Tukur, the chief executive of the Nigerian Financial Intelligence Unit (NFIU) said the move was part of efforts to tackle money laundering, according to a Thursday (Jan. 5) Bloomberg report.

“On March 1, if there is a cash withdrawal from a government account, even if it is one naira, we are going to trigger off money laundering and corruption investigations,” he told reporters in Abuja.

In recent months, Nigeria has been taking a hard line on cash transactions as it attempts to digitize its economy.

The government has imposed strict limits on cash withdrawals at ATMs, which will come into effect on Monday (Jan. 9). From then, individuals will be limited to withdrawing 20,000 naira ($44.49) daily, down from the current limit of 150,000 naira ($333.68).

The country is also in the process of removing old banknotes from circulation by the end of the month.

Championed by the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, the Naira redesign has been proposed as a way to prevent people from hoarding cash for illicit purposes and as a means of controlling inflation. However, the policy has divided opinion.

Two days after the CBN announced the redesign in October, the naira suffered a historic crash, following what has already been a turbulent year for the currency. Shortly after that, the International Monetary Fund (IMF) urged caution as the central bank implements the policy.

With nearly every political party taking a stance on the issue and Nigeria about to kick off its election season, the role of cash in the economy has become a hot political topic.

Proponents of the central bank’s efforts to reduce the weight of the cash economy say it is necessary to tackle corruption and stabilize the naira’s value on foreign exchange markets.

Critics, on the other hand, argue that the current approach is too aggressive and disproportionately affects small businesses and society’s poorest, who are most reliant on a functioning cash system and don’t necessarily have access to alternative means of payment.


Related stories: New bank note launched in Nigeria to help curb corruption

Video - New currency in Nigeria to affect small businesses according to World Bank

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