The recent cash withdrawal policy of the Central Bank of Nigeria (CBN), which limits the amount of cash an individual bank customer and a corporate entity can withdraw per week, has been highly criticised by politicians and other Nigerians. The new policy puts the maximum weekly withdrawal for an individual at N100,000 and N500,000 for a corporate organisation. The cash withdrawal policy came after the CBN has redesigned N200, N500, and N1000 notes.
The exercise, the apex bank explained, would check the high volume of cash outside the banking system. According to the CBN, about 85 per cent of the money in circulation is outside the banking vaults and this makes the economy vulnerable to various crimes, including hoarding of the currencies. The cash withdrawal limit is seen as part of measures by the monetary authority to check vote buying by politicians ahead of the 2023 general election, as well as check rising inflation, among other reasons. The latest inflation rate for the month of December is 21.4 per cent.
Despite the envisaged benefits of the new cash withdrawal policy of the CBN under Godwin Emefiele, many Nigerians are opposed to it and those who support the policy are in the minority. Many Nigerian politicians have vehemently opposed the plan. This can probably explain why the Senate has called for a review of the cash withdrawal limit for both individual and business organisations. The lawmakers have reasoned that the present cash withdrawal threshold will cripple political campaigns and other logistics for the forthcoming general election.
Consequently, the Senate has directed its Committee on Banking, Insurance and other Financial Institutions, to embark on aggressive oversight of the CBN on its commitment to flexible adjustment of the withdrawal limit and periodically report the outcomes to the Senate. However, the Senate supports the implementation of the transformational payment and financial policies being initiated by the CBN, provided the apex bank reviews some provisions of the cashless policy in line with the present realities.
However, some members of the House of Representatives have described the cash withdrawal limit as unrealistic and called for its suspension. Most of them called for the CBN Governor to appear before the lower chamber on December 20. Those opposed to the policy have argued that it did not take into consideration the interest of the informal sector, including the rural populace. They have also pointed out that enough consultation was not done by CBN before taking the decision.
But the CBN Governor has hinted that the withdrawal limit may be reviewed upward, but did not say categorically by how much. While ruling out the suspension of the policy, Emefiele insists that the action is in the overall interest of the economy. Also, a Federal High Court of the Federal Capital Territory (FCT) on Thursday refused to grant the injunction of a group seeking to restrain the CBN and the Federal Government from proceeding with the January 31, 2023 deadline when the use of the current banknotes will cease to be a tender legal. The Court ruling came on the day some protesters, under the aegis of “Initiatives for Patriotic Nigerians,” and some Civil Society Organisations (CSOs) barricaded the premises of the National Assembly in support of the CBN policy.
The group had insisted that the policy should be allowed to run its full course, as it would help stabilise the exchange rate and promote a free, fair and credible election next year. We believe that the cash withdrawal policy will help to check crimes and money laundering if it is seamlessly implemented. While the timing may not be right, the CBN can still correct the observed lapses. Adjusting the withdrawal limit is something that the monetary authority should quickly do, as suggested by the Senate and other Nigerians.
However, the CBN must ensure that this does not further increase the cost of doing business in the country. The cashless policy alone cannot solve the problem of the economy and relying so much on it to save the ailing economy will amount to using the wrong therapy to cure a serious ailment. The fact is that the economy is in deep crisis and requires many macroeconomic policy tools to revamp. Therefore, the prudent management of the economy has become expedient now more than ever before.